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A thinly disguised assault on Medicare

The deficit hawks hope to undermine the program.

By Theodore R. Marmor

and Jerry L. Mashaw

Rep. Paul Ryan's proposal to make Medicare a voucher program is extremely unlikely to be enacted. But Ryan (R., Wis.) and his fellow Republicans aren't hoping to win a legislative battle over Medicare or Medicaid this year. Rather, they're trying to shift the debate over the programs in favor of their ideology.

How do Medicare vouchers fit that ideology? First, vouchers restricted to a fixed sum would limit government expenditures, regardless of whether medical costs were actually being constrained.

Vouchers also arise from the idea of making the insured sensitive to the price of their coverage. The fact that no industrial democracy in the world relies on such devices to restrain medical expenses has not dampened the enthusiasm of the idea's promoters.

But the key ideological goal of the proposal has to do with Americans' general understanding of the moral basis for access to medical care. To the extent that Ryan's proposal is treated as a serious policy option, it undermines the concept of social insurance that Medicare embodies.

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Ideology over evidence

Vouchers would ration medical care according to individuals' willingness and ability to pay instead of their medical needs. The GOP wants to move the debate in that direction eventually.

One problem with the voucher proposal is that, like the proposal to start Medicare eligibility at age 67 instead of 65, it confuses controlling the cost of medical care with controlling the cost of Medicare. Both proposals shift costs to employers who continue coverage, to older Americans without employment-based coverage, and to Medicaid. But they do nothing about the rising cost of medical care.

Another problem is the conviction that regulated competition among health insurers is a reliable means of restraining medical inflation, as well as a sensible form of consumer choice. This notion rests on ideology, not evidence.

Virtually every other industrialized nation provides universal health insurance without vouchers or expensive co-pays and deductibles, and does so at strikingly lower per-capita costs than the United States'. And the two nations that have expanded the scope of insurance coverage through regulated competition in the last two decades - Switzerland and the Netherlands - have seen sharp increases in medical and insurance costs.

Other proposals to reduce Medicare expenditures also emphasize pricing strategies, making changes to deductibles and coinsurance, for example. These proposals are independent of Ryan's vouchers, but they have the same ideological basis. They reflect an enthusiasm for restraining costs and benefits by forcing the sick and injured to have more "skin in the game."

This way of thinking contradicts the nearly unanimous evidence that patient cost-sharing isn't effective at controlling costs or getting the right care to the right person at the right time. Even if such policies would save the government money, they have little or nothing to do with restraining the costs of health care, and they would do so in ways that are neither just nor beneficial.

For decades, notions of "managed competition" and "consumer-driven health care" have been promoted as articles of faith without supporting evidence. It's stunning that such mythmaking gets so much respectful attention.

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Refighting the battle

The reality is that these proposals embody the ideological premise that the role of government does not include providing common benefits of protection against the costs of illness, and that market allocation of medical care - and all other goods and services - is superior. The Medicare legislation of 1965 was a firm rejection of that notion.

The current deficit wars have simply provided an opportunity to refight that battle. The media's framing of the debate as a technical matter of reforming "entitlement spending" ignores the fundamental principles that are really at stake.