Effort to opt out of Medicare would have jeopardized system

Americans, it seems, love Medicare. Elderly beneficiaries give the program the highest approval ratings of any insurance plan in America. According to the Commonwealth Fund, 91 percent rate it as good, very good or excellent. That’s 10 points higher than the grade for private employer-based coverage and 33 percent higher than that for private individual insurance.

Among all U.S. adults, Medicare enjoyed the support of 88 percent in a recent Harris poll. That’s up from 77 percent in 2005. In a recent Marist poll, 80 percent opposed making major cuts. Even more remarkable, that opinion was shared by 70 percent of tea party supporters.

A rally on Capitol Hill in Washington in October 2011 against potential cuts in programs including Medicare. (J. Scott Applewhite / AP Photo)

There’s good reason for Medicare’s popularity. It provides better coverage than other plans. In the Commonwealth Fund poll, only 20 percent of elderly Medicare beneficiaries reported a problem getting access to care. Experiences were decidedly less favorable among those with private coverage. Thirty-seven percent of those with employer-based coverage and 48 percent of those with individual policies reported problems.

All Americans automatically receive Medicare hospital coverage (Part A of the program) when they reach age 65. There are no premiums and no enrollment forms. It’s difficult to imagine that anyone would want to opt out of a plan like this. But that’s what a small group of people want to do.

Five senior citizens, including former Republican House Majority Leader Dick Armey, asked the government to disqualify them from Medicare Part A. They acknowledged that they could simply decline to collect the benefits, but they wanted to be removed from the rolls altogether. The government responded that under the law, you can opt out of Medicare Part A only if you also disenroll from Social Security. Unhappy with this outcome, they sued.

Why did they want to lose Medicare hospital insurance? Because, they claim, it would enable them to get better coverage from a private insurer. They say they have private policies that limit hospital benefits for those who are also eligible for Medicare and their coverage would improve if they disenrolled.

To call this argument utter nonsense is to put it mildly. As the polls reflect, Medicare consistently outperforms private coverage. The benefits under their policies might improve if they didn’t also get Medicare, but it is highly unlikely the coverage would come close to what Medicare provides.

And if they don’t like the way traditional Medicare works, they can choose to receive benefits through one of dozens of private Medicare Advantage plans while remaining within the program.

They also have the option to seek relief in the free market, something they apparently never considered. Nothing prevents private insurers from offering policies that maintain full benefits for those who are also enrolled in Medicare. If enough people wanted such coverage, the market could easily respond.

However, that kind of coverage would almost certainly cost much more. The plaintiffs might be able to afford it. They include a board member for E*Trade and the founder of Rabbit Seminconductor. But most people would be priced out.

But why not let the plaintiffs drop Medicare, if they want? Would they harm anyone but themselves?

The answer is that they could cause a lot of harm, because opt-outs could threaten the integrity of the entire system. Medicare works well because it applies to everyone. Costs can be spread over the whole population, and hospitals are assured that virtually all elderly patients have a source of payment. Allowing opt-outs would make the system more difficult, and potentially more expensive, to administer.

That’s the way it works for most broad government programs. You can’t opt out of access to roads or environmental protection. These public efforts and many others can function effectively only if they apply to everyone.

Earlier this week, a federal appeals court ruled against the plaintiffs. (Click here for the full opinion.) We should all be glad that it did. Medicare is a lifesaver for millions, and there is no reason to jeopardize its foundation.

Perhaps the plaintiffs can next try other targets. Would they like the freedom to opt out of national defense?

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