http://www.nytimes.com/2003/11/14/opinion/14KRUG.html --------------------------------------------------------------------------------
November 14, 2003
OP-ED COLUMNIST
The Trojan Horse
By PAUL KRUGMAN
What are we going to do about Medicare? That should be the subject of an open national debate. But right now Congressional leaders are trying to settle the question by stealth, with legislation that purports to be doing something else.
An aging population and rising medical costs will eventually require the nation to provide Medicare with more money or to cut benefits, or both. Meanwhile, there are demands for a new benefit: a gradual shift away from hospital treatment and toward the use of drugs has turned the program's failure to cover prescription drugs into a gaping hole.
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This proposal goes under the name of "premium support." Medicare would no longer cover whatever medical costs an individual faced; instead, retirees would receive a lump sum to buy private insurance. (Those who opted to remain with the traditional system would have to pay extra premiums.) The ostensible rationale for this change is the claim that private insurers can provide better, cheaper medical care.
But many studies predict that private insurers would cherry-pick the best (healthiest) prospects, leaving traditional Medicare with retirees who are likely to have high medical costs. These higher costs would then be reflected in the extra payments required to stay in traditional fee-for-service coverage. The effect would be to put health care out of reach for many older Americans. As a 2002 study by the Kaiser Family Foundation judiciously put it, "Difficulties in adjusting for beneficiary health status . . . could make the traditional Medicare FFS program unaffordable to a large portion of beneficiaries."
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