Why does medicare exist?
As the result of wage controls during WWII, employers looked for ways to attract and keep good employees. Providing benefits like health care insurance was a way for them to raise effective wages without violating the letter of those wage controls. The die was cast. Business would supply health care insurance. This could work if employers provided full-career employment and provided health care insurance along with retirement programs. But to the extent that workers do not receive retirement with health insurance, it was “necessary” to have something like medicare. Put differently, the fact that individuals primarily got their health insurance through their employer rather than through some group that would last their lifetime gave rise to the need for medicare.
The world changed. Employment changed. There is much more mobility in employment than there once was. Part of this is related to workers being more footloose, willing to move from job to job and from city to city. Another part relates to the increasing rate of firms needing to change what they do and where they do it. The information age means that information is more available about alternative opportunities for workers and for firms.
If it was ever a good idea for employers to provide health care insurance, that time has passed. But if there is an alternative that provides lifetime health care insurance, then the time has passed for medicare too.
What is the alternative to employer provided health care and medicare? There need to be insurance groups that exist for natural reasons. And there need to be incentives for large numbers of potential members of the groups to voluntarily join. Natural groups exist by virtue of attributes that people cannot change, or can only change at high cost. For example, one might argue that membership in a craft union, such as electricians or plumbers, is almost a natural group. Blood type defines natural groups, but has problems in terms of the varying sizes of the groups among other things. State of birth is a pretty great way to define groups, much better than state of residence. Relevant incentives are such things as the degree of coverage being a function of the number of prior years of coverage.
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