Correspondence
Reforming Medicare: The Gramm Plan
N Engl J Med 1998; 339:777-778September 10, 1998
- Article
To the Editor:
Under the plan proposed by Gramm et al. (April 30 issue),1 uninsured workers would pay for current Medicare recipients and their own future benefits, but they still would have no current medical insurance. Why not have an investment-based Medicare system for all (“Americare”), so those who pay for the health care of others will be covered as well? As the most prosperous society in the world, we have the resources to provide universal health care. Do we have the wisdom and the will?
1 ReferencesGerald Frankel, M.D.
1441 Redbud Blvd., McKinney, TX 750691
Gramm P ,Rettenmaier AJ ,Saving TR . Medicare policy for future generations -- a search for a permanent solution. N Engl J Med 1998;338:1307-1310
Full Text | Web of Science | Medline
To the Editor:
Senator Gramm's proposed health care policy is flawed because it is based on three false assumptions. The first false assumption, shared by many, is that the goal is to save Medicare. Medicare began as a stopgap political compromise and has become a patient–provider obstacle course that encourages profit taking with one hand and ratchets down revenues with the other. The policy makers' goal should not be to save such a system. Rather, the goal should be to preserve health care benefits for people now turning 65 whose contributions to Medicare have already been spent in the current transfer-payment financing model. The best way to do that is not simply to tinker with a system begging to be fundamentally changed.
The second false assumption is that health care policy is a unidimensional issue. There is much more to reforming health care than just finding a financing mechanism agreeable to a variety of interests. For example, it is time to “follow the money” spent on health care. If one runs water through one end of a hose at a steady high pressure and only a trickle of water comes out the other end of the hose, one knows to look for a hole in the hose. There is such a leak in Medicare. The current system is characterized as much by expenditures on financial, legal, and political maneuvering as by spending what it takes to provide dependable, affordable health care services to an aging population.
The third false assumption is that health care is the right only of Medicare beneficiaries and insurance beneficiaries. In every other major nation in the world, health care is considered a customary right of citizenship, however flawed the systems by which those countries try to fulfill that principle. The common mistake is to believe that this is because other countries have more of a social conscience than we do in the United States. But the economic reality is that those countries appreciate what we have apparently not yet discovered — that is, like it or not, failing to meet the needs of entire populations results in increased health care costs for the entitled few.
Richard E. Thompson, M.D.
1975 Orange Ct., Palm Harbor, FL 34683Author/Editor Response
The authors reply:
To the Editor: Providing health care for the aged involves real resources, and because we have elected to finance the purchase of these resources by transferring income from the working generation to the retired generation, we are at the mercy of demographics. The tax rates that will be required to allow the baby boomers to consume health care at the current per capita rate will result in payroll taxes that may well exceed 35 percent and a total tax burden on the younger generation in excess of 60 percent. If the younger generation is unwilling to give up that much to help their elders, any promises we have made to the baby boomers will remain just that — promises.
To gain control over this problem, we must accomplish two things. First, we must slow the continued increase in per capita health care expenditures; second, we must introduce a financing system that allows each generation to pay for its own retirement health care. These two parts of the problem are separable, and although converting Medicare to an investment-based system can hardly be called tinkering, no one would argue that rising health care costs are unimportant or that the existing system is not without its inefficiencies.
However, a reform effort with only a traditional focus on per capita costs is doomed to failure if Medicare's basic financial structure is not put on a sound footing. The generational transfer system now used reduces the nation's wealth and income. By moving to a system in which each generation prepays its retirement health care insurance, we will set in motion rising national wealth that will ultimately produce the additional national income that provides the doctors, nurses, pharmaceuticals, hospital beds, and other medical equipment that will be required by the baby-boom generation.
As for the currently uninsured, investment is the ideal method of preparing to pay for a large known future expense such as health care during retirement, but you do not earn compound interest when the principal is spent on the current consumption of health care. These are two separate problems and should be treated as such. The most important thing we can do to help the uninsured is to provide persons seeking to buy individual health insurance with the same tax break General Motors gets when it buys health insurance for its employees. This would reduce the cost of health insurance for such persons by as much as a third.
Phil Gramm
U.S. Senate, Washington, DC 20510Andrew J. Rettenmaier, Ph.D.
Thomas R. Saving, Ph.D.
Texas A&M University, College Station, TX 77843
