Medicare Is Not Sustainable in Its Current Form

Paul Krugman pretends the system can be saved by rationing health care delivery substantially.

Medicare is going bankrupt. The entitlement program, which finances health care for America’s elderly, may be popular, but it will run out of money by 2024. That is according to the program’s trustees.

Once the main trust fund is depleted, revenues from Medicare taxes would initially be enough to cover 90 percent of expenses. But that share will decline to 75 percent by midcentury before rising again, to 88 percent by 2085.

Over the next 75 years, Medicare’s unfunded obligations would add up to a grand total of $24.6 trillion.

In reality, the program — unless reformed — will be far heavier indebted as the official numbers assume $575 billion in savings included in President Barack Obama’s health reform law and a 29-percent reduction in physician reimbursements in 2012.

That is unlikely to happen. Time and again, Congress has overwritten payment reductions and it’s almost certain to do so again, especially during an election year.

Democrats have no plan expect letting Medicare go bankrupt. Republicans have proposed privatizing care delivery for the next generation of seniors, offering them vouchers or “premium support,” which is effectively a subsidy to cover part of their insurance costs.

According to economist Paul Krugman, that’s completely unnecessary. He argues in The New York Times that Medicare is sustainable “in its current form.” How? By rationing care.

Medicare will have to start saying no; it will have to provide incentives to move away from fee for service, and so on and so forth. But such changes would not mean a fundamental change in the way Medicare works.

It would to people on Medicare. They would not longer be able to afford the sort of medicine and treatments deemed unfit or too expensive by — whom exactly? Who is supposed to say “no”? Who will decide which medical care will be paid for and which will not?

President Obama has answered that question already. He would let an “advisory board” of fifteen unelected bureaucrats decide how to trim Medicare spending.

Rationing care is the favorite resort of leftists when confronted with the unsustainable nature of their favorite government handouts.

The current adminstrator of Medicare and Medicaid, Dr Donald Berwick, is no exception. He complained in 2008 about how America’s then relatively free health insurance market was trapped in “the darkness of private enterprise” and professed to be romantic about the British National Health Service which, he said, was “generous, hopeful, confident, joyous and just.”

Britain’s National Health Service ombudsman disagreed. He found that medical care for seniors in the United Kingdom was inhumane and “failing to meet even the most basic standards of care.”

Britain has a rationing board. It’s called the National Institute for Clinical Health (or NICE) and Berwick described it as “a national treasure.”

Just how nice is this institution, though? According to its mandate, each year of added life is worth approximately £30,000 (or $44,000). NICE chairman Michael Rawlins boasts that at times his agency has approved treatments costing over £48,000 ($70,000) per year of extended life, but the principle remains unchanged: NICE puts a price tag on life. A principle that is readily endorsed by Dr Berwick.

“The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health-care bill out there,” he said.

Berwick predicts the need of what he described as “a very difficult democratic conversation” without elaborating all too explicitly of course on what it would entail. But he did announce this:

The decision is not whether or not we will ration care. The decision is whether we will ration with our eyes open.

Just what does “eyes-open rationing” mean? Dr Berwick has yet to answer that question. What’s obvious, though, is that according to the Medicare and Medicaid chief, the chronically ill and elderly are taking up more than their fair share of America’s health-care supply. It’s the government’s job to remedy that injustice.

“Any health-care funding plan that is just, equitable, civilized and humane, must redistribute wealth from the richer among us to the poorer and the less fortunate,” he said. Good health cars “is by definition redistributional.”

“The simplest way to reach these goals is with a single-payer system,” according to Berwick.

Which, as Krugman points out, is what Medicare is — and should remain.