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A prescription for fixing what ails Medicare

A prescription for fixing what ails Medicare

The Diagnosis and Treatment of Medicare, by Andrew J. Rettenmaier, PhD, and Thomas R. Saving, PhD. Washington, DC: The AEI Press, 2007.

A large percentage of US cancer patients depend on Medicare, but over the years the program has developed a peculiar malady—it is weakening from malnutrition while gluttonizing the federal budget. Despite its deteriorating condition, many Americans keep circling the wagons around a common ethos: I work, I pay taxes, and therefore I'm entitled to unlimited healthcare retirement benefits. However, according to a sobering new book, The Diagnosis and Treatment of Medicare, without aggressive reform Medicare's worsening condition will place an untenable financial burden on America's healthcare system.

To their credit, authors Andrew Rettenmaier and Thomas Saving cut through the bloated rhetoric that plagues most serious discussions about Medicare reform. As the metaphorical title suggests, before offering treatment they essentially do an MRI on Medicare to see the nature and extent of its ailments.

In short, Medicare as we know it is doomed by a gathering storm of demographic forces that will eventually overwhelm its current generational transfer system with too few new workers to pay for its burgeoning population of retirees. Given the current structure of Medicare, retirees are too sheltered from the fiscal realities of healthcare spending to be concerned.

This phenomenon of psychologically detached spending patterns is central to the authors' thesis—what ails Medicare is what ails healthcare in America.

After analyzing and diagnosing the causes of Medicare's malaise, Rettenmaier and Saving score in detail several reforms that would redefine Medicare's coverage and/or commitments to retirees. They acknowledge, given the ominous projections from the Medicare Trustees Report, that no one reform will solve the magnitude of the growing Medicare deficit.

Eliminating first-dollar coverage

The question they pose in evaluating any proposal is: Who will foot the bill for the rising costs of elderly entitlements? While the first two reforms the authors consider center on transferring part of the cost of Medicare to users in general, I find the most interesting is reform III: Controlling First-Dollar Coverage.


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