Beware Bush Words On Benefits

Although his proposed tax cut has captured the headlines, President Bush's
budget is also offering America a radically different path for its two best-loved
programs, Social Security and Medicare. Until recently, these towering monuments of
social insurance were politically untouchable.

Even President Reagan, who was at least honest about his conservative goals, did not dare mess
with Social Security. Medicare, until lately, has also been sacrosanct. Both parties have vied
with each other to pose as its champion.

But buried in the fine print of the Bush budget and obscured by its rhetoric are two
fundamental changes that would shift costs and risks from the social insurance pool to the
individual for both Medicare and Social Security. As in the campaign, Bush has proved to be a
master of cloaking radically conservative ideas in disarmingly liberal language.

To listen to his budget message, for example, you'd think he was proposing prescription drug
coverage for all seniors. But the fine print reveals that Bush would merely allow older
Americans to buy whatever drug coverage they could afford from a private insurance company.
A tiny minority of low-income seniors who had spent unusually large out-of-pocket sums on
drugs would get modest help from the government.

The speech also talked about saving Medicare. But read the fine print and you find that Bush
actually proposes to tap the Medicare accounts for other uses while turning the current
universal and public Medicare system into a voucher program.

Under the Bush plan, the government would give you a voucher and let you buy whatever
private insurance the voucher could cover. If you could only afford a stripped down plan, too
bad for you. In Bush-speak, this is known as choice. The voucher approach is also an invitation
for the insurance industry to carve the population into the sick and the well and levy punitive
charges on the sick.

Ever since its enactment in 1965, Medicare has been a universal program financed by taxes
levied according to people's ability to pay with a universal risk pool. Largely because of the
opposition of the pharmaceutical industry, which fears controls on its astronomical profits,
Medicare has never covered prescription drugs.

So the Medicare program is at a crossroads. We can either take some of the immense surplus,
restore Medicare to solvency, and add prescription drug coverage while were at it. That could
cost something like $50 billion a year, or less than a third of what Bush proposes to give back
in taxes.

Alternatively, we can shift risks and costs to the individual, as both parties have been doing
ever since the 1997 budget deal. Indeed, one of the reasons why government has that huge
surplus is that government programs have been cut, and none has taken a bigger hit than
Medicare. If you or a loved one finds a hospital unit bereft of adequate nursing coverage or has
difficulty getting medical tests you need, one culprit is private managed care and the other is the
cut in the Medicare budget.

As my friend Jeff Faux, president of the Economic Policy Institute, puts it, the dictionary
defines a surplus as something left over. But do we really think the money saved from
Medicare cuts is left over or is it money that properly belongs to the care of the sick?

What Bush has in mind for Medicare is just a warmup for his plans for Social Security. He
wants to take nearly a trillion dollars of the projected 10-year budget surplus and use it to
underwrite the partial privatization of Social Security. Money would be diverted from Social
Security funds into private retirement accounts.

Privatizing Social Security sounds like a good deal. But it's easy to forget that Social Security is
not like an ordinary savings plan. It provides extra insurance against poverty in old age. Also,
you can never outlive it; the checks keep coming. And it has additional benefits for the disabled
and for widows and orphans. But turn it into an ordinary personal savings account and you can
be the victim of a down stock market. Or your savings can just run out.

This is the difference between social insurance and having individuals fend for themselves.
Maybe Americans are not alert to this radical threat because we take Medicare and Social
Security for granted. This would be a good time for a refresher course on the value of social
insurancewhile we still have it.

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