McCain’s Quiet Medicare Bombshell

Privatizing Medicare one inch at a time

Tuesday night the News Hour with Jim Lehrer dutifully reported that John McCain had been in Pittsburgh that day—tax day, as it happens—at Carnegie Mellon delivering a speech about his economic proposals. The NewsHour’s Kwame Holman quickly noted that McCain went after his rivals on money matters. Indeed he did. He chastised his opponents, saying that they would allow tax cuts to expire, which would result in people paying more taxes—perhaps thousands of dollars per year. In a sly reference to the title of one of Barack Obama’s books, he added that the Democrats have the “audacity to hope you don’t mind.” The NewsHour also allowed McCain to pitch his plan for a temporary suspension of federal gasoline taxes from Memorial Day to Labor Day to reduce pain at the pump.

What the NewsHour didn’t let the candidate discuss was his quiet bombshell proposal to make Medicare beneficiaries with higher incomes pay more for their prescription drug benefits, a notion that furthers the privatization (and in the eyes of many health care advocates, the diminution and eventual death) of Medicare, and one that presumably a lot of NewsHour viewers would be interested in. In his prepared remarks, McCain called the prescription drug benefit a “new and costly entitlement” that included many people who could buy insurance on their own without government help—people like Warren Buffet and Bill Gates. By making them pay more for their medicines than some worker who spent his career in the coal mines, the country could save “billions of dollars that could be returned to taxpayers or put to better use.”

That rhetoric sounds plausible, maybe even logical, and it may well resonate with the public. Why shouldn’t a poor coal miner pay less than Bill Gates?

But many health care advocates see McCain’s proposal is just another opening to privatize Medicare and destroy it as a social insurance program, under which everyone who has paid into the system is entitled to equal benefits as a matter of right. A provision that was tucked into the recent law that gave seniors the drug benefit (Part D) already requires wealthier beneficiaries to pay more for the Medicare premiums that cover doctor visits and outpatient services (Part B). If drug benefits, too, are based on income, critics fear that support for the program will eventually erode as those with more choices and more money will opt out of the program and buy coverage from private insurers.

Like the NewsHour, most of the media didn’t get it, and ignored MCain’s privatization message and its ramifications. The New York Times mentioned it in a front page piece, noting that the proposal would affect not just billionaires but couples earning more than $164,000 and single people with incomes of $82,000. But it didn’t go beyond that. A McClatchy Newspapers story appearing in The Seattle Times nibbled around the edges. McCain’s proposal, the paper said, “brings up the specter of means testing for federal-benefit programs, anathema to the politically powerful seniors lobby,” a tip-off to what the debate is about, but without really explaining it. The Washington Post presented a shred of context, but only a shred, that offered a glimmer of what’s really at stake here. The Post pointed out that McCain’s Medicare proposal had been floated unsuccessfully past Congress before.

McCain adviser Douglas Holtz-Eakin revealed the most when he said in the Post story: “You could make this as aggressive as you want to get more savings.” In other words, if the government saves $2 billion by making couples with incomes greater than $164,000 pay higher premiums, it could save $6 billion by moving down the income ladder to, say, $100,000 or even less.

Over time, Medicare experts say, the amount of income that will trigger higher premiums will drop, as Holtz-Eakin hints, which will eventually turn it into a welfare program, a goal long-sought by conservatives. Those left in Medicare will likely be the poorest and the sickest with few options, and they will face unaffordable premiums for health care, the same problem that led to Medicare’s creation in the first place and the same problem that younger people already face today—if they can find coverage at all.

The argument is that Medicare created a compact among generations and made it possible for people to have health care when they are old and need it. And for the most part, it has done its job. Administrative costs are low, and most of the time people get what they need. Like the rest of the health care system, it has been plagued by the high cost of medical treatments and technologies, and it hasn’t been great at controlling those costs largely because it’s politically hard to say no to the pleadings of special interests who want to make sure that their own service, product, or new procedure is covered even if evidence that it works is flimsy.

What do the other candidates say about all this? Earlier this year, the Senate took a vote on an amendment that would have required Medicare beneficiaries with incomes over $160,000 to pay higher premiums for their prescriptions. The amendment was rejected by a vote of 56 to 42. Hillary Clinton and Barack Obama voted against it. McCain didn’t vote.

That vote suggests neither Clinton nor Obama are big supporters of privatization. But neither talk much about Medicare. Voters need to hear more about what they think. What’s needed is a full and open discussion. Does the public want Medicare adequately funded with public revenue, or does it want to shove the increasing costs of care onto beneficiaries, along with their children, who will be saddled with health care expenses when mom and dad can’t pay. If the media doesn’t lead this discussion, who will?

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.