Medicare a Key Issue in Generational Divide

Older and younger voters are split this year as never before. And the future of the massive Medicare health program for the elderly promises to pit generations against each other, even more as retiring baby boomers prepare to swell its ranks.

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Much has been made this year of a generational split in the electorate. No issue underscores that divide more cleanly than Medicare. Taxes collected from the young finance the massive, and rapidly expanding, health program for the old. But as NPR's Julie Rovner reports, experts are also divided over just how divisive Medicare really is.

JULIE ROVNER: Health and Human Services Secretary Mike Leavitt spent part of last week warning that Medicare is "drifting towards disaster."

Mr. MIKE LEAVITT (Health and Human Services Secretary): This is the kind of political problem that isn't about ideology. It's about pitting one generation against another. It's about seeing social-economic clashes that are very real and divisive to a nation.

ROVNER: Leavitt says his own family is a good example. His father, now in his late 70s and on Medicare, still runs an insurance agency full-time.

Mr. LEAVITT: I know he makes a lot more money than any of my children. I've got a 30-year-old son who just bought a home. He's got a little girl and another one on the way. He's doing what he can to make certain that they have food and clothes and a house and they're trying to put some money away for college for their children. They are paying for their own health insurance, and in every paycheck they get some taxes taken out to pay for my father's subsidized healthcare. I have a hard time figuring that out.

ROVNER: And unless something is done soon to rein in Medicare spending, says Leavitt, the next generation simply won't be able to shoulder all those burdens.

Mr. LEAVITT: This will define, in my view, our capacity long-term to remain an economic leader in the world.

ROVNER: But while there's widespread agreement that Medicare is expensive and growing and something has to be done about it, some say the magnitude of the problem is being overstated.

Professor JONATHAN OBERLANDER (Health Policy, University of North Carolina, Author): I actually don't think there is going to be a generational war over Medicare unless politicians in Washington create one.

ROVNER: Jonathan Oberlander is a professor of health policy at the University of North Carolina, and author of a book on the politics of Medicare. He says Secretary Leavitt misunderstands how Medicare was designed.

Prof. OBERLANDER: Medicare is built actually on the principle that his 30-year-old son will pay for the 77-year-old father. The idea that younger generations will pay for older generations, that's exactly the social contract that's behind Medicare, and it's been that way since the beginning of the program.

ROVNER: And Oberlander says he's not that worried about families like the Leavitts where the older generation is wealthier than those who are helping pay for their healthcare.

Prof. OBERLANDER: Medicare is the universal program. And so there are people in Medicare who are better off, who have higher incomes. But that's not what most of the Medicare population looks like. And I think it's also worth remembering that it's one of the few programs that all Americans can expect to be part of. We all have a stake in Medicare and it's one of the reasons it's been a success.

ROVNER: Oberlander and Leavitt agree that Medicare doesn't have enough money to weather the retirement of 78 million baby boomers. But while Leavitt says that's primarily a Medicare problem, Oberlander says it's a problem with the healthcare system as a whole. He cites a recent report from the Congressional Budget Office that found over the next several decades:

Prof. OBERLANDER: Population aging is not what is going to drive any increases in healthcare spending. That's actually a fairly small percentage of national healthcare spending. So it's not a Medicare problem, it's a healthcare system problem. And it's really a result not of population of aging but of medical technology and the fact that we can do more things for more people.

ROVNER: In other words, you can't really fix Medicare's problems without fixing the problems with the healthcare system as a whole. Still, so far all three remaining presidential candidates have shied away from addressing changes that may be needed to shore up Medicare's financing.

And something else Leavitt and Oberlander agree on: the sooner you start making those changes, the less drastic they'll have to be.

Julie Rovner, NPR News, Washington.

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