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Commentary

Medicare: The Monster at Our Door
Robert J. Samuelson, Real Clear Politics, 9-13-06

Washington Post columnist Robert Samuelson has made entitlement reform a regular—and powerful—topic of discussion in his writing. And he focuses like a laser beam on what should be the fundamental question underlying entitlement reform: "What's good for America?"

Unless you're a news junkie, you probably missed Mark McClellan's announcement that he'll resign in early October, after two grueling years as head of CMS. What's CMS? Well, it's the Centers for Medicare and Medicaid Services, which spent $515 billion in 2005—21 percent of the federal budget and about $21 billion more than all defense spending. Leaving government presents McClellan with a golden opportunity: he can tell us what to do about Medicare. It's the monster in our future—and no one knows it better than McClellan, who is a medical doctor, a Ph.D. economist and, since 2004, Medicare's chief bureaucrat. Moreover, he's not a rabid partisan. He also worked for Bill Clinton.

If monster seems like rhetorical overkill, then recall what the aging baby boom does to government. Federal spending on the elderly is plausibly projected to double from 2000 to 2030 as a share of national income. About three-quarters of that increase will be health spending—mostly Medicare, but also Medicaid (70 percent of Medicaid spending goes to the old and disabled). The projected increase in health spending exceeds all of today's discretionary domestic spending on schools, the FBI, the environment and much more. If the "aging problem'' involved only higher Social Security spending, we could handle it easily. …

We should overhaul Medicare, but just how is unclear. To know, we need to answer three questions: (1) How much health spending can the economy absorb without having higher taxes or depressed wages reduce economic growth? (2) Who should pay for Medicare—that is, should older people pay more (lessening the burden on the young)? (3) How can we pay physicians and hospitals for better outcomes and not just for more tests, hospitalizations and visits? These questions apply to any system we might adopt—from a government-run "single payer'' system to more "consumer driven'' health care.

Carrying out President Bush's agenda—including the new drug benefit—McClellan couldn't pose these basic questions. Now he says he plans to settle at a think tank or university, where he can. Most studies of Medicare have had a narrow and technical focus, evading the truly central issue. It isn't, "What's good for Medicare beneficiaries?'' Rather, it's, "What's good for America?''



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