Voucherization of Medicare

People need to realize that Medicare, unsustainable as it is, does not insure health: it insures savings.

And even more to the point because of who gets it, it insures inheritances. As such, it is a direct transfer from the working class to the pockets of people in their 40’s and 50’s — their prime earning years.

If the excuse for Medicare is that some elderly are poor, then offer Medicare to the poor elderly. That rich people get Medicare — indeed more of it because they live longer and are better connected — while holding on to gobs of money they will never use, should be considered a travesty and should be reason enough for reform.

>If you want to have a fixed (as opposed to open-ended) Medicare budget, you either need rationing or vouchers

No you don’t – you can have FEEDs (Flexible Expected Eligibility Dates).

1) establish a tax rate,
2) establish benefits,
3) have the trustees match taxes to benefits EVERY YEAR by adjusting the eligibility age

It never goes out of balance, it can handle even a severe economic downturn (in the recent downturn perhaps people on the cusp would have had to wait a mere 8.5 extra months to start Medicare), it allows Congress to increase/decrease the tax rate in the future, should it so desire, based on a clear understanding of what it would do to the expected eligibility dates.

Why is this option not discussed?

More fundamentally, why a limited purpose voucher just for health insurance instead of an unspecified use tax credit for people over 65 years old.

By specifying a medical insurance use for the voucher, it acts an health insurance subsidy and increases the cost of elderly health insurance while minimizing industry competition.

An unspecified use elderly tax credit would force health insurers to more vigorously compete for the elderly consumers’ dollars on price and quality among all consumer consumption choices. It would broaden competition for the dollars, which would force greater efficiencies in the medical sector and allow the medical sector to shrink as a percentage of US GDP.

Yancy,

OK, but that means we are already rationing.

I believe just about every American would understand and support the FEEDs system – there is a line on the chart with your birth year on it, it tells you the month and year you will probably get to move to the Medicare system, which only happens when some one dies and you are next in line (or when XX new workers enter the workforce – but why make it complicated?).

Americans stand in line a lot, and if the line is too long we look for alternatives. Everybody understands this system, with no ‘education’ required.

FEEDs should be part of the discussion.

At 86, as a “forced” beneficiary[?]of Medicare, its years of taxes at the max, and its extractions from SocSec, why should it issue anything – just phase out these unconstitutional appropriations. Spend the money on bike paths that impact interstate commerce.

jorod –

Sorry – found the article and see it is re: vouchers, not FEEDs.

These don’t force reductions of anything, they just increase the number of parties with stakes to increase the size of benefits, which is why the private alternatives always paid more than medicare.

Rick Stewart-

Going on Medicare is worth hundreds of dollars per month, and for those who are unable to afford insurance prior to going on, it can be invaluable. I don’t get the argument that this burden is tiny. It also seems very odd to argue that since there are already plenty of unlucky people in our society, that no one should mind if we add one more thing to be unlucky about.

Why distribute the burden onto just a few? Your only argument is that it is easy to make the math work. It would be like solving an education budget shortfall in a town by having everyone whose last name begins with B or C pay an extra $1000 in property taxes.

Thomas DeMeo –

Are we talking about the same idea? The person who is ‘unable to afford’ insurance prior to Medicare eligibility is Medicaid eligible – they would simply stay on Medicaid a few extra months before converting.

Add one more thing to be unlucky about? I know of no way to eliminate the vagaries of human existence. Waiting a few extra months – AT MOST – to get on Medicare is no worse than having a thief steal your car, and you needing to cover the $1000 deductible. Regrettable, but not enough to throw very many people’s lives out of kilter.

Your analogy fails me. A closer one would be ending high school mid-way through 12th grade, after a major flood reduced the property tax base. Nothing you wanted to happen, but hardly a life changer for the ‘undereducated’ students.

While I appreciate your thoughts, I can’t help thinking you have your eye upon the hole, and not the donut. FEEDs completely save the current MEDICARE program, permanently, without eliminating the possibility of raising tax rates later, should politicians need more votes.

Thomas DeMeo –

I have previously done the arithmetic here, so won’t repeat it, but 10 hours of minimum wage work per week will buy a nice Blue Cross/Blue Shield health insurance policy for me, a 59 year old male. Only an insignificant number of retirement aged people ‘cannot afford’ insurance (the ones unqualified to work as Walmart greeters – it doesn’t strike me as a high bar).

But, since you continue to insist all of life must be ‘fair,’ how about this – the actuaries can be instructed never to adjust an age cohort’s expected eligibility date by more than one month, each year. This would result in mild but temporary imbalances in the revenue/benefit match.

Rather than continue to debate the size of the donut hole, however, perhaps you could go ahead and let us know of the ‘other ways’ to do it? Remember, it must be a permanent solution, and accommodate changes in life spans, medical technology, national income, etc.

I’m all ears.