Medicare at 50

Can Medicare pass its 50-year check-up?

Thursday marks the 50th anniversary of Medicare, the compulsory federal health insurance program for the elderly and disabled that this newspaper described as "just, humane and overdue" on the day it was signed into law. Today, more than 920,000 Marylanders are covered by Medicare, a small fraction of the 55 million (or one in six) Americans receiving benefits in some form.

When President Lyndon B. Johnson signed the legislation creating both Medicare and Medicaid (the means-tested insurance program for the poor), The Sun's editorial board fretted about the cost, about whether the then-stagnant economy already facing an increasingly expensive conflict in Vietnam could handle this new burden and whether physicians would cooperate (the measure had been opposed by the American Medical Association). Fifty years later, the AMA has become one of Medicare's most stalwart supporters, but the program's cost remains an issue.

Republican budget proposals touted in recent years by Rep. Paul Ryan and others have included turning Medicare into a voucher program through which beneficiaries would shop for private insurance. Just last week, GOP presidential aspirant and former Florida Gov. Jeb Bush revived that notion, telling an audience in New Hampshire that he supported phasing out Medicare for those who are not currently recipients and "moving to a new system that allows them to have something because they're not going to have anything."

Such gloom and doom projections for Medicare have followed the insurance plan since before President Johnson picked up his pen on July 30, 1965. And while the concerns are real, they are often overstated. The most recent trustee's report projects the program to stay solvent into 2030, which is actually an improvement in its long-term outlook. But while Medicare spending growth has slowed in recent years, there is legitimate concern about its demographic challenge — the major bump in beneficiaries as baby boomers hit 65.

That's no "entitlement crisis" but evidence that some fine-tuning of Medicare needs to be done — as has been done before. In fact, any reform of the program should look as carefully at where Medicare coverage ought to be expanded as it does at where costs should be reined in. Traditional Medicare doesn't cover dental care or eyeglasses, for instance. Payments to providers ought to be based on medical outcomes and not what procedures are performed. Incentives must be provided so that doctors and hospitals better coordinate care. The easiest "fix" is simply to require wealthier beneficiaries to pay more for coverage either in payroll taxes or in cost-sharing — or else reformers may need to look at raising the eligibility age above the current 65, a move studies have suggested is unhelpful as it would merely shift the cost by raising private insurance premiums.

Medicare has already invested heavily in privatization. So-called Medicare Advantage plans have proven to be a big success, attracting about one-third of all beneficiaries. But there are real concerns that efforts to tighten federal expenditures and reduce payments will make it difficult for these private providers to offer the same benefits they provide today. Caps on payments to doctors and hospitals inevitably make it harder for enrollees to find care.

Like Social Security (which turns 80 next month), Medicare has become a third rail in American politics but justifiably so. It's easy to lose track of what life was like for seniors in the United States before the program arrived. Five decades ago, only about half of seniors had health insurance coverage and, largely as a result, about 30 percent lived below the poverty line. Today, nearly all seniors have coverage, and the percentage living below the poverty line has fallen by an estimated 75 percent.

That's made Medicare among the most successful federal programs ever devised. The quality of life for older Americans has been raised astronomically, and the public's broad support for Medicare is likely to thwart ill-considered efforts to close it to the next generation. It's still possible to make the system more effective and efficient, of course. In Maryland, the waiver granted a year ago to the state by the Centers for Medicare and Medicaid Services has reduced Medicare-related hospital reimbursements substantially by providing a stronger incentive to keep beds empty. We need to employ that kind of "smarter" health care to meet 21st century needs cost-effectively, not to abandon a "Great Society" program that's worked for generations.

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