Last week, writing for the Reporting on Health Blog, I noted that with private insurance there are zillions of risk pools, and that’s why people who are not part of a group must pay more for their coverage. There’s no one to spread the risk to when they get sick. When you design a risk pool using private insurance, the government must force people to buy insurance in order to broaden the pool and spread the risk, which is what the health reform law does.
The prescription drug law, which gave the task of providing the new benefit to commercial insurers, moved supporters of privatization closer to their goal. Until the prescription drug law came along, all Medicare recipients got the same hospital and medical benefits, although seniors could buy different supplemental coverage to plug Medicare’s benefit gaps. Everyone made payroll tax contributions, which paid for their hospital coverage, and everyone paid the same premium for medical coverage. The drug law began to change that by introducing means testing, a concept more associated with welfare programs than social insurance. It called for wealthier seniors to pay higher premiums for their medical coverage beginning in 2007. The health reform law took means testing a few steps further, requiring those seniors to pay more for their drug benefit as well. The law also reduced the subsidy Medicare will provide wealthier people for their medicines and changed the rules for determining who is wealthy, so that more people will pay the higher premiums. Few in the media paid attention.
After that law passed in 2003, Harvard government professor Theda Skocpol predicted that the changes would splinter political interests. That is happening now—witness Democrat Wyden and Republican Ryan. “The genius of Medicare was that it included poor people and the middle class. It wasn’t designed as charity or welfare,” Skocpol said. Few have defined Medicare better, which is why I use her quote to help journos write about the program. Because Medicare was neither welfare nor charity, it captured popular support early on and has sustained it over the years.
A voucher plan will crack Medicare’s support by allowing people to leave the program, take their government subsidy—in the form of a voucher—and buy private coverage. Under Ryan and Wyden’s plan, people could remain in the traditional program. Experts have long feared that those who remain would be the sickest. These people won’t be terribly attractive to commercial carriers, even if the law is written in a way that requires carriers to take those at death’s door. Care in the government program will become very expensive and perhaps untenable. Medicare could nosedive into a death spiral, common in commercial insurance where policyholders can no longer afford their coverage.
It’s time to end this sideshow drama over PolitiFact and get on with the business of explaining Medicare—what’s at stake for everyone, not just seniors in wheelchairs. Snarky blog posts from all sides do little to enlighten the electorate.