Wednesday, April 20, 2011

Coffee, flour, Medicare -- all still essential? April 20, 2011 column


As Congress and the president battle over whether to reinvent Medicare or just tinker around the edges, it’s enlightening to eavesdrop on LBJ nearly half a century ago.

On March 6, 1965, as Congress was laboring over the Medicare bill, President Lyndon B. Johnson was on the Oval Office phone, talking with Hubert Humphrey, his vice president.

“Don’t ever argue with me. I’ll go a hundred million or a billion on health or education,” LBJ declared. “I don’t argue about that any more than I argue about Lady Bird buying flour. You have to have flour and coffee in your house and education and health. I’ll spend the goddamn money. I may cut back some tanks. But not on health.”

David Blumenthal and James A. Morone analyzed tapes of LBJ’s Oval Office conversations for their 2009 book, “The Heart of Power,” on the politics of American health policy and concluded that the conversation was typical of the president who played a larger role in the creation of Medicare than most people realize.

In his chat with Humphrey, Johnson articulated a homespun standard that has held for nearly 50 years: Some things you have to have, period. You buy the essentials now and figure out how to pay later.

This, of course, is not 1965, when Democrats controlled Congress and Johnson was still popular. The country was enjoying an economic boom, but only about half the nation’s seniors had health insurance.

The question facing us is whether LBJ’s Great Society is still relevant, or even possible, in an era of exploding federal deficits. If LBJ’s vision is too rich for today’s aging population, are we doomed to a Pretty Good Society? Must we -- to use the chilling analogy from Vietnam -- destroy Medicare in order to save it?

House Budget chairman Paul Ryan, R-Wis., and House Republicans want to scrap the current system and institute a more modest Medicare. They also would switch Medicaid to block grants and cut education and other spending – all without raising taxes or going beyond the $78 billion in Defense cuts already outlined by Secretary Robert Gates.

Ryan changes nothing about Medicare for those now 55 and older, but in 2022 new Medicare recipients would get “premium-support payments” or vouchers to purchase private insurance through a Medicare exchange.

His plan is dead in the Democratic-controlled Senate, where a bipartisan group is working on an alternative.

President Obama wants to raise taxes on individuals making more than $200,000 a year and couples making more than $250,000. He would preserve Medicare while curbing its spending . . . somehow. He says he will rely on a future independent commission’s recommendations for Medicare savings. And he calls for the Defense Department to identify $400 billion in cuts over 10 years.

It’s always easier to give people something than to take something away. Ryan claims his plan offers seniors coverage just like the health plan federal workers and members of Congress have. Not exactly, says Uwe E. Reinhardt, economics professor at Princeton.

The federal plan is basically “a typical employer-sponsored health insurance plan,” Reinhardt wrote Monday in the New York Times’ Economix blog. The federal government, supported by taxpayers, contributes to the premiums federal workers and members of Congress pay to competing private insurers.

The key is that the government’s contributions rise in step with the average premiums charged by private insurers.

Under the Ryan plan, however, the federal contribution to future Medicare beneficiaries would be tied to the Consumer Price Index, which has risen at a much lower rate than per-capita health spending, Reinhardt points out.

The bottom line is that beneficiaries would have to make up the difference, paying thousands more out of pocket, according to the Congressional Budget Office.

One beauty of Medicare in 1965 and today is that every generation contributes and benefits. Signing Medicare into law in July 1965, LBJ said:

“No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents, to their uncles, and their aunts.”

Let’s hope this president and Congress find a way to keep coffee, flour and Medicare in the house.

© 2011 Marsha Mercer. All rights reserved.


  1. Bravo, Ms Mercer. Your column is a really first class treatment of the issues confronting government spending, with emphasis on medicare.

    Isn't interesting that LBJ says, "I'll spend the god damned money" as if it were his own.

    Also, "You buy the essentials now and figure out how to pay later". Isn't this how we got ourselves into the budget crisis we are now confronting?

    Nevertheless, we can all agree with Ms. Mercer's, "Let's hope this president and Congress find a way to keep coffee, flour, and Medicare in the house."

  2. Another brilliant column by Marsha. She combines superb writing skills with insightful analysis, and resourceful connections to LBJ to make her case.

    We join Marsha and caryberkcam in hoping the president and Congress can find a way to keep coffee, flour, and Medicare in the house. And we would add - without bankrupting the nation.