America's elderly and disabled have much to fear from the current debate over Medicare, but not from the $100-billion-plus of so-called cuts contained in the balanced budget agreement. The real threat is the idea that Medicare is fundamentally flawed, that it requires a complete overhaul and that the right solution is vouchers for private insurance.
The conventional wisdom among policy elites is that Medicare is "unsustainable in its present form," as Robert Reischauer, former head of the Congressional Budget Office, puts it. The wholesale overhaul of the program they recommend depends on vouchers to buy private health plans.
The argument that Medicare's financial difficulties require the complete abandonment of the program's current structure is powerful, widely held--and wrong. It is based on dubious assumptions about demography, the control of health costs and the nature of Medicare's entitlement. It misunderstands Medicare's past successes and current weaknesses and ignores the responses that other advanced industrial democracies have taken to the types of problems Medicare faces. By raising the specter of impending financial catastrophe, voucher enthusiasts substitute the rhetoric of crisis for a reasoned debate about Medicare reform options.
Medicare, it should be acknowledged, is growing too quickly, and the aging of the baby boom generation will certainly exert substantial financial pressures on the program. But these fiscal and demographic projections are neither etched in stone, nor do they dictate a unique policy response. As the recent budget talks revealed, estimates of the growth of public health insurance programs are extremely sensitive to predicted rates of economic growth and inflation, not to mention expected changes in clinical practice, medical technology, patient views and the organization of medical institutions. Forecasts of Medicare costs have fluctuated widely since the program's enactment, and there is no reason to place greater trust in current predictions. Confident talk of precise financing shortfalls in the next century should be greeted with a healthy dose of skepticism.
