Medicare: Such a Modest Proposal

President Clinton must feel he has struck the right balance with his new proposal to allow Americans aged 55 to 64 to buy into the Medicare program. Conservatives have attacked it for being too big. Liberals have complained that it is not big enough. Health policy experts have fretted that it will cost more than the White House estimates, even as many of them concede that the benefits may be worth the extra cost. In The Post, the assessments have ranged from positive [E. J. Dionne Jr., Outlook, Jan. 11] to ambivalent [Robert Reischauer, op-ed, Jan. 12] to downright hostile [David Broder, op-ed, Jan. 11].

The overlooked story about the president’s proposal, however, is just how modest it really is. Only four years ago, the president defiantly declared during his State of the Union Address that he would veto any health reform legislation that failed to achieve universal coverage. That goal now seems fanciful, a distant memory. Yet neither conservatives nor liberals seem willing to accept that it is truly dead.

To conservatives, the president’s failed 1993 health plan lurks behind every new initiative. When Clinton recently endorsed regulations to protect patient rights, for example, Republican leaders charged that they would lead “straight down the path to the Clinton health plan rejected by the American people three years ago.” “We should not,” they warned, “allow the president to do through the back door what failed through the front door.”

What conservatives fear many liberals hope for. They see in the president’s new proposals a cunning stealth strategy for achieving some of the abandoned goals of the Clinton plan. As Dionne reports, a handful of Democrats are even bold enough to suggest that the “Medicare buy-in could become the road to universal coverage.”

Both sides are in need of a reality check. More than 40 million Americans are without health insurance today. Of the uninsured, 3 million fall into the age group the president’s proposal addresses. According to the administration’s own estimates, just 300,000 of these older Americans will have the means and inclination to buy into Medicare. If these estimates are anywhere near correct, then the president’s plan will cover only 10 percent of the uninsured in the 55-64 age group and far less than one percent of all uninsured Americans.

In this respect, the president’s proposal fits the mold of other much-ballyhooed recent initiatives to expand health coverage. The 1996 Kassebaum-Kennedy health insurance legislation, praised across the political spectrum as a significant guarantor of coverage, is unlikely to make much of a dent in the number of uninsured, mainly because it promises no funds to help workers purchase their prior insurance. The experiment with medical savings accounts (MSAs) that was part of that legislation is turning out to be even less consequential. Despite Republican claims that MSAs would open up new options for the uninsured, fewer Americans than expected have signed up with these plans, and most who have were not previously uninsured.

Even the widely heralded 1997 expansion of coverage to children (which will probably insure fewer children than the similar Medicaid expansions enacted between 1987 and 1990) will be hard-pressed to achieve its goal of covering half of the 10 million children who lack insurance, because it will almost certainly displace existing private and public plans.

If the benefits of these initiatives have been oversold, however, so too have their costs. Critics of the Medicare buy-in have tried to have it both ways, simultaneously decrying the plan’s potentially devastating costs and claiming that it is unnecessary because most who need insurance can get it.

Critics have also courted inconsistency in claiming at one and the same time that the program will attract only the sickest and costliest potential enrollees and that it will prompt a massive influx of new beneficiaries, distorting the labor market, wreaking havoc with fringe benefits practices and burdening an already struggling program. The truth is that the more people who buy into Medicare, the more likely it is that the program will obtain a broadly representative pool of Americans across which to spread medical costs and, hence, the lower the chance that a new beneficiary’s health costs will grossly exceed the premium paid.

The premise apparently shared by both critics and defenders of incremental initiatives is that small steps will eventually add up to comprehensive reforms. This premise is questionable, however, for at least two reasons. First, American medical care is changing rapidly even without these reforms, and largely in directions that have reduced, rather than expanded, coverage. Under these circumstances, recent initiatives to augment coverage look more like fingers in the dike than inexorable steps toward universal coverage.

This hints at the second problem that bedevils incremental reforms—America’s patchwork multiple payer system, which makes it nearly impossible to increase coverage through one source without decreasing coverage provided by another. Multiple payers also mean that when government tries to insure vulnerable populations, it lets private insurers skim off the healthiest patients, leaving taxpayers to foot the bill for the sickest. And multiple sources of coverage mean that no payer is able to exercise effective control over health care costs—a problem that has lost some of its urgency because of the recent slowdown in medical inflation but will return with a vengeance if costs begin to rise sharply again.

Of course, advocates of reform have chosen incremental action not because it is the optimal alternative but because it is the only alternative. America’s fragmented political system, its citizens’ distrust of government and its disjointed medical complex all make one-stroke reforms politically infeasible, now and perhaps permanently. But reformers should be careful not to fool themselves into believing that what’s necessary is what’s best. Nor should they fall into the trap of overselling the modest reforms they are currently able to achieve. The risk in doing so is that reformers will so devalue the coin of reform that Americans will come to view it as worthless, and that their incremental reforms will add up to nothing more than a pastiche of disconnected and incomplete interventions.

Rather, reformers need to think about the long-term effects of incremental changes, constructing an institutional infrastructure and a set of public rationales that can serve them if and when new opportunities for larger changes emerge. The president’s new proposal reaches for such a strategy in its commitment to build on the popular Medicare program. But its limited size and tempered ambition suggest that, however worthy its goal, it is likely to follow past incremental initiatives in becoming just another isolated segment of America’s costly patchwork quilt of public and private health insurance.