Editor’s introduction: Today we introduce a new feature on our website in which NAS members write about books they have authored. We are proud to recognize our members’ accomplishments in this space. Our first such article is by Ken Doyle, NAS board member, professor of journalism at the University of Minnesota, and director of the University’s Mass Communication Research Division.
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One normally wouldn’t think of healthcare for senior citizens as a top-of-the-list priority for the National Association of Scholars.
Or would one?
There are three reasons why I want to call to NAS attention this new book, To Tax or To Ration: Medicare, Medicaid, and Our Long-term Healthcare Crisis (www.TaxOrRation.com).
The first reason is that the federal government is already up to its ears in Medicare and Medicaid debt and proposing to take on so much more that the money “left over” for higher education in the future will be even more severely limited than it is now.
The second reason is that many NAS members, not necessarily with unbridled enthusiasm, are rushing headlong toward Medicare, some even toward Medicaid, and should have a burning personal interest in healthcare for seniors.
The third reason I want to call this book to your attention is that I wrote it, along with my colleague Larry Houk, a top-notch elder law attorney in St. Paul.
Let’s look at some facts, starting with Medicare:
- More than 45 million American seniors depend on Medicare to pay their healthcare expenses. But the program’s own Board of Trustees predicts that it will go bankrupt in 2017.
- Congress has been borrowing from the Medicare Trust Fund for years. The “unfunded promises” debt now amounts to $38 trillion! That’s $124,000 for every man, woman, and child in the United States. Payments on the Congressional loans are supposed to start in 2027, but nobody knows where the money will come from.
- The first of the 77 million Baby Boomers are just starting to retire. Their healthcare needs will simply overwhelm the program.
- Medicaid is not just the healthcare program for the poor. It’s the healthcare program that pays virtually all the expenses for elderly people who have been in a nursing home for more than a few years. Most people who enter nursing homes enter as private-pay patients but go onto Medicaid as soon as their personal assets are depleted.
The average annual cost of a room in a nursing home is about $78,000, double that in some parts of the Northeast. It wouldn’t take long to eat up the net worth of the average professor.
- Nearly 10% of Americans who reach 65 will spend at least five years in a nursing home. Increasing numbers of patients with debilitating diseases like Alzheimer’s and Parkinson’s are likely to stay in nursing homes for an addition ten, fifteen, even twenty years, all at Medicaid expense.
To fund their healthcare proposals, today’s reformers would prefer to tax only the very wealthy. But the Tax Foundation calculates that, just to pay Medicaid’s current $333 billion federal and state operating expense would require a 75% increase in income taxes on the very wealthy (adjusted gross incomes in excess of $451,000). Alternatively, it would require a 50% across-the-board tax increase on the top 25% of taxpayers (AGI $66,500). That doesn’t include any tax increase necessary to cover other federal spending, like bailing out banks and other industries that are “too big to fail.”
When your service organization doesn’t have enough money to do what it’s supposed to do, you have three choices: Get more money, reduce expenses, or cut services.
In healthcare, getting more money mainly means increasing taxes. As I just suggested, there’s no way we can raise taxes enough to fund these programs.
Yes, we can reduce expenses, but probably not much more than 20%. There’s just so much you can cut a physician’s income before he decides to become a veterinarian. Moreover, if government hasn’t been able to eliminate fraud and inefficiency from Medicare and Medicaid so far, there’s no reason to believe a new government program will be any more successful at that. One might actually anticipate an increase in fraud and inefficiency because the new program will surely be larger and more complex.
That leaves cutting services, which is a euphemism for rationing.
Rationing is already with us, in Medicare, in Medicaid, and in your friendly neighborhood HMO. But we’re convinced that dramatically more rationing is inevitable. Exactly how that drama will play out is still unclear.
There’s a wide range of rationing models in the literature, some far more frightening than others. The less frightening models emphasize the doctor/patient relationship, disallow fewer procedures and medications, and encourage private insurance to cover procedures and medications that the rationing committee is likely to turn down. The more frightening models would deprive everybody over a particular age – 75 is often mentioned – of all but palliative care: No hip or knee replacements, no cancer screening or surgery, no nothing but pain killers. They would also prohibit private supplementary insurance on the grounds that allowing people who can afford insurance to buy it while others can’t would be unjust.
Since rationing is inevitable, we suggest that, rather than fighting about Canadian versus British versus Swedish rationing models, our time would be better spent designing and lobbying for a rationing program that reflects American values and that we can all live with, pun intended.