Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Don't You Touch My Medicare!

We have heard Medicare described by Senators as the "third rail of politics" -- just touch it, and you're dead. Unfortunately for clever phrases, the costs of the last decade of employment are shifting to a point we may foresee major health costs for working people getting heedlessly dumped onto Medicare as a desperation measure. Meanwhile, Medicare grows more expensive and national indebtedness grows worse. That's what single-payer enthusiasts demand, but even politicians on the campaign trail acknowledge that something must be sacrificed in the name of affordability. A growing gap in coverage for divorced women and early retirees already exists between the end of employer coverage and the beginning of Medicare, because no one has figured out either how to cover the increasing longevity, or how to assign the gap cost to multiple former employers. So, we might well pass through a phase where Medicare costs are rising, employer costs are declining, while the political parties merely blame each other for failing to cover the growing gap of uninsured which lies between dual coverages for elderly healthcare and simple retirement. Life insurance companies may suggest themselves merging Medicare with retirement insurance, but former employers reply "catch us if you can." Politicians describe "affordability," but that's what it amounts to.

If we could shift the cost of employee medical cost elsewhere, we might have an unbeatable wall against foreign goods, but there are perplexing limits, even to success. As we found at the Bretton Woods Conference, if we have all the money, foreigners can't buy anything. To be useful, a solution to the American hospital payment problem must be gradual, and it must be adjustable. Plenty of desperate foreigners stand ready to cut your throat if it isn't. So medical costs and retirement costs simply must be reduced as a painful but inevitable price to pay.

After we solve that issue -- wonder of wonders -- scientists will start to pick off the diseases of old age. We are already given to understand that the NIH has ordered a priority to grants for curing the most expensive ten diseases. That somewhat conflicts with the goals of scientists, who tend to concentrate their attention on the easiest diseases to cure. But money is money, and so we find that eighty percent of health care costs are caused by eight or ten diseases. With over thirty billion dollars flowing into research annually, relatively soon one or two of those dread diseases will disappear from concern, longevity will increase somewhat, and we hope some less expensive disease will finish off the temporarily lucky survivors. No doubt, we could use a few billion to pay off debts to the Chinese for our previous deficits. But the time will surely come when buccaneers will wish to spend the surplus generated in this manner, on something else more trendy than elderly health care.

Unless we have the foresight to anticipate this collision of interests, an unfortunate precedent might have been set. Leaders of the elderly and their concerns should anticipate this battle, and be better prepared to meet it. The best way to meet it is with a completed plan in operation to shift Medicare gains from research to retirement funding as they appear. The problem of funding Medicare (which is 50% subsidized by foreign bond sales to an insupportable degree) would then take the form of changing the name of Medicare to Retirement Care, because most of the money then goes to that purpose, a fairly meaningless and thus easier political problem to manage, because it will take a generation or two to happen.

By the way, Medicare represents the largest expense in the healthcare budget, so liquidating it gracefully will generate the largest source of new funding for the lifelong scheme. We now turn to the problem of funding the early years of life, which seems destined to be the hardest problem to address. In fact, it is so difficult there are essentially no competitive plans of any substance so a workable proposal might have surprisingly clear sailing.

Originally published: Thursday, March 31, 2016; most-recently modified: Thursday, May 16, 2019