AMA Journal of Ethics^®

The trustees of the Medicare program have projected that Medicare will, in effect, go bankrupt in 10 years [1]. It faces a projected annual cost increase of some 7 percent, which will raise the program’s cost from $427 billion in 2007 to $844 billion in 2117 [2]. Many policy analysts have determined that, for the program to survive in a viable way, the government will need to double the taxation for it, cut its benefits in half, or combine these two approaches in some way [3]. Doubling the taxation would be a great burden on the young, who will have to pay those taxes, while cutting benefits in half would harm the old, whose medical treatment Medicare reimburses.

How do we get out of this dilemma, particularly in the context of (a) a bipartisan resistance these days to large tax increases of any kind, and (b) the imminent retirement of the baby boom generation—one that has shown every inclination to expect generous medical care of the highest quality. If that is not enough of a dilemma, consider the fact that Congress has resolutely refused, since Medicare’s initiation in 1965, to allow actual costs to be taken into account when determining the medical benefits the program will provide. “Reasonable and necessary” has been the only acceptable standard.

But those are not the only problems. Thirty or 40 years ago it was taken for granted that the elderly were not good candidates for organ transplantation, dialysis, or advanced surgical procedures. That has changed. Age alone is no longer considered a reason to deny necessary care. It is widely assumed that equity demands that the elderly be treated like everyone else; that is, age has become irrelevant in treatment decisions.

Unfortunately that last sentence must be qualified in light of Medicare’s financial situation. Under the best of circumstances, age should be irrelevant in the Medicare program. But so far, cost of care has not been considered, and it can hardly remain irrelevant in a program strapped for money; cuts will have to be made. There are a number of ways the program can put off making cuts that would directly limit the medical care of individual beneficiaries.

A universal health care system might well lower the overall costs of health care by means of strong regulatory interventions, as has been done successfully in Europe.

Congress could allow the program to take cost into consideration when it creates the benefit structure—and refuse to cover expensive treatments that have marginal benefits.

Medicare beneficiaries with large incomes could be forced to pay high deductibles and copayments (already being done with Part B coverage for physician services and proposed for pharmaceutical coverage).

Higher deductibles and copays could be extended to those in the middle range of income.

Cuts could be made in physician and hospital reimbursements.

With the possible exception of universal health care, none of these suggestions would be sufficient to keep the Medicare inflationary costs in line with the projected growth of the GDP (gross domestic product), that is, in the vicinity of 3-4 percent a year—a significant drop from Medicare’s present 7 percent annual rate of inflation. But nothing less than such a drop would keep Medicare financially sustainable. There are no good solutions in sight, and little is served by unrealistic talk about cutting waste and inefficiency (a 30-year failed refrain), hoping for research breakthroughs that will eliminate costly diseases such as cancer and heart disease (which would have a much less dramatic effect than most people think), or more consumer-directed medicine, which forces patients to make more cost-savvy choices (of little use for complex multi-organ failures common to the elderly).

Given all those obstacles, I believe we need to confront three questions. The first is a matter of the philosophy of modern medicine: is there an obligation to keep the elderly alive as long as possible, regardless of the cost of doing so? I would argue that, in the face of such economic pressure, there is a duty to help young people to become old people, but not to help the old become still older indefinitely. A more reasonable goal is maintaining a high quality of life within a finite lifespan.

One may well ask what counts as “old” and what is a decently long lifespan? We can generally agree that the present Medicare and Social Security eligibility criteria of 65 years is quickly becoming outdated. My own answer is that someone is old when it can be said that he or she has had a “full life,” by which I mean enough time to do most (though not necessarily all) of the things that a life makes possible: education, family, work, and so on. As I have listened to people speak of a “full life,” often heard at funerals, I would say that by 75-80 most people have lived a full life, and most of us do not feel it a tragedy that someone in that age group has died (as we do with the death of a child).

A second question might be a matter of justice: since it is the young who pay the taxes used to care for the old, are there some limits to what they should be asked to pay? As matters now stand, there are about four working people for every retired person (known as the dependency ratio). As the baby boomers retire, that ratio will decline to 2.5 younger workers for every retiree. To keep the Medicare program at its present level of benefits would require a tax increase for the young of a magnitude that would threaten their ability to care for their families and children [3]. No doubt more of the elderly can continue to work and thus be less dependent, but there are likely limits to how far that can be pushed. There are some, like me at age 77, who continue to work, but the numbers drop off rapidly by 80 (and of course those who do hard manual labor rarely continue into their 70s).

The third question is a matter of broad health care policy: can we deal with the Medicare cost problem separately from the overall costs of our health care system? The answer is no, a point agreed upon by every health policy expert [4]. The costs of Medicare are, in great part, caused by the cost of overall health care in this country—and Medicare’s coverage benefits affect those overall costs. The reason for this symbiotic relationship is simply that Medicare finances coverage benefits, but it is the private sector that mainly provides the actual care.

We are left then with the question of universal care. The American private sector has historically been unable to control costs and shows little potential for being able to do so. The European universal health care systems manage to control costs by heavy government regulation—limits on technology, negotiated physician fees, national and hospital budget caps, and price controls on pharmaceuticals. All of this sounds obnoxious to many Americans, but the hard truth is that what sounds acceptable in the U.S.—rejecting strong government interventions—simply won’t work to control costs. There are, to be sure, many happy-face scenarios available that say otherwise, but few if any have a track record of success.

I add a caveat. The European systems themselves are now under economic strain, though far less than our own. Their strain comes from the underlying dynamic of developed countries: aging societies, rising technology costs, and increased public demand. Those factors are just exacerbated in our country. In the long run, all countries will have to rethink the idea of endless medical progress and technological innovation, aspirations that are turning out to be incompatible with finite budgets.