Don’t Voucherize Medicare

The official Medicare advisory commission, whose report is due March 1, is on the verge of proposing a truly radical change. The proposal, sponsored by the commission’s more conservative members, would transform Medicare from guaranteed social insurance into essentially a voucher program, in which the haves would enjoy far better care than the have-nots.

Some background: Medicare is said to face a financial crisis because of the looming retirement of the baby-boom generation. Medicare has never provided fully comprehensive coverage--prescription drugs and long-term nursing home care are excluded, for example--but it goes a long way toward providing basic health security to the elderly and the disabled.

As social insurance, Medicare is redistributive in three ways. First, it redistributes from the well to the sick. Second, it redistributes from the young to the old. And third, as a tax-financed program it redistributes from the more affluent to the less affluent, who could otherwise not afford decent insurance.

By contrast, private insurance bases your benefits on how much you can afford to pay. And because commercial insurance companies, unlike universal Medicare, try to avoid sick people, commercial insurance tends to be less redistributive from the well to the sick.

It’s true that even under the current program the more affluent are able to supplement basic Medicare, with private “medigap” policies and with out-of-pocket payments. But the commission’s proposal would push Medicare much farther down that road.

Instead of giving everyone the basic government-guaranteed Medicare program with its free choice of doctors and hospitals, the commission majority proposes giving everyone a voucher. People could then take the voucher and purchase whatever policy it could buy.

Those affluent enough to supplement the voucher with their own resources could buy superior policies. Most seniors, whose budgets are stretched thin, would be stuck with stripped-down coverage.

At least 12 million of the 39 million elderly have medical problems so severe that they could not afford to buy adequate insurance via the proposed voucher system. If the government’s contribution were capped, they would very likely go without necessary care.

Most Republicans on the 17-member commission support the proposal and most Democrats oppose it. Commission rules require 11 members to make its recommendation official.

The White House is equivocating on the approach. On the one hand, Bill Clinton professes to be a defender of Medicare; on the other, the administration believes there is a financing crisis. Vouchers, if nothing else, would “solve “ the budget problem. As so often is the case, this president is eager to split the difference and claim victory.

If this sounds vaguely familiar, it precisely echoes the fault lines of the Social Security debate.

What we’re seeing on both fronts is a turning away from the hard-won concept of social insurance. It’s understandable that conservatives, who celebrate risk, want to put these risks back onto individuals. It’s a bit harder to grasp why liberals would go along.

A far better solution would be to spend some of the budget surplus to shore up our most effective Great Society social insurance program, so that retiring baby boomers would get the same health security their parents enjoyed. When will some liberals step up to the plate?