The truth about Medicare

Calculating its limits

We all get old and we all get sick before we die when we get old. These days we usually get expensively sick, which is why Medicare has been such an important program for the elderly. Unfortunately, it cannot go on much longer in its current form. Yet a reform of Medicare poses a nasty social dilemma. Highly popular politically, it is deep in trouble economically. Medicare now covers 34 million elderly, but over the next three decades there will be an increase to an estimated 72 million elderly, encompassing close to 20 percent of the population. The Medicare Trust Fund is expected to run out of money in 2008 and-if the program is not changed-to incur annual deficits in the range of hundreds of billions of dollars in the decades thereafter. Yes, hundreds.

Perhaps the most discouraging news is that (according to a late-1998 survey supported by the Kaiser Family Foundation) only 22 percent of Americans believe Medicare is headed for a "crisis," though some 40 percent concede that it has some "major problems." Only one reform option is currently favored by a majority of Americans, and that is that higher-income elders should pay more. Medicare is well liked, even considered indispensable, but only 31 percent favor an increase in payroll taxes to fund it.

Sound familiar? Recall the 1994 Clinton health-care debate, which showed that most Americans wanted universal health care and believed that, if necessary, a million dollars should be spent to save a life. I don’t recall the actual figure, but those same fellow citizens of ours were not willing to go much beyond a $50 yearly tax increase to bring that about-approximately twelve minutes in an ICU. In other words, someone else’s million.

Survey results of this kind do not, apparently, hold much sway for those with a strong ideological streak. They have the answer. Conservatives favor a reliance on savings accounts, vouchers, and a freer play of the market to get us out of any jam. Many liberals, fearful of a cutback in a popular entitlement program for older Americans, contend that policy innovations and economic growth can save the day. Technological optimists believe in more biomedical research, which will significantly reduce the diseases and disabilities associated with aging and their costs.

Escapist fantasies. There is nothing in the historical record to give them any credibility. None of them addresses the main source of the projected deficits: the combination of an aging population and a steady introduction of new, expensive, and more intensively used medical technologies to care for them. Note that the research lobby has helped give us that result, all the while holding itself up as the way out of a financial bind that it engenders itself.

As the Stanford economist Victor Fuchs shows, the average increase in many high-technology procedures with the elderly (for example, angioplasty and laminectomy) has been running from 13 percent to 22 percent annually (Health Affairs, January/February). "The only reliable way" to slow spending growth, he argues, is to "slow the growth of services." That sounds harsh but, in light of the other alternatives, is there really any other choice? Most of these alternatives-improved efficiency, cost sharing, less reimbursement for providers-are not nearly so promising as advertised. Doubtless there can be greater efficiency in American health care, but the once-again rising costs show that the end of that road is near. Co-payments and deductibles for medical care can be increased, of course, but that is the equivalent of more taxation. (The elderly already spend on average 21 percent of their annual income on health care, more than the 15 percent they paid when Medicare was passed in 1965.) Hospital and physician reimbursements can be reduced, but that reduction, one way or the other, will be passed along in diminished patient care.

We are left then with a slowing of the growth of benefits, which translates into a slowing of technological innovation, as the only serious and decisive option for the future. Now if this were just an unpleasant reality that Americans would have to get used to, we could expect disagreements, evasions, and offsetting optimistic proposals; the usual, that is. Fair enough. But some groups, such as the National Right to Life Committee and the International Anti-Euthanasia Task Force, are nastily treating any talk of cutbacks for the elderly as nothing less than the next logical-and predictable-step after euthanasia itself as a way to get rid of the burdensome. Not only is this a mean-spirited response to a serious issue, it is simply a fallacy to claim that a perceived need to reduce Medicare benefits is equivalent to saying the elderly are a burden or of less worth than any other age group. No other age group gets such benefits at all. To lend a spurious credence to the cynical, supposedly "prolife" line, Derek Humphry, founder of the Hemlock Society, is now touting euthanasia and suicide as the best antidote for the Medicare problem. Cut from the same wormwood, they will dance well together. The rest of us should look elsewhere.

Is there a way out? Not if one is looking for a way to keep Medicare services at their present level, or to keep Medicare payroll taxes low, or to pursue an unlimited technological progress to be limitlessly reimbursed, or to allow the elderly a full range of attractive choices at public expense to pay for their health care. That is what most Americans seem to expect of Medicare. They won’t get it.

Should we therefore feel sorry for the baby boomers as they begin retiring? Not at all. Unless they can pay for it out of their own pockets, they will surely be deprived of some expensive, and probably beneficial, modes of future medical progress. They are, though, likely to get most of the present technologies, at least those that remain affordable, that is, are not expensively upgraded. They will benefit, as their grandparents did not, from their already improved health status, mainly a function of public health improvements. More of the future elderly will go into old age in reasonably good health and have a greater life expectancy than any other generation in human history-regardless of the availability of medical care or acute-care medicine paid for by Medicare.

Education and economic level, together with a lifetime of good health habits, matter most of all. Few people make it to ninety by spending much time in hospitals having their lives saved. If that word can get around, there would be far fewer worries about the future of-a necessarily stripped down-Medicare.

Published in the 1999-04-09 issue: 
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Daniel Callahan, a former Commonweal editor, is president emeritus of the Hastings Center and the author of What Price Better Health: Hazards of the Research Imperative.

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