Aging expensively in the USA: 50-year-old Medicare and Medicaid programs cry out for reform.
CAL: Fifty years is enough time to judge whether a government program has lived up to its promises. Last year in this column, we agreed that 50 years after the Great Society was launched by President Lyndon Johnson, his anti-poverty programs had failed to significantly reduce the number of poor people in America, and that other approaches should be tried. Today, we look at Medicare and Medicaid a half-century after these programs began. I'm not feeling good about either.
BOB: You should. In 2008, before the Affordable Care Act, 44 million Americans received Medicare health insurance, and 47 million received Medicaid. Medicare covers those over 65 who have paid into the program, while Medicaid provides health care for the most vulnerable Americans, especially poor children. Before these programs, most poor and elderly did not receive health care, except those who paid for it out of pocket or received it through their employers. Since 2010, 16.5 million additional people who had been uninsured have health insurance thanks to Obamacare.
CAL: Johnson said Medicare would cost $500 million a year, but in 1967, the House Ways and Means Committee projected a cost of $12 billion annually by 1990. In 1990, Medicare cost $110 billion. By 2014, the price had ballooned to $600 billion. It has been the same with Medicaid: $1 billion in 1966, and today it's over $450 billion. By 2019, the cost is projected to be $704 billion. There doesn't seem to be any way of stopping the hemorrhaging without major reform.
BOB: That's because health care costs per capita have increased 2.4 percentage points faster than annual gross domestic product since 1970. Medical breakthroughs allow people to live longer. They need more health care as they age. Obamacare has increased Medicaid eligibility for people who make less than 138% of the poverty level, allowing millions of Americans to qualify.
CAL: President Obama cut $500 billion from Medicare spending over 10 years in order to claim that Obamacare was "paid for." A better option, writes Forbes columnist Merrill Matthews, "would have been to aggressively target Medicare and Medicaid fraud, which could have provided the same amount of savings." Like so many other government programs, Bob, politicians are less frugal with our money than their own.
BOB: I agree with you on waste. The federal government has been lax in pursuing those who abuse the system. The New York Times reported that one Brooklyn dentist filed 991 claims for Medicaid in one day! The same Forbes article you mentioned said that in 2011, states recovered over $1.7 billion in fraudulent Medicaid claims.
CAL: I agree with your earlier point that the situation in the mid-1960s was intolerable and that too many people were uninsured and/or could not afford to pay for their health care. But as the Supreme Court recently noted in a case involving Environmental Protection Agency regulations and coal, cost must be weighed as a factor in any government program, or regulation. If the cost gets too high, it has a corrosive effect, not only on taxpayers but also on the quality of the care people receive.
BOB: I noticed in the picture of Johnson signing the Medicare and Medicaid bills that former president Harry Truman was beside him. Rightfully so, since Truman had attempted unsuccessfully to pass a universal health care law. President Kennedypursued a bill before his assassination, and Johnson finally had the political muscle to get it done.
CAL: We can agree that in order to preserve the best elements of these "middle-aged" programs, reforms are needed. There are numerous proposals. For example, groups from the conservative Heritage Foundation to the libertarian Cato Institute (though not the liberal AARP) favor raising the Medicare eligibility age.
BOB: There is no question that both programs have to have a major overhaul if they are to survive. Social Security also needs change. As hundreds of thousands of my own Baby Boom generation turn 65 every month, the pressure for reform will only increase. The question is, will Congress and the health care and insurance industries allow reform to pass?
CAL: Government does few things well, but if it got behind a focused attack on some of the costlier and most debilitating diseases — Alzheimer's for one — not only would there be obvious health benefits, but cost reductions would be significant.
BOB: I couldn't agree more. Lest I leave the impression that Democrats are the only ones behind health care reform (not a single Republican in the House supported Obamacare), it was Republican President George W. Bush who pushed Medicare reforms to offset prescription drug costs, helping millions of poor elderly citizens pay for drugs.
CAL: Yes, and it was Democrats who thwarted Bush's serious attempt to reform Social Security and portrayed Rep. Paul Ryan, R-Wis., dumping "granny" over a cliff from her wheelchair when he proposed serious reforms in Medicare and Medicaid.