Medicare: “Generational Divide” and the Future

In April of this year, Rep. Paul Ryan (R-WI) of the House Budget Committee released a proposal for the 2012 federal budget. While Ryan’s budget would reduce spending by $5.8 trillion over the next ten years, Republican leaders backed down from the proposal in May, mainly because it included a controversial plan to completely overhaul Medicare, the government-run insurance program for the elderly. [1] The proposal calls for a phasing out the current Medicare system for Americans currently under age 55, replacing it with a voucher system to cover the cost of private insurance.  Washington has historically showed reluctance to confront Medicare directly, so Ryan’s proposal to fundamentally change the system raises an intriguing question:  Is the budget deficit so pressing in the minds of policymakers that Congress feels forced to reform, or might lawmakers sense a changing of the political winds that makes long-sought reform more publicly acceptable?

Policymakers and academics have demonstrated concerns about the financial stability of the Medicare program, mainly because premiums currently cover only between 51-58% of costs [2], with one study concluding that “past and current retirees, and most working-age adults, will never pay for all their premiums.”  [2] In addition, the United States has exhibited a degree of elderly age bias with regards to government spending, as we spend 2.4 times more per capita on the elderly as we do on children, with that ratio increasing to 7:1 on the federal level. [3]

Despite this gap in spending, Medicare has traditionally had overwhelming public support across age groups, leading many to conclude that the program is politically untouchable. [4] However, recent polling has indicated that the cross-generational support may be wearing away, as both younger, working age Americans (ages 18-39) and, more surprisingly, those waiting in the wings for Medicare (ages 55-64) showed higher levels of support for Ryan’s budget proposal. [5]

What explains this shift in perception?  Proposals similar to Rep. Ryan’s would have been considered political suicide as recently as the 1980s, when seniors constituted a powerful voting bloc [6].  However, since the mid-1990s it has become more acceptable within political circles to consider large-scale changes.  It would appear that since the 1980s a “generational divide” has formed between the opinions of younger voters and the policies that are enacted regarding elderly programming.  This paper will examine the political history of Medicare and look at how public support has affected policy decisions, and what kind of effect recent political changes may have on the future of Medicare.

Medicare was enacted in 1965 as part of the Social Security Act, and while its creation was marked by fierce debate between liberal, organized elderly groups and conservative, organized medical groups like the AMA, much of the debate calmed once it was enacted.  Medicare became increasingly popular, and bipartisan support marked a nearly 30-year period “predominantly of consensus.” [7]

Several reasons for this have been suggested.  First, the House and Senate were controlled by liberal Democrats working in conjunction with an “activist” president in Lyndon Johnson, and Medicare was enacted within the context of a healthy economy, a surplus federal budget, and low health care costs [8].  Additionally, it is argued that the idea of public insurance matched the values of those in power, such as universalism and government responsibility, and many agreed that Medicare should remain under government control, as “public insurance was the proper vehicle to guarantee access to medical care for the elderly.” [7]

Contemporary Gallup polls support these theories.  In a 1963 nationwide poll, 63% of respondents across age groups approved of compulsory health insurance sponsored by Social Security taxes, and 46% (vs. 36% for the opposing view) said that they preferred medical care for the elderly funded by Social Security taxes over expansion of private insurance.  It is important to note that public opinion at the time favored government intervention in health care over market-based mechanisms, as 65% of respondents said they had trust in the government to help solve their problems. [8] These numbers suggest that there was a minimal generational divide at the time of Medicare’s inception.  There was a high level of trust in the government, and one theory posits that younger American voters felt sympathy for the targets of the Medicare policy, thinking of the elderly as poorer, less-insured, and sicker [7].

By the 1980s, seniors had established themselves as a formidable political force, and support for Medicare across age groups continued well into the early 1990s, with a majority of younger Americans supporting the maintenance or increase of federal spending on Social Security and Medicare. [10] With the force of public opinion behind them, senior groups were able to mobilize opposition to the Medicare Catastrophic Coverage Act, which planned to expand benefits of the program and provide prescription drug coverage by increasing premiums.  Through false claims that all income groups would be subject to a premium increase, and with affluent seniors protesting having to pay for benefits already received through supplemental insurance [11], Congress was forced to repeal the policy a year later.

By 1995 support for Medicare in Congress had waned, and newly-elected Republicans had doubts about the ability of the program to keep with rising health care cost increases [7].  Additionally, after the “no new taxes” debacle with President George H.W. Bush, leaders were “ideologically opposed” to raising taxes to fund the program [7].  Support for Medicare has remained high among the public, but the release of Ryan’s proposal can be seen as a sign that Congress is now more willing to confront Medicare head-on, rather than simply bow to the whims of the senior lobby.

What changed?  What happened in the last 10 years or so that has created the context that this policy proposal can exist in?   One theory posits that, while the questions regarding the financial viability of the program have been around for years, the difference in public opinion may be due partially to issue framing.  Republicans generally focused on framing government spending in a broad light, choosing to use appeals such as “government spending must be cut!” [12]. Democrats, on the other hand, used a “specific issue frame” that appealed to targets of policy, such as “It is important to find health care for the elderly!” [12]. An analysis of the 1992 CPS National Election Study found that voters, when asked whether or not they supported increased government spending on social programs, were significantly affected by the way the issue was framed [12].  When framed in a broad light, citizens were less likely to support government spending, cited as indicating a negative reaction toward “the government.”  However, when questions were asked about specific issues, such as support for the elderly, respondents were more likely to support increased government spending, perhaps because they felt compassion for the issue’s “targets” [12].

It is possible that Republican leaders during the 1990s that aimed to reign in Medicare spending were more successful at preying on a broad distrust of the government, and even if few reform policies were passed, it does appear that issue framing was able to alter the opinions of the public, especially younger voters.  Today, many young Americans are cynical about their prospects of receiving Medicare benefits when reaching the age of retirement [6, 10].  While 57% of respondents said that they would not support any reductions to spending on Medicare to reduce the deficit, from 2006-2011 the percentage of respondents saying that they would favor “slowing the rate of growth in [spending]” has increased from 35% to 52%, and while younger people tend to lean in this direction, seniors are fairly evenly split.  When questioned about whether they would accept Paul Ryan’s proposal, seniors overwhelmingly supported keeping the Medicare system as it is (62% vs. 30%) against changing it to a voucher system, whereas those age 18-39 and between 55-64 were split down the middle (at 48%). [6]

However, what was most baffling about the aforementioned Kaiser Foundation poll was the fact that those closest to receiving Medicare benefits (age 55-64) showed just as much support for Ryan’s proposal as did the younger voters, even though they would be exempt from the plan.  The same age group in a 1991 American National Election Studies survey showed the highest opposition to taxing Social Security benefits, but were surprisingly the most likely to support increased taxes to prevent benefit reductions, despite having to pay those taxes until retirement [13].  This may be partially due to self-interest, as this group would not have to bear the costs of future implementation [13], but the possibility also exists that in a tough economy, the broad framing of issues and higher levels of government distrust have had an effect on the opinions of more age groups.  Perhaps individuals close to receiving benefits are more concerned about the ability of the current program to provide benefits in the long-term, leading them to be more accepting of reform.

Public opinion polls across the board still demonstrate a high level of intergenerational support for Medicare as an idea [14], but those currently waiting to receive Medicare in the future are conflicted as to the future direction of the program.  The specific issue frame may have been more successful early on, when seniors as a target of policy were seen as more “needy and dependent” [13].  However, writings from groups like the Americans for Generational Equity and the Association of Baby Boomers have demonstrated a rising opinion among working-age adults that old-age benefits are costly and appear to benefit middle-class and affluent elderly, diverting resources away from children and needy groups [13].  Additionally, intra-generational conflict between older voters about the role of government in providing security to seniors has been on the rise, making the senior voting bloc less solid than it once was [13].  It is likely that a combination of these two factors has diminished the power of the senior voting bloc somewhat, and the future of Medicare will probably be determined by which political party is able to frame the Medicare issue more convincingly.

The battle will rage on, and the recent economic downturn will force the federal government to consider long-term changes to Medicare, which otherwise will continue to be the largest source of future federal deficits [15].  The “generational divide” between what younger voters desire from Medicare and what current Medicare beneficiaries receive is not likely to change anytime soon however, as even the current Medicare proposal from Rep. Ryan would grandfather those currently over age 55 into the plan, a move described as “absolv[ing] more than one third of all adults from dealing with th[e] threat [of a budget deficit].” [15].  Even if seniors may have lost a little political power since the 1990s, younger voters still have a long way to go before their concerns are going to be paramount in the minds of policymakers.


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Matthew Green is a fourth-year public policy major at the University of Chicago.