Medicare Killers

The Republican Party is now firmly committed to replacing Medicare with what we might call Vouchercare. The government would no longer pay your major medical bills; instead, it would give you a voucher that could be applied to the purchase of private insurance. And, if the voucher proved insufficient to buy decent coverage, hey, that would be your problem. Moreover, the vouchers almost certainly would be inadequate; their value would be set by a formula taking no account of likely increases in health care costs. Why would anyone think that this was a good idea? The G.O.P. platform says that it “will empower millions of seniors to control their personal health care decisions.” Indeed. Because those of us too young for Medicare just feel so personally empowered, you know, when dealing with insurance companies. Still, wouldn’t private insurers reduce costs through the magic of the marketplace? No. All, and I mean all, the evidence says that public systems like Medicare and Medicaid, which have less bureaucracy than private insurers (if you can’t believe this, you’ve never had to deal with an insurance company) and greater bargaining power, are better than the private sector at controlling costs. I know this flies in the face of free-market dogma, but it’s just a fact. You can see this fact in the history of Medicare Advantage, which is run through private insurers and has consistently had higher costs than traditional Medicare. You can see it from comparisons between Medicaid and private insurance: Medicaid costs much less. And you can see it in international comparisons: The United States has the most privatized health system in the advanced world and, by far, the highest health costs. So Vouchercare would mean higher costs and lower benefits for seniors. Over time, the Republican plan wouldn’t just end Medicare as we know it, it would kill the thing Medicare is supposed to provide: universal access to essential care. Seniors who couldn’t afford to top up their vouchers with a lot of additional money would just be out of luck. Still, the G.O.P. promises to maintain Medicare as we know it for those currently over 55. Should everyone born before 1957 feel safe? Again, no. For one thing, repeal of Obamacare would cause older Americans to lose a number of significant benefits that the law provides, including the way it closes the “doughnut hole” in drug coverage and the way it protects early retirees. Beyond that, the promise of unchanged benefits for Americans of a certain age just isn’t credible. Think about the political dynamics that would arise once someone born in 1956 still received full Medicare while someone born in 1959 couldn’t afford decent coverage. Do you really think that would be a stable situation? For sure, it would unleash political warfare between the cohorts — and the odds are high that older cohorts would soon find their alleged guarantees snatched away.

To the Editor: Re “Truth and Lies About Medicare” (editorial, Aug. 19): As a former chief executive and actuary of an insurance company that once sold both individual and group health insurance, I am particularly mystified by the effort to push Medicare participants into the individual health insurance market. I thought that we wanted to reduce — or at least control — the cost of health insurance, but individual health insurance is by far the most expensive alternative. Depending on the size of the vouchers, the government itself may save money, but the entire system will pay more. Someone has to pay for the costs of individual underwriting, marketing and so on, and those expenses will fall on the elderly themselves. You are also correct in assuming that there is likely to be anti-selection, with the healthier people going to the insurance companies, leaving the sickest and most expensive people in the Medicare plan. It is certainly true that health insurance needs reform and that President Obama is far from having all the answers, but the Romney-Ryan plan will increase the country’s health care bill with little or any of the increase going to more or better health care. STEPHEN BROWN Brewster, Mass., Aug. 19, 2012 The writer is a former chairman and chief executive of John Hancock Financial Services. -- Howard McGowan MaldenSenior