In part Medicare represents an attempt to use public means to redistribute medical care in accordance with the criterion of effort rather than by the market criterion of ability to pay. HI benefits go largely to elderly people who have earned them by working for extended periods of time in jobs covered by the social security program. Medicare's attempt to distribute benefits in accordance with effort is imperfect, however, in two respects. First, it excludes those elderly people who have exerted sustained effort—in or outside the paid labor force—but not in jobs covered by social security. Second, with few exceptions, it excludes people who have exerted sustained effort in jobs covered by social security but who are under age sixty-five. Thus effort is not the sole criterion. Medi-
care relies as well on ascription—age—as a principle of distributive justice.
Certainly, the elderly are particularly vulnerable to health problems, and they characteristically have both limited incomes and limited access to employer-sponsored private group medical insurance. But other citizens are equally in need of medical coverage. By using ascription as a criterion for distributive justice, Medicare is by design unable to produce results consistent with the criteria of effort or need.
Even among elderly beneficiaries, Medicare coverage has its limits and is far from comprehensive. Beneficiaries pay a deductible and coinsurance that increases with the length of a hospital stay. SMI involves premiums, coinsurance, and limits on reimbursement for specific services. Outpatient prescriptions and nursing-home care are not covered at all. So while Medicare, particularly with the recent adoption of catastrophic-cost protection, does limit a hospitalized patient's financial responsibility for acute care, it all but neglects a common medical need of the elderly: custodial care for chronic ailments.
This focus was adopted by Medicare's designers to avoid antagonizing physicians and hospitals. But the emphasis on acute services has also provoked a debate about the relation between medical care and basic goods. In the sense that a wide variety of medical procedures, applied in varying contexts, may save lives, these procedures are as basic as food and water. Yet the dramatic developments in medical technology over the last several decades pose ethical and economic challenges to the simple equation of medical care with basic goods. The ethical question is whether the use of extraordinary life-maintenance techniques prolongs the suffering of patients and their families and constitutes an unnatural or unethical manipulation of life. The economic question is what proportion of its resources can or should a society allocate to expensive life-maintenance technology. The opportunity costs of systematically applying a variety of expensive treatments to lengthen minimally the lives of terminally ill patients are high. Indeed, data on cross-national medical expenditures show that these costs rise rapidly with increases in per capita gross national product—a pattern exemplified by luxury goods rather than by necessities such as food and shelter.
Our final consideration regarding distributive justice concerns vertical redistribution. The program's beneficiaries are primarily elderly people representing the middle ranges of the socioeconomic spectrum. Medicare does involve significant intergenerational transfers, but vertical redistribution from rich to poor is not prominent. But when we consider the market value of Medicare services, we confront a novel form of vertical redistribution. Payments for the medical services provided by Medicare flow to physicians, other medical professionals, and investors in health-care companies. This upward flow makes it difficult to construe Medicare as an attack on property.