Are Worried Seniors Hoisting The Ladders Behind Them?

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From The New Yorker’s Financial Page:

by James Surowiecki (Nov. 22, 2010)

As shellackings go, the 2010 election was as comprehensive as it gets. Democrats lost among women, men, high-school graduates, college graduates, Catholics, Protestants, and so on. But there was one demographic group whose repudiation was especially influential: senior citizens. In the 2006 midterm election, seniors split their vote evenly between House Democrats and Republicans. This time, they went for Republicans by a twenty-one-point margin. The impact of that swing was magnified by the fact that seniors, always pretty reliable midterm voters, were particularly fired up: nearly a quarter of the votes cast were from people over sixty-five. The election has been termed the “revolt of the middle class.” But it might more accurately be called the revolt of the retired.

Why were seniors so furious with the Democrats? The weak economy and the huge deficits didn’t help, but retirees have actually been hit less hard by the financial crisis than other Americans. The real sticking point was health-care reform, which the elderly didn’t like from the start. While the Affordable Care Act was being debated, most seniors opposed it, and even after the law was passed Gallup found that sixty per cent of them thought it was bad. You sometimes hear (generally from Republicans) that the health-care bill is wildly unpopular. The truth is that, in every age group but one—seniors—a plurality of voters want to keep the bill intact.

Misinformation about “death panels” and so on had something to do with seniors’ hostility. But the real reason is that it feels to them as if health-care reform will come at their expense, since the new law will slow the growth in Medicare spending over the next decade. It won’t actually cut current spending, as Republicans claimed in campaign ads, but between now and 2019 total Medicare outlays will be half a trillion dollars less than previously projected. Never mind that this number includes cost savings from more efficient care, or that the bill has a host of provisions that benefit seniors—most notably the closing of the infamous drug-benefit “doughnut hole,” which had left people responsible for thousands of dollars in prescription-drug costs. The idea that the government might try to restrain Medicare spending was enough to turn seniors against the bill.

There’s a colossal irony here: the very people who currently enjoy the benefits of a subsidized, government-run insurance system are intent on keeping others from getting the same treatment. In part, this is because seniors think of Medicare as an “entitlement”—something that they have a right to because they paid for it, via Medicare taxes—and decry the new bill as a giveaway. This is a myth: seniors today get far more out of Medicare than they ever put in, which means that their medical care is paid for by current taxpayers. There’s nothing wrong with this: the U.S. is rich enough so that the elderly shouldn’t have to worry about having health insurance; before Medicare, roughly half of them didn’t have it. But the subsidies that seniors get aren’t fundamentally different from the ones that the Affordable Care Act will offer some thirty million Americans who don’t have insurance. Opposing the new law while reaping the benefits of Medicare is essentially saying, “I’ve got mine—good luck getting yours.”

Current sentiment among seniors seems like a classic example of an effect that the economist Benjamin Friedman identified in his magisterial book “The Moral Consequences of Economic Growth”: in hard times voters get more selfish. Historically, Friedman notes, times of stagnation have been times of reaction, with voters bent on protecting their own interests, hostile to outsiders, and less interested in social welfare. In boom times, by contrast, societies typically become more open, more inclusive, and more generous; think, in the U.S., of the myriad reforms of the Progressive Era, or of the nineteen-sixties, when Medicare, Medicaid, civil-rights legislation, and immigration reform were all introduced.

This isn’t a hard-and-fast rule; Social Security, after all, was created during the Great Depression. But Friedman suggests that the Depression’s effects were so deep and widespread that it created a sense of social solidarity. The current crisis, bad as it is, isn’t severe enough to do that; instead, it has tended to drive people apart, with economically anxious voters trying to hold on to what they have. These days, the notion that we can’t afford to expand the safety net sounds plausible, because everyone’s feeling poor. By contrast, when Medicare was first proposed, in the boom times of the nineteen-sixties, Republicans made little headway trying to fend it off, despite using arguments remarkably similar to the ones they’re now advancing in support of health-care repeal. In this environment, it’s understandable that seniors want to pull the ladder up in order to protect their benefits, just as other voters don’t want to pay for any more stimulus spending, even if millions of Americans are unemployed.

To be sure, the Obama Administration didn’t pitch health-care reform as well as it might have: its emphasis on the way the bill would “bend the cost curve” was heard by seniors as “slash Medicare.” But the Democrats’ loss of support among the elderly was more a matter of economic fundamentals than of political framing. If the economy were growing briskly, it’s unlikely that the health-care bill would have become so politically toxic. And, with Republicans now looking to roll back parts of the bill, what happens to health care in the long term may depend a lot on what happens to the economy in the short term. ♦

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