Health Care

Governor’s Overhaul Can’t Cure Health Care’s Ills

After failing to gain either legislative or popular support for his ambitious, universal health care plan which would have relied heavily on government mandates, Gov. Bill Richardson has introduced a scaled-back proposal that will be considered in the upcoming special session.

The governor’s bills which were unveiled recently would:

  • Require all children through the age of 18 to have health care coverage from private or public sources. The bill contains no enforcement mechanism or penalty for parents who don’t secure coverage for their children.
  • Appropriate $58 million to expand existing programs to reach an estimated 50,000 children who qualify for publicly funded coverage but don’t receive it. The additional spending would be a recurring expense.
  • Establish a new Health Care Benefits Administration to consolidate management of several existing public coverage programs, including state employee and public retiree insurance plans.
  • Gradually limit premium increases insurance companies can charge small businesses from 20 percent today to 10 percent per year in five years.
  • Require insurers to spend at least 85 percent of premiums on services and guarantee that anyone who needs insurance can get it regardless of health status.
  • Establish privacy requirements for patients’ electronic medical records.

While this scaled-back proposal is a significant improvement over the original — if only because it is scaled back — legislators should still be skeptical as to whether the proposal, if passed, would result in any improvement in New Mexicans’ health care or uninsured rates.

Specifically, requiring that parents obtain health care for children through the age of 18 is bound to be ineffective as there is no enforcement mechanism, but this is actually a good thing.

After all, responsible parents want their children to be covered, but not all parents are responsible and many others either can’t afford it or believe that putting food on the table and gas in their car to get to work is more important than health insurance for their children.

Spending $58 million to put more children on government plans is also a poor option. How about giving parents an equivalent state tax break to set up Health Savings Accounts for their children?

Regarding efforts to set up a Health Care Benefits Administration, limit premium increases, and set up arbitrary requirements for insurers, these are nothing more than means to further impose government control on the health care sector of the economy.

New agencies and micromanaging the insurance industry are not going to result in significant improvements in either the quality or availability of health care in this state.

The fact is that government policies are largely to blame for the current mess. Did you know that New Mexico charges the highest tax — 4 percent — on insurance premiums in the nation? How about eliminating New Mexico’s gross receipts tax on deductibles and co-pays which are tax-exempt in almost all other states? This tax, which exceeds 8 percent in some areas of the state, is applied to this ever-increasing area of health care expenses.

These are just a few ways in which the negative impact of current government policies could be mitigated. They would also be far more likely to succeed in expanding health care access to the greatest number of New Mexicans.

While the governor should be applauded for scaling back his mandate-heavy original proposal, the new plan still moves us toward an increased government role in health care. Hopefully, legislators will again reject more government reliance and instead consider market-based reforms in the 2009 legislative session.

Paul Gessing is president of the Rio Grande Foundation, a research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Health Care Taxes

Return surplus to taxpayers, abandon health care boondoggle


After a great deal of back and forth, it looks like Governor Richardson will call legislators back to Santa Fe after all.

Fortunately, while the Governor had previously stated that health care would be the only topic of discussion during a special session, his stance has softened a bit. Recently he recognized that his plan faces political headwinds saying, “I may not get everything I want” on health care. Clearly, both the public and the Senate remain unconvinced of the Governor’s plan.

Rather than calling the Legislature back to Santa Fe for what would likely be a fruitless special session on health care, Richardson has proposed a to use a portion of the state’s $400 million in “new money” that is available as a result of strong oil and gas revenues. So, what does the Governor’s cleverly-named “CARE” package have in store?

First and foremost, New Mexico families would receive an income tax rebate from the state of between $150 and $75. Those with family incomes below $60,000 and no children would receive $150 while families making more than $70,000 would receive $75. Having children would result in additional refunds with lower income taxpayers receiving more than higher earners.

Instead of returning money to those who earned it (an optimal result), Richardson’s rebate plan re-directs money from high income families to those with lower incomes. At the same time, Richardson should be commended for proposing to refund money to New Mexicans even if it would be fairer if tax rebates were based on taxes paid or were “one-size-fits-all” rebate.

Also, while it is too much to do in a special session, it would be great to dedicate at least some time to studying the possibility of permanent tax cuts, possibly in the income tax. The Rio Grande Foundation outlined such a plan in our study “Stimulating New Mexico’s Economy by Phasing out its Personal Income Tax.” Unlike fleeting rebates, such a plan would give New Mexico’s economy a long-term boost.

Nonetheless, it is still better than more spending.

In addition to rebates, the Governor’s plan includes a one-time tax holiday for the Holidays. The tax holiday would start November 28, 2008 and run through December 7, 2008.

Just like the current back-to-school holiday, clothing, school supplies and computers could be purchased without taxes. In addition, the tax holiday for the Holidays would include Energy Star certified appliances.

Richardson would also expand both the time and the value of items that can be purchased tax-free during the back-to-school tax holiday, not for this year’s “Back to School” but in 2009.

While economists generally see one-time rebates and tax holidays as ineffective economic policy, they are superior to new government programs. Thus, both the rebate and tax holiday plans will not harm our economy.

Unfortunately, Richardson’s plan contains $20 million in new, permanent spending and this, if the Legislature approves of it, could do long-term economic harm.

The Governor would increase the working families’ tax credit by 25 percent and expand income eligibility for child care assistance from 165% to 200% of the federal poverty level. Also, the Governor is proposing a $4 million state supplement to the Low-Income Home Energy Assistance Program (LIHEAP) and an additional $2 million for weatherization assistance and $2 million for high-efficiency appliances for low-income New Mexicans.

It is unclear why the Governor would use temporary “new” money to fund permanent spending hikes. Regardless of the supposed merits of these programs, in today’s uncertain economy, significant new government spending programs – on top of major increases throughout Richardson’s term – could put New Mexico in a difficult position, particularly if oil and gas prices fall.

Hopefully, during the upcoming special session, the Legislature will have time to focus on improving the Governor’s CARE package by making the rebate portion more equitable and eliminating permanent spending. Health care reform and permanent tax cuts should be addressed during a full legislative session.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Health Care Research

Cutting Costs and Improving Health Care in New Mexico

With health care, specifically, Governor Richardson’s complex and bureaucratic “reform plan” at the top of the Legislature’s agenda this year, the Rio Grande Foundation has come up with some market-based as opposed to government-based solutions that New Mexico’s elected officials should consider.

Click here to read the policy brief.

Health Care

Take A Tip From Georgia on Health Care


New Mexicans and their elected officials are still waiting for the word from Gov. Richardson on an expected special session to push his government-managed “Health Solutions” plan. In the meantime and heading in the opposite direction (toward free markets and individual control), Georgia’s Legislature has passed and the governor has signed innovative health care legislation that New Mexicans might want to consider before they give the state additional power to manage and regulate health care.

Specifically, the new law makes high-deductible health plans (HDHP) paired with Health Savings Accounts more affordable for Georgians. HDHP’s are health insurance plans that offer consumers lower premiums and higher deductibles than a traditional health plan. HSAs are accounts that consumers set up to set aside tax-free money for future health expenses.

The tools outlined above are helping to change the way in which health care is delivered toward something called “consumer-driven health care.” This phrase simply means that rather than making health care decisions in a vacuum, with little information on how much various procedures actually cost, consumers can buy these less-costly policies, thus increasing coverage in the state while ensuring that consumers can at last use price information as a component in their decision-making process on health care issues.

New Mexico, with the second-highest rate of uninsured in the nation, is a prime candidate for increased penetration of consumer-driven health plans. That’s because the premiums for such plans are, on average, 10 to 20 percent less than those for traditional HMOs and PPOs.

First and foremost, the Georgia legislation exempts insurers from state premium taxes on the sale of high-deductible health plans when combined with a Health Savings Account. Most health care consumers are oblivious to the fact that health insurance itself is taxed, but it is. In fact, New Mexicans face the highest tax on health insurance premiums – over 4 percent – in the nation. Unfortunately, consumers and even their employers who often purchase the plans are not given this information on their policy statements.

While Georgia’s new law exempting consumer-driven health plans from the premiums tax is by itself an important step, consumers in that state will also be allowed to deduct from state income taxes an amount equal to premiums paid to those accounts. Lastly, the new law gives employers a $250 tax credit per employee for small employers who offer HSAs to their employees.

Georgia’s new law makes it the national leader in increasing coverage without burdening businesses and citizens with higher taxes and onerous regulations. The law also begins the important process of returning control over health care decisions back to patients and their families.

An estimated 500,000 uninsured will be able to attain coverage. While Georgia has a much bigger population than New Mexico, this new law will give more Georgians access to health insurance than there are New Mexicans who lack coverage. Certainly, encouraging the use of inexpensive, market-based health care coverage would have a similar, positive impact on New Mexico’s uninsured rate.

Unlike some of the so-called “universal coverage” plans under consideration in New Mexico, Georgia’s push toward consumer-driven health care will not result in doctors leaving the state or allow government bureaucrats to micromanage our health care. Rather, more New Mexicans will have access not only to health insurance, but to high-quality health care when they need it. Better still, because it is their money, they’ll have direct financial incentives to reduce costs and improve their health.

Ronald Reagan once said, “Government is not the solution; government is the problem.” Nowhere is this truer than in health care. New Mexico policymakers should consider following Georgia’s lead by enabling New Mexicans to find the solution.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Health Care

Richardson’s Universal Health Disaster: The Governor’s Big-Government Experiment Failed on the Launch Pad.


Bill Richardson slipped off of the national radar screen back in January when he abandoned his bid for president. While he eagerly awaits the outcome of the Clinton-Obama battle for the Democratic nomination — and perhaps a phone call inviting him to join a ticket in the vice-presidential slot or take a cabinet slot down the road — Richardson has been stuck in Santa Fe, New Mexico, in the mundane (at least for him) role of governor.

Richardson will not have the chance to fulfill his presidential campaign promise of “universal health coverage.” But since abandoning his bid for the presidency he has used New Mexico as a testing ground for public acceptance of government-run health care. Let’s just say his experiment failed on the launch pad.

Richardson’s efforts to achieve government-mandated health-care coverage in New Mexico have foundered, at least to this point, on fiscal and economic reality. In fact, were health care not a life-and-death issue for so many, the entire episode might make for a great comedy.

It became apparent right from the start that Richardson’s people had not done their homework. The consulting firm Mathematica Policy Research was hired to study the state’s health-care proposal. (It had previously done such work for Maine’s Dirigo program, drastically underestimating the costs.) The problem was, Mathematica’s numbers proved to be phony.

Before the state’s legislative session even got under way, Mathematica’s estimated price tag for Richardson’s proposal over a five-year period was magically reduced from $333 million to about $72 million. The firm blamed a computer error for the original, inflated estimate. But given the track record of such approximations, it is likely that even the $333 million figure is an underestimate of the true cost of the governor’s proposal.

And what did that proposal include? First and foremost, it targeted doctors for significant cost savings by forcing anyone practicing medicine in New Mexico to prescribe whatever care the state or health-insurance companies deemed adequate. While such a move may appear logical to those who believe government is the font of all wisdom, the reality is that doctors — already scarce in the state’s rural areas — would flee New Mexico in droves if they became the target of ever-increasing demands for cost-savings.

Despite the potential adoption of these draconian policies, New Mexico’s doctors’ association put up only tepid opposition to the governor’s proposal. Yet, in the middle of the legislative session, as Richardson saw his plan altered beyond recognition, the governor lashed out — calling New Mexico’s doctors “greedy” for not being more supportive of his agenda.

In addition to placing an overwhelming burden on doctors, Richardson’s plan targeted small businesses. Under his plan, employers would have been responsible for tracking employee health coverage and paying into a state-sponsored fund if they failed to offer coverage deemed “adequate” by the state. The New Mexico Restaurant Association, which actively opposed Richardson’s bill, estimated that providing health insurance for its industry’s employees would cost restaurants around the state an additional $55 million.

Ultimately, Richardson could not get his plan through either house of the Democrat-dominated New Mexico legislature, at least during the regular session. As the legislative session ended, Richardson again lashed out, saying the session was the “worst in his term as governor” and accusing legislators of “lacking the political will to address health care.”

Richardson’s defeat was due in part to genuine policy disagreements. But another factor that cannot be understated is the widespread perception of Richardson as a “lame duck.” The assumption is that he is simply biding his time in New Mexico until Clinton or Obama tap him for a job in Washington.

In the meantime, Richardson has said that he’ll call the legislature in for a special session in a last-ditch effort to ram his health-care plan through. Ironically, while Richardson’s campaign for the White House was based in large part on his credentials as a diplomat, he exhibited anything but diplomatic skill in his attempts at health-care reform in New Mexico.

— Paul Gessing is president of the Rio Grande Foundation.

Health Care

First, Do No Harm: Improving Health Care


Health care reform is Gov. Bill Richardson’s top agenda item in the 2008 legislative session. And, with his campaign for the White House concluded, it looks like the governor may be able to give the issue his full attention. Unfortunately, while focusing on expanding coverage, Richardson’s plan relies heavily on government power to achieve its goals.

There are many problems with Richardson’s plan, but the tremendous power given to an entity called the New Mexico Health Care Authority is the biggest. This entity would be in charge of implementing the plan and regulating nearly every health care-related activity in the state including doctor pay. New Mexico already struggles to keep doctors practicing in rural areas throughout the state. Allowing an all-powerful new bureaucracy to cut costs on the backs of doctors as Medicare and Medicaid do will exacerbate the problem.

If large numbers of doctors leave the state, New Mexicans will quickly learn that having insurance and receiving quality health care in a reasonable amount of time are not the same thing.

Rather than adding more government mandates and bureaucracy on top of an already overregulated and over-taxed area of the economy, policy makers should first explore ways to undo the harm done by existing policies.

Health care reform in New Mexico must start by ending the taxation of co-payments, deductibles, fee-for-service health care (including dentists), and over-the-counter medicine under New Mexico’s Gross Receipts Tax. Most health care plans now ask patients to pay part of their bill in the form of co-payments and deductibles; there is no reason to demand New Mexicans pay up to nearly 8 percent in taxes to the state on top of those burdens.

While state and local governments would see revenues reduced by $14.7 million for ending the tax on dental care alone, this is a drop in the bucket when compared to Richardson’s health care plan, the real costs of which are unknown and impossible to accurately calculate.

Almost no other state in the nation and none of New Mexico’s neighbors taxes the range of everyday health care costs that are taxed here. Wouldn’t it make more sense to cut health care costs by as much as 8 percent right away than to embark on a convoluted and bureaucratic proposal that has never actually succeeded in states where similar plans have been implemented (Massachusetts being the most recent example)?

Taxes are only one way in which health care prices in New Mexico are artificially inflated, but they are by no means the only one. Regulations also distort the health care market. For example, New Mexico now mandates that all insurance plans sold in the state cover 49 specific treatments. All states mandate some treatments, but most states have far fewer mandates.

Unfortunately, healthy New Mexicans, many of whom are young and healthy and would prefer a bare-bones insurance policy, cannot access such a policy in this state. While reducing the number of mandates would be politically difficult, New Mexico should allow health care companies to sell policies here under the regulatory regimes of other states. Simply put, regulations should be set up for the benefit of New Mexicans rather than as a means of stifling their choices. Maine is currently considering a similar reform.

While advocates of single-payer health care often claim the mantle of efficiency, history has shown that no government-run bureaucracy can ever be as efficient as allowing individuals to operate in the marketplace free of unnecessary government intervention.

If Gov. Richardson’s Health Solutions New Mexico plan is adopted, the state will ultimately lose doctors and see the quality of health care reduced as price controls take hold. The ideals of the Hippocratic Oath taken by all doctors are “Do no Harm.” The Legislature should consider that in its discussions of health care reform this year.

Paul Gessing is the president of New Mexico’s Rio Grande Foundation, an independent, non-partisan, tax-exempt research and educational organization.

Health Care

How We Pay Doctors Makes All the Difference


A few weeks ago, the Journal’s health care reporter, Winthrop Quigley, argued in a column that how we pay for doctors is irrelevant. I could not disagree more. In fact, it is the incentives created by government that have created the current system.

Once upon a time in this country, the doctor-patient relationship was direct. Patients paid their doctors directly and if they could not pay, doctors were often flexible in accepting installments or alternative means of payment.

During World War II the federal government placed price controls on businesses, thus limiting their ability to hire scarce labor and ushering in the era of tax-advantaged “fringe benefits.” Unfortunately, while tax incentives for employer-provided health care may have seemed like a fine idea at the time, this was the first break in the doctor-patient relationship.

Over time, employers grew frustrated with spiraling health care costs (employees, after all, were paying little or nothing for their health care and thus had no reason to spend wisely). This spurred the introduction of HMOs and other cost-control measures, further separating doctors from their patients.

After all, doctors no longer answered to their patients but to insurance companies. Whereas a patient has strong incentives to get the best care for his or her money, HMOs care more about cutting costs, sometimes in ways that patients find objectionable.

According to a recent Boston ABC-TV news story, thousands of patients who were prescribed a brand-name cholesterol drug were being switched to a generic by their doctors. Doctors were paid $100, per patient, by the insurance company for making the switch. There were 2,400 patients switched by their doctors with no disclosure that the doctor was being paid to do so. If doctors treated their patients (not the insurance companies) as their customers, this would probably not happen.

Even avowed socialists like Michael Moore understand (to a point) that how we pay doctors is important. Insurance companies are taken to task in Moore’s movie “Sicko” for denying patients necessary care. What Moore and other advocates for government-run health care fail to see is that replacing insurance companies with government bureaucrats will only make the current situation worse.

After all, someone has to control costs and that means making decisions about who receives treatment and who doesn’t. Even in countries where the tolerance for high taxes is much higher than it is here, governments have imposed waiting periods and other mechanisms to deny care, thus keeping a lid on costs to taxpayers. (Of course, Michael Moore conveniently left these stories out of his movie.)

There are really only three cost-control options: individuals, insurance companies or the government. It only makes sense that individuals, particularly if they are armed with adequate information by their doctors, can obtain the best care for themselves for the lowest cost. After all, in a world of scarce resources where trade-offs are inevitable, wouldn’t you rather decide how those trade-offs are made instead of having someone else decide for you?

That is the thinking behind Health Savings Accounts (HSAs). Rather than giving insurance companies or the government the final call over my health care needs, as the proud owner of an HSA, I am building money in a savings account and can use that money on the care I need. This includes “alternative” forms of medicine that are not always covered by traditional insurance policies.

HSAs or, better still, simply giving individuals the tax advantages that are now given to employers to pay for health care, will improve the quality of our health care while saving money at the same time. Any scheme that purports to “reform” health care without empowering patients must rely on someone else to contain costs and will only worsen the problems we now face.

How we pay doctors drives the incentives in the health care system. Restoring the relationship between doctors and their patients can only be done by returning patients to the rightful role of owning their own health care.

Health Care Research

The Health Security Act: New Mexico’s Coming Single-Payer Health Care Disaster?

This Rio Grande Foundation study, “The Health Security Act:  New Mexico’s Coming Single-Payer Health Care Disaster?” explains how the single-payer health care system that has been proposed in New Mexico would work in practice and compares it with existing international examples. Special attention is paid to cost estimates which the author believes have been underestimated.

Click here to download the study in PDF format.

Health Care

Bill Richardson’s Health Care Boondoggle: Market Democrat, Think Again


Bill Richardson has often claimed to be a “market Democrat.” Indeed, he has cut both income taxes and capital-gains taxes as governor of New Mexico, much to the delight of folks at the Cato Institute and the Wall Street Journal. Unfortunately, Richardson has not avoided the siren song of “universal” health care that has charmed all the Democratic challengers for president.

Richardson assures voters that his plan for universal coverage “does not believe in creating new bureaucracies.” That is basically true; he would simply expand existing ones. The Richardson plan would extend Medicare to include those in the 55 to 64 age group. It would further expand Medicaid and SCHIP to include even more lower-income families. It would mandate that existing family coverage include young adults up to age 25. And it would create something called a “Heroes Health Card” for veterans.

The bill for taxpayers, meanwhile, is an estimated $110 billion. Thus, Richardson has managed to lay out a plan with costs similar to the plans of Barack Obama and John Edwards that relies on many of the same inefficient and frustrating bureaucracies (Medicaid, Medicare, SCHIP, and the Veterans administration) that doctors and patients know and hate.

While Richardson’s plan may not create any “new” bureaucracies, it is anything but “market-based.” Adding beneficiaries to broken programs will do nothing for the long-term prospects of those programs — especially Medicare, which is under-funded by as much as $28 trillion. Indeed, the Titanic that is Medicare is already sinking; Richardson’s plan would only submerge it faster.

Richardson appears blind to all this, and he also seems not to realize that certain parts of his plan are at odds with other parts.

Richardson claims that by covering all Americans, his plan will “save the average family up to 10 percent off their private coverage.” Yet by expanding Medicare, Medicaid, and SCHIP, Richardson will add to the phenomenon known as “cost shifting.” Cost shifting occurs when hospitals and doctors charge more to private insurance companies to compensate for the low reimbursement rates of Medicare, Medicaid, and SCHIP. That makes private insurance more expensive. An expansion of those government programs will only worsen cost shifting, making Richardson’s goal of reducing private health insurance bills by 10 percent unachievable.

Even if the Richardson plan didn’t expand Medicare, Medicaid, and SCHIP, the 10 percent claim would remain dubious. This claim is based on getting the uninsured covered, and thereby reducing the amount of uncompensated care they receive:

Moreover, though uninsured people often delay or skip the care they need, the care they do get — which is often in more expensive settings — amounts to nearly $100 billion annually, and much of the cost is covered by health care providers, taxpayers, and insured individuals via higher premiums. In fact, if we don’t act to cover all Americans, the average family will be paying an extra $1,502 for their own health insurance by 2010 in order to pay for the cost of the uninsured.

That $1,502 figure, which comes from a Families USA study, is an overstatement, and Richardson isn’t alone in making it. When California governor Arnold Schwarzenegger unveiled his health care plan last year, he made a similar claim about the burdens of uncompensated care on private insurers. Based on a study from the New American Foundation, Schwarzenegger maintained that uncompensated care in California raised premiums for private insurance by an average of $1,186 annually. Yet a later study by the California Chamber of Commerce put the amount much closer to $166.

Importantly, the Chamber of Commerce study accounts for the cost shifting of Medicare and Medicaid, while the New America and Families USA studies do not. Using the Chamber of Commerce estimates, Richardson’s plan would roughly save only 2 percent on private insurance premiums. And that still doesn’t account for the effects of expanding Medicare, Medicaid, and SCHIP.

Richardson’s universal health-coverage plan is a mess, which puts him in good company with Democrats on the presidential campaign trail. In fact, if there is one thing all the Democratic contenders can agree on, a massive, taxpayer-funded takeover of the nation’s health-care system is it. But we’d come to expect more from a man the Cato Institute called “Bar none, the best Democratic governor in the nation and among the best new governors (as of 2004) of either party.”

— David Hogberg is an adjunct scholar with, and Paul Gessing is president of, the Rio Grande Foundation.

Health Care

Should Medicare be Means-Tested, Quite Simply, Yes.

Should Medicare be means-tested? Quite simply, I say “yes.” This solution to the well-documented problem of out-of-control entitlement spending may not be “fair,” assuming that further changes are not made and that high-income people will continue to contribute disproportionately to the program, but government programs are never “fair.”

That’s why, when I’m presented with the opportunity to shrink a major government program, I can’t help myself but to say “yes.”

After all, today’s productive workers are footing the bill for Medicare and Social Security programs that are far beyond what will benefit them. That is not fair, either.According to a New York Times article outlining concerns about means-testing provisions contained in the 2003 expansion of Medicare, the two major objections to means-testing are (1) wealthy retirees will abandon the program and rely on private insurance instead, leaving poorer, sicker people in Medicare; and (2) higher premiums could drive people with higher incomes out of Medicare, thus making Medicare a welfare program rather than a universal social insurance program.

The second point is the key, because it follows directly from the first. Many supporters of means testing will quibble with these facts and attempt to gloss over the very real political issues associated with transforming Medicare into a welfare program, but I do not.

Calling Medicare “welfare” only articulates what has always been true about it: Any entitlement program that annually transfers $418 billion from one group of people to another (as Medicare did in 2006) must be considered “welfare.” The only difference is that one welfare program (the current version of Medicare) essentially buys the support of higher-income Americans by giving them access to basically the same welfare as low income recipients.

Taking money from productive taxpayers and arbitrarily allocating it to another group, no matter how wealthy, is still welfare. We see this regularly with “corporate welfare” that is given to multi-billion-dollar corporations. All of this is not to say that people who oppose Medicare means-testing are being disingenuous. They really do have the right to be afraid that if welfare were means-tested, political pressure might build to alter or even eliminate the program.

Of course, the end of Medicare in its current form is exactly what I (and presumably most advocates of limited government) want. Many conservatives and nearly all libertarians believe that Medicare is a deeply flawed program and even a regrettable mistake. That said, if we simply move forward under the assumption that some kind of health care program for seniors will always be with us, then means testing could help open the door for other reforms. These include the adoption of more market-based insurance mechanisms such as health savings accounts, which allow patients to plan for medical expenses and retirement as a whole, or some form of block-granting of Medicare money, as was done in 1996 with welfare reform.

Empowering patients would be a major positive step in reducing the burden of this program on taxpayers and, along with means-testing, would serve the very people who need help without shoe-horning everyone into the same unsustainable government program. Means testing may not be the silver bullet needed to put Medicare on a path to sustainability, but by altering political calculations, needed reforms may be in the offing.

Paul Gessing is president of the Rio Grande Foundation, a non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico, based on principles of limited government, economic freedom, and individual responsibility (


The full symposium document can be found at: