Undoing Medicare: The Real 'Death Tax'

See UPDATES below and followup items about doctors' views and about the Canadian approach.

From my days as a school kid I remember the original debate over creating Medicare. At the time, my dad -- a small-town doctor and at that stage a conservative -- was, like most doctors and the AMA as a whole, strongly against the plan, as a step toward "socialized medicine." After all, when his patients couldn't pay, he found ways to reduce or forgive their fees. The opposing argument, which in the long run convinced nearly everyone (including the AMA, and my father) was that leaving older people exposed to the threat of open-ended and potentially ruinous medical expenses, or dependent on individual doctors' charity, was harmful all around.

medicare_logo-765937.gif

Controlling the open-endedness of medical spending is of course a major public and private challenge. To repeat: "bending the curve" of health-care expenses is absolutely necessary. But until recently it had been taken as settled wisdom, on both policy and political grounds, that insuring people against the risk of complete financial ruin from late-in-life medical expenses left everyone better off. Old people, their families, doctors and the medical system too. Our health care system is out-of-control and unsustainable in countless ways. But very rarely has anyone argued that removing universal coverage for older people would make things better rather than worse.

That's the understanding being challenged by Rep. Paul Ryan's "serious" budget plan. I've been trying to find the way to convey what it would mean to go back to the pre-Medicare era in which each family had to prepare for unknowably large late-in-life expenses. Merrill Goozner, on his GoozNews site, has just now put it in the way I was looking for. He writes (emphasis added):

>>Here's the real argument young and middle-aged people need to hear, and the real reason why the "more skin in the game" argument can never work for seniors or other vulnerable populations, including them when they reach that age. Seniors and the poor account for over half of health care spending. Within those groups, 5 percent of the population accounts for 50 percent of health care costs; and 20 percent of the population accounts for about 80 percent. These costs come for the most part at times when economic incentives have no influence at all on medical decision-making: in medical crises; in treating chronic conditions; and, for most Medicare patients, in the last six months of life.

That's why a voucher program for Medicare, which will shift an increasing share of those inevitable costs onto the elderly themselves, can fairly be categorized as a 100 percent estate tax or death tax. People under 55 need to know that if the plan crafted by Rep. Paul Ryan were passed, most of them will never have a cent to leave to their children. It will all go to the health care industry to support the American way of dying.<<

Here's a bit of real world evidence supporting that view: Why is the savings rate so unbelievably high in China -- as much as 50 percent of the GDP? There are many reasons, crucially including exchange-rate policy. But a very powerful individual motivator is each family's knowledge that there is no Medicare-like system for their older members. Health care is on cash-payment basis there, and so every family must save like crazy against the risk that the parents or grandparents will require very expensive late-in-life care. More savings would be good for America, but that's not the right way to induce them. It's hard to believe that the Republicans will seriously embrace a plan to undo Medicare.
___
UPDATE: Two points I thought of making, but skipped, earlier today.

Presented by

James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

Video

Google Street View, Transformed Into a Tiny Planet

A 360-degree tour of our world, made entirely from Google's panoramas

Video

The 86-Year-Old Farmer Who Won't Quit

A filmmaker returns to his hometown to profile the patriarch of a family farm

Video

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Video

Carrot: A Pitch-Perfect Satire of Tech

"It's not just a vegetable. It's what a vegetable should be."

Video

The Benefits of Living Alone on a Mountain

"You really have to love solitary time by yourself."

More in Politics

From This Author

Just In