About Medicare

I recently had the great pleasure of spending a couple of hours with an old friend who is one of our nation’s foremost mandarins. It was no kind of official meeting, of course – I have no expertise or standing that is particularly relevant to his professional world – so most of our time was spent catching up on personal news. Even so, the policy matters that we touched on – not within his official purview, but about which he is infinitely better informed than most – were weighty, and provided much food for thought.

In the context of a brief reference to America’s budgetary problems – with trillion dollar deficits now routine and inevitable changes in our demographics making it certain that without drastic and painful changes to entitlement programs our fiscal challenges will only grow worse – we talked about Medicare for a while.

Medicare is so sacrosanct that no politician would dream of proposing that it be carved back; instead, they compete about how it should be expanded. Elderly Americans are broadly convinced that Medicare coverage of their healthcare costs is what they are owed, no more, no less. Indeed, the program is so popular that leaders of the Democratic Party are now trying to a sell a single-payer, i.e., socialized, healthcare system to the American public under the Medicare for All moniker.

In a narrow sense, the debate as to whether or not socialized medicine is a good idea will soon become irrelevant to my friend and me, since we are old enough so that before too long Medicare will take responsibility for the bulk of what would otherwise be our personal medical costs. Medicare is a universal, rather than a needs-based program, so the fact that each of us has more than adequate resources to meet our likely medical needs is irrelevant to whether or not we will collect from it.

I mentioned the fallaciousness of the widely held belief that he and I will be entitled to the coverage of such costs because we have already paid for them through payroll taxes. Our payroll taxes were used to help balance long-past federal budgets; the Medicare and Social Security trust funds are accounting fictions. Insofar as we collect future Medicare and Social Security benefits, they will be paid for by future taxpayers and through borrowings that, on current course, may well bring the national debt to unsustainable levels. Thus my friend and I will be benefiting from what amounts to social services spending paid for by generally less well-to-do taxpayers and by putting the nation further in hock.

My friend readily agreed with these comments, which represent the proper economic analysis of the present situation but – crucially – not how the program is understood by the American public. Would voters support such social services payments to the well-to-do if the facts were properly understood? I think not, but there seems to be no constituency for explaining the facts clearly and thus likely depriving a hugely influential group of voters of something to which it presently feels entitled. As a result, Medicare spending will almost certainly continue to increase dramatically: the baby boom population is aging quickly and the majority of life’s medical bills tend to come in end-of-life care.

Entirely apart from the accounting legerdemain that has been used to justify social services spending – conceptually no different from welfare – on the well-to-do, though, my friend and I have both seen in the very personal cases of our respective, now-deceased parents the mechanics of how Medicare encourages absurd taxpayer-funded spending. The medical system is effectively on autopilot to address whatever problems it finds, irrespective of the surrounding circumstances. Doctors do what they are paid to do, and Medicare – i.e., the taxpayers – will often pay them to do crazy things.

When my then 79-year-old father was very close to death from cancers that had spread through his body and had him in agony, the hospital he was in (one of the nation’s finest) discovered that he had a wholly unrelated kidney problem and wanted to operate on it. Not wishing to cause him yet more pain, we refused to allow the doctors to go forward with the procedure, and he passed away more peacefully than he otherwise would have – from his cancers, of course – a few days later.

Similarly, when my friend’s mother – then in her late 80s – had long been entirely lost in an Alzheimer’s haze her doctors discovered a heart murmur and wanted to insert a pacemaker that might be expected to enable her to ‘live’ for another ten years. Fortunately, she had long since told her children that she wanted no such thing, so they refused to allow it. She passed away shortly thereafter.

I mentioned one other example that perhaps raises even broader ethical questions. A man I knew who was from an extremely prominent and well-off family passed away last year at the age of, I think, 92 or 93. He was a wonderful guy and when I last saw him, maybe three years ago, I was certainly rooting for him, but I knew that he had huge medical issues.

I didn’t know how huge. A mutual friend told me after his passing that the Medicare-covered healthcare costs in the last two years of his life had amounted to $3.5m.

I’m sorry, but I just don’t see how it made sense for Joe and Josephine Sixpack to pay such a staggering sum so that he could have two physically miserable years in his nineties. It was, frankly, nuts, but that’s the kind of thing that can happen when the system is on autopilot, as our medical system is for Medicare patients.

***

On a lighter note, my friend knows most of the movers and shakers on both sides of our nation’s ferocious political divide, and he tells me that in private, one-on-one meetings they are almost uniformly much smarter and more balanced than their public personae suggest. So perhaps there’s hope that they will find ways to address our nation’s structural problems.

 

M.H. Johnston

2 comments to About Medicare

  • Anonymous  says:

    Medicare is settled science

  • Dennis Paine  says:

    @ Anonymous:
    Medicare is more like ‘consensus’ science.
    __________

    Thank you, Mark, for this illustrative post.

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