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Amazing Medicare!

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BUDGET BATTLE
AP

At first glance, it appears to be one of the most remarkable political stories in a long time: a new poll shows not only that 80 percent of all Americans do not want Medicare to be cut, but, amazingly, that total includes 70 percent of self-identified tea-partiers. How is that possible? Isn't their main goal to cut a huge amount out of government spending -- all government spending?

Why does Medicare (and even Medicaid) appear to be off the table even for them?

The answer is simple: Medicare works. It does exactly what it is supposed to do, and lots of Americans, including tea partiers and their parents, benefit from it. The fact is that, for more than 45 years, Medicare has paid the medical care bills for elderly Americans, as well as for many who are disabled. Even though the social insurance program is administered by the U.S. government, it is hugely popular. How is that possible!

Their health, rightly, is a big worry for seniors, and Medicare has provided access to the medical services they need. As people who live largely on fixed incomes, they know that, otherwise, they would have lots of trouble getting that care. Not only do the seniors appreciate it, but so do their children. The fact is that not having to worry about whether they can access needed care is a great comfort to those affected and probably shortens their recovery time.

Of course, the program has problems. Chief among them, the amount of spending has grown year after year (though somewhat less than total health care spending). Partly as a result, seniors' sense of Medicare-induced security has been eroding over the years, as cost-sharing of ever-more expensive services has become impossible for some beneficiaries to manage. And when Medicare reduces fees to physicians (or declines to raise them) in the effort to contain its expenditures, it drives some of those physicians from the program, further reducing access to services.

Rather than seek creative ways to solve Medicare's problems, however, the Republican-controlled House of Representatives recently punted. They passed a budget for 2012 that would simply end the current program. Instead, beneficiaries -- that may not be the right word any more! -- would receive a voucher that would cover part of the cost of a private insurance plan that seniors could buy on the open market. Since seniors and everyone else already knows what private, for-profit insurers do in that market, they are not too happy about that prospect.

Insurers' first goals are to make a profit and grow the value of their shares. But they have only three ways to achieve those objectives: (1) they can limit who buys their policies to those who are likely to need fewer services (and discourage those likely to need more); (2) they can limit benefits, either by limiting the amount of services covered or increasing cost-sharing; or (3) they can raise prices. Each of these would reduce seniors' access to needed services.

Moreover, with less revenue, providers -- doctors, hospitals, and others -- would lose the cash they need to keep up with the latest developments, to maintain and modernize their equipment, to invest in information technology, and to engage in continuing education. In other words, the health care delivery system would continue to deteriorate as providers searched for ways to make up the lost income. One way is to look for other money-making opportunities. For example, they might diversify -- perhaps, by earning fees for participating in clinical trials (which can also create conflicts of interest). A side effect of that approach is to divert providers' attention from their patients' medical needs, thus eroding the quality of care, which already is unreliable enough.

Although Medicare needs some changes, its problems are largely those of the larger medical care system, not the program. Until we tackle and solve the real problems -- like the methods of paying providers -- the potential for saving money without reducing access to care or contributing to the further deterioration of quality is virtually non-existent.

Given Medicare's popularity, it should be obvious that by pursuing this approach, the GOP is putting itself at considerable political risk. Of course, the extent to which that risk will be realized will depend to a great degree on the actions of Democrats and other Medicare supporters.

Will they let Republicans frame the issue as the imperative to cut costs? Or will they insist the real goal is to protect the good that Medicare does for seniors (and the health care system)? Will Democrats highlight the nasty behavior of for-profit insurers or the trends in Medicare expenditures? Will Medicare spending be taken in isolation or compared to other health-care spending?

Even tea partiers realize they have a stake in the Democrats getting it right.

Davidson, a professor at Boston University's School of Management, is the author of Still Broken: Understanding the U.S. Healthcare System.