You can’t Save Medicare by Raising Taxes.

Ezra Klein notes that one can’t save Medicare through revenue alone. Although I support selected tax increases to address Medicare costs, we must actually confront the program’s unsustainable cost growth in the coming decades. That won’t be easy from any perspective, but it must be done.

Ezra quotes me as saying: “One unintentional benefit of health-care reform would be that if we get health-care financing on a better footing, we would stop killing all sorts of social programs that do more on the margins for health than health care does but are being starved for resources.” I strongly endorse that view. Current and future Medicare recipients should accept reasonable cost controls as part of needed health reforms.

Medicaid, though, is another story. Per-recipient, Medicaid costs have been growing more slowly than costs have been rising elsewhere in the medical economy. The Congressional Budget Office forecasts relatively disciplined Medicaid cost growth for decades to come. One implicit reason for Medicaid’s relatively modest projected cost growth is the realization that recipients lack the political heft to resist painful measures that constrain spending.

Cost control is not the most important challenge facing Medicaid. Indeed I would like to see the program spend more, for example by paying competitive rates to medical providers. I would also like to see expanded services for long-term care. The key Medicaid budget challenge is to provide the federal supports and the additional tax revenue required to put the program on a better financial footing.

We often lump Medicare and Medicaid into a single bucket of “health entitlements.” We shouldn’t do that. Both programs face serious challenges, but the challenges are very different.

[Cross-posted at Same Facts]

Harold Pollack

Harold Pollack is the Helen Ross Professor at the School of Social Service Administration at the University of Chicago.