Don’t Means-Test Medicare

Sooner or later (I hope) Congress will get past self-created problems like the shutdown and the debt ceiling and start talking about something real: the long-term budget and how to pay for expensive-but-necessary programs like Social Security and Medicare. And when that day comes, one idea the Republicans will put forward is means-testing. (It’s already happening: Tuesday 51 Republican congressmen wrote to Speaker Boehner calling for “Means-testing benefits for high-income recipients of Social Security”.)

At first glance, it makes sense: The $15,000 a year that Social Security pays the average retiree may be a lifesaver to people who didn’t manage to save anything when they were working (or who did save but lost it all to fraud, accident, or a health problem), but Warren Buffett probably won’t even notice if his checks stop coming. And how much are janitors and check-out clerks putting into Medicare just so the government can pay for Warren’s cancer treatments?

Back in February, Yuval Levin put the case like this:

Democrats want to close the budget gap by having the government lean more heavily on the wealthy, while Republicans want to close it by having the government spend less money. Both sides should agree at least to spend less money on the wealthy — via means testing. It may surprise some Americans to learn that the United States spends quite a lot on the affluent, especially through the entitlement programs at the heart of the budget fight: Social Security and Medicare. Both programs move money from relatively poorer young people to relatively richer old people, and they are growing ever more expensive. Means-testing — allocating benefits according to need — might offer both sides a way out.

Levin is a conservative who used to work for the Bush administration, edits the right-leaning National Affairs, and occasionally writes for the conservative flagship, National Review. So what does he have against the rich? And why does a liberal like Paul Krugman defend those upper-class benefits?

Part of the issue is technical: When you do the math, means-testing doesn’t save any significant amount of money unless you’re cutting benefits for people considerably closer to the middle class than Warren Buffett. (Conservatives often make that case with regard to tax increases, but it’s much more true here. The top 1% make 19.3% of the national income, but I doubt they account for 19.3% of Medicare spending.)

But that can’t be the heart of it, because every little bit helps, right? Even if we’re not talking about much money, every dollar we don’t spend on wealthy people is one more we don’t have to borrow.

Here’s the heart of it: Means-testing is actually the opening shot in a much longer strategy to cut entitlement benefits for everyone. It relies on a broader principle you can see all around you: If you want to destroy a public program, first get the rich people out of it.

Think about cities with first-class public transportation like San Francisco or Washington. At rush hour on the BART or the Metro you’ll see a lot of three-piece suits, because no matter how much money you make, public transit is just a good way to get to work. But in cities with crappy systems — dirty buses that don’t come very often and don’t go where you want — public transit is mainly for the underclass. Maids and janitors take the bus to work, but bankers don’t.

Now obviously, rich people have options, so they won’t ride a crappy system. But the arrow of causality also points the other way: Systems that rich people don’t ride tend to get crappier and crappier. It’s not hard to understand why: When there’s a budget crunch, the people who decide what to cut are rich, or at least well-to-do politicians who have to answer to rich donors. If they think of public transit as something other (i.e. poorer) people use, it’s easy for them to imagine those people making do with less. But if they use it themselves, they’re going to fight to keep it operating at a high level.

Ditto for schools. In towns where everybody’s kids — rich and poor alike — go to the public high school, you can be sure the school will have a full range of options and amenities. When times are tough, the well-to-do decision-makers may not understand why poor kids need foreign languages or music or calculus. But it’s different if their own kids and grandkids are going to have to do without (and explain that deficiency when they apply to Harvard).

So if you want to kill public schools in your town, start a voucher program that draws the children of the well-to-do to private schools. That way, rich and professional-class parents — people who have the ear of decision-makers and could be articulate spokesmen for all parents — will stop taking public-school issues personally. Debates about public education will be about those people — and what can you really expect out of their kids anyway? Rhetoric about “throwing money down a rat hole” won’t offend anybody who really matters.

Imagine if we means-tested the public libraries or the parks. You could only get in if you could prove that you were too poor to afford your own books or a yard big enough for your kids to play in. I think before long we’d decide that the poor don’t need a lot of books, and if their parks are over-crowded and poorly maintained, well, what do they expect?

So yeah, let’s remove the rich people from Medicare. Let’s turn it into a welfare program, and make non-participation a status symbol. Then when we cut taxes again and create new deficits, budget-cutters can sharpen their pencils, secure in the knowledge that benefit cuts won’t hurt anybody who lives in their neighborhood. (I mean, seriously, do waitresses really need the latest chemo-therapy drugs? What do those people expect, anyway?)

On the other hand, we could let entitlements be entitlements — care you get not because you’re poor, but because you’re American. Then when future budget-cutters make their proposals, they’ll have to explain why Americans don’t deserve the best.

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  • John McClain  On October 14, 2013 at 2:45 pm

    I like the transit system analogy (and fits in with the question in my head after coming back from London, is there any reason Boston can’t have as many buses as London?).

    One thing I wonder is for something like means testing medicare, would it make a difference if the means testing took the form of higher co-pays? Seems like that would be less likely to undermine the entire program.

    Of course this is all bogus since we don’t have a entitlement problem in the US, we have a cost of health care problem.

  • Click This Link  On October 18, 2013 at 12:16 am

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  • By Apocalyptic Methods | The Weekly Sift on October 14, 2013 at 12:22 pm

    […] week’s featured post: “Don’t Means-Test Medicare“. Because the first step in gutting a program is to get the rich people out of […]

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