Starting over on health care reform: Put Medicare on the chopping block

Republicans have been accused –quite fairly in my opinion– of trying to kill health reform under the guise of improving the approach and making it bipartisan. A major complaint is that the bill isn’t deficit neutral. In other words, it might cost money.

Health reform in 2009 was always mainly about increasing access to health insurance, not saving money, so it’s hardly surprising that there’s a price to be paid for that achievement. But I’m not unsympathetic to the idea of a better, leaner reform bill that focuses on costs.

In my opinion, a good place to focus would be reforming Medicare, starting with the repeal of Part D prescription drug coverage. As Princeton economist Uwe Reinhardt puts it in a letter to the editor in today’s New York Times:

[I]n 2003, barely out of the recession of 2000-2, President George W. Bush and his then Republican Congress passed the Medicare Modernization Act of 2003, a huge new entitlement. Unlike serious attempts to make the current health reform deficit-neutral, however, the entire cost of the Medicare drug bill simply has been deficit-financed since the inception of the program in 2006. Current projections are that the legislation will add in excess of $1 trillion to the federal deficit over the period 2010 to 2019…

There is something quite untoward for people who went along with that glaring fiscal irresponsibility to now belatedly discover the virtue of fiscal probity.

One suggestion would be to limit Medicare spending to the amount of funding paid for through the Medicare payroll tax. That would cut the Medicare budget by about 50 percent. Seniors would receive a much-reduced subsidy on Medicare premiums. Better yet, the subsidies would be income and wealth based.

The remainder of the money now spent on Medicare could be used to bring everyone else into coverage, including the millions of working people who pay for Medicare through payroll and income taxes, but lack health insurance for their families and themselves.

December 15, 2009

2 thoughts on “Starting over on health care reform: Put Medicare on the chopping block”

  1. In my mind, cutting funding to seniors on Medicare is a fairly bitter pill to label as reform and swallow. I see that it would likely enrage more than just seniors. Any attempts to take money away from people will always be met with significant resistance and would be a very undesirable move for politicians. Do you have a suggestion on a way that this would be done that would not have people in the streets calling for the heads of their politicians?

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