October 22, 2003


'Means Test' Deal Near On Medicare: Wealthy Seniors Would Be Charged More Under Plan (Amy Goldstein, October 16, 2003, Washington Post)

The agreement's basic contours, reached during a bargaining session yesterday, would take Medicare in a direction not envisioned by the House or the Senate in June, when each chamber passed legislation to add a prescription drug benefit and a larger role for private health plans to the insurance program for the elderly and disabled.

The idea of creating a "means test" with less help for affluent patients has surfaced in every major discussion of Medicare's future for nearly two decades. Policymakers have regarded it as one of the most effective steps they could take to improve the system's fragile financial health. But liberal Democrats and others say it would undermine a central principle on which the 38-year-old program was founded: universal health insurance for all people 65 and older. [...]

The Senate included an income-related provision in 1997 legislation to balance the federal budget, but it was dropped in a final budget agreement with the House. President Bill Clinton included the strategy in his failed attempt to revise the nation's health care system in the early 1990s, but he abandoned it as politically unworkable in a Medicare proposal to Congress several years later. And in the late 1990s, leaders of a high-level advisory commission on Medicare's future favored the idea, but excluded it from final recommendations.

It's decades past time to means-test all government welfare programs, but they'll almost certainly fold under pressure yet again. This is one of the many ways in which Bill Clinton's unwillingness to Nixon-go-to-China cost the nation dearly.

Posted by Orrin Judd at October 22, 2003 4:19 PM

I agree this should be done but the government should stop insulting my intelligence by making the Social Security and Medicare taxes a separate calculation in the tax return. Both my wife and I are self-employed and it truly raises our blood pressure when we see how big the checks are we write for "benefits" that we will likely never see. Just roll them into the big pot and be done with it.

Posted by: Rick T. at October 22, 2003 5:57 PM

Agreed. Demographics are going to be the undoing of both systems, and there's no way to finesse it. Tacking on more benefits to these programs only hastens the day of reckoning, and makes the problem worse.

For a good discussion of the big picture, see Megan McArdle's two recent pieces at Tech Central Station here and here.

Posted by: Dave in LA at October 22, 2003 6:25 PM

Moving toward a means test will highlight the
fact that the proper role (if any) of government
is to help out with a safety net for seniors
who need it. This flies in the face of the
"single payer" socialized medicine fanatics and
will dash their hopes for at least a generation
or two.

It also does away with the fiction that midicare
is an insurance plane rather than a welfare benefit.

Posted by: J.H. at October 23, 2003 9:27 AM


I'm sure OJ is aware, but can I presume that the rest of you are aware that the primary reason for opposition to means testing is that by eliminating universality, it becomes much easier to cut or eliminate the programs later on? It was a key point for FDR to make these systems pay money to basically everybody to insure a maximal political base. If we get means testing today, these programs will be radically downsized twenty years from now.

Posted by: Annoying Old Guy at October 23, 2003 11:33 AM

Of course means testing will force downsizing: once the universal nature is dropped, there will be powerful forces lined up to make changes. But to a Democratic Senator, means testing just translates into progressive SS and Medicare taxation. That is where the GOP has to fight the fight.

Posted by: jim hamlen at October 23, 2003 4:49 PM


Even if universality is retained, I'd be VERY surprised if the programmes weren't downsized anyway, in twenty years. Also, disappointed.

Posted by: Michael Herdegen at October 24, 2003 7:56 AM
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