THE MEDICARE MESS, PART 3: Barack Obama, 'The Truman Strategy' and the Politics of Health Care in 2012

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Editor's note: This is the third of a five part series looking at Medicare by Fox News contributor James P. Pinkerton.

In the previous installments of this series (click here for Part One and here for Part Two) we saw how Democrats, going back to the 1940s, have used national health insurance, including Medicare, as a hammer against Republicans. That hammer has not always been effective, but Democrats have loved to used it--with one glaring exception, as we shall see.

Yet as big a deal as Medicare might be, the even bigger question now is whether the ultimate fiscal issue--the specter of national bankruptcy--will change the calculus on the senior health program. On April 18, the news that Standard & Poor’s had downgraded the economic prognosis for the US to “negative” caused the stock market to tumble, sending shock waves through the nation’s economy. Yet of all the possible solutions to the debt crisis--from tax increases to spending cuts to ending wars to clawing back bailout money from bankers--it’s not clear that Americans will see Medicare cuts as anything other than a last choice.

Indeed, current polls show that the American people support Medicare by a margin of at least 3:1.  So we can surmise that many other approaches to deficit-reduction will find favor with the voters before they agree to cut Medicare.

Medicare is popular for the same reason that Social Security is popular: Everyone pays in when young, and everyone takes out when old. Game theorists call such a system “reciprocal altruism,” and it’s widely popular because it’s based on Americans’ intuitive sense of equity and fairness.

Indeed, Medicare is so much like a mutual insurance program that 40 percent of Medicare recipients don’t believe they are benefiting from a government program. To them, they are getting back the money that they paid in, pure and simple. And who wants to argue with a strong-willed senior citizen? Not a politician, that’s for sure.

Of course, today’s seniors are getting back a lot more from Medicare than they ever paid in Medicare taxes; the Urban Institute ran the numbers--adjusting for inflation and compound interest --and concluded that a senior citizen today could easily reap twice as much as he or she paid in. (On the other hand, the Urban Institute did not compute the value to the country of military service, or of having raised productive children, or of having done volunteer work over the decades.)

In the face of such strong public sentiment, it’s easy to see how both parties have not only supported Medicare, but also its expansion. There’s a reason that the Medicare budget has grown from $3 billion in its first year, 1966, to $489 billion this year.

Indeed, the normal pattern has been for the two parties to get into a Medicare bidding war, each party vying to be more generous to seniors. A decade ago, drug prices were looming as a major issue for seniors; the cost of drugs for seniors doubled during the 1990s. Pharmaceuticals weren’t necessarily growing more expensive, but they were growing more numerous, and prescriptions were multiplying.

So in 2003, the Bush administration, joined by Congressional Republicans, sought to get out in front of this issue. GOPers pushed through a major addition to Medicare, called "Part D," which provided partial payment for seniors’ prescription drugs, at an estimated cost of $552 billion over the next decade.

One of those Republicans voting for the Part D program, by the way, was a third-term member from Wisconsin, Paul Ryan.

Democrats voted against the Republican proposal, but only because they wanted an even bigger drug benefit. Democrats were prepared to outbid Republicans, but the Republican bid was high enough--and the GOP kept control of Congress in 2004.

Yet the normal pattern--Democrats making the bigger Medicare bid--changed in 2009-10, when in the midst of the ObamaCare debate, Democrats found themselves on the opposite side of the Medicare equation, arguing in support of some $500 billion in Medicare cuts.

So what happened? How did Democrats flip on their own core issue? It seems that the liberal-left avant-garde of the party, fixated on extending health insurance to everyone, of all ages, overrode the Democratic party’s natural partisan interest in subsidizing seniors. That is, to make the ObamaCare numbers “work”--the goal was to keep the ten-year projected cost under $1 trillion--Obamans had to cut health spending somewhere, and that meant Medicare.

For their part, Republicans jumped on the partisan opportunity. In August 2009, Republican National Committee chairman Michael Steele set forth a “Seniors’ Health Care Bill of Rights,” pledging Republican devotion to Medicare. “Save Medicare” was the message coming out of the GOP spin shops. In Steele’s words, the president had enlisted in Democrats in a plan “to raid, not aid, Medicare by cutting $500 billion from the program to fund his health-care experiment.”

And in fact, in the 2010 elections, voters favored GOP candidates by a 21-point margin, up from just eight points in 2008. 

That was then. Now in 2011, amidst talk of national bankruptcy, the same Paul Ryan has put forth a plan to shrink Medicare dramatically in the next four decades; some estimates suggest that out-of-pocket expenditures by seniors could rise by two-thirds.

In response, former Vermont governor and Democratic National Committee chairman Howard Dean  has countered that something might need to be done, but it should be Democrats doing it, not Republicans. Declared Dean:

Look, we have a fiscal problem in this country that needs to be solved. But getting rid of Medicare and Medicaid is not the answer. That’s what these far-right radical Tea Party Republicans want, and I’m glad the president is standing up to them.

Those are the fighting words Democrats want to hear. So now AARP and other groups, which were strangely silent as Democrats sought to chop Medicare two years ago, are sounding the alarm against Ryan.

Here’s what Barbara Kennelly, head of the National Committee to Preserve Social Security and Medicare, had to say as she praised President Obama’s April 13 defense of the Medicare status quo:

We applaud the president for stating clearly that destroying programs and services which benefit middle class Americans and seniors does not represent the kind of America most of us are proud of. GOP budget proposals which end Medicare as we know it while providing even more tax cuts for the wealthy is not shared sacrifice and America's seniors understand that.

In other words, for Democratic activists, the clouds of confusion have lifted. No more defending the Medicare cuts in Obamacare--now it’s attacking the Medicare cuts in RyanCare.

But there’s still that one little nagging question: What are we going to do about Medicare costs? We will take up two different approaches in the next two sections. Read Part 4 on Sunday, April 24 and Part 5 on Monday, April 25.

James P. Pinkerton is a writer, Fox News contributor and the editor/founder of SeriousMedicineStrategy.