McCain's camp fired back, arguing that McCain had no intention of slashing benefits. The "savings"  would come from eliminating fraud, accelerating the computerization of health records, speeding the use of generic drugs, eliminating government subsidies for private Medicare Advantage plans, and  requiring high-income beneficiaries to pay more for pharmaceuticals,.

Let's look at this list, item by item. While electronic medical records could reduce waste in the long run, experience has shown that it takes at least ten years for healthcare IT to begin to pay off. In the meantime, where would the Senator find the money to install the technology and train doctors and hospital staff to use it? Electronic medical records would be a fine investment: but this is not a way that Medicare can save billions over the next decade. Speeding the use of generics should reap some savings -- though if you buy generics, you have probably noticed that prices are spiraling.  As for eliminating the bonus that Medicare now lavishes on private insurers that offer Medicare Advantage, that would trim spending by $16 billion. But that's still far from the $1.3 trillion that McCain aims to save.

Finally, what about the last item: "requiring high-income beneficiaries to pay more for pharmaceuticals"?  Let me suggest that this gets to the heart of the matter. For the goal here is not so much to raise revenues for Medicare as to shrink the size of the program. 

When it comes to McCain's plans for Medicare, the Wall Street Journal story is only the tip of the iceberg. If you want to understand McCain's intentions toward Medicare you need to realize that his objections to the program are firmly grounded in a conservative ideology that can be traced back to Ronald Reagan. From a conservative point of view, the problem with Medicare is that it covers everyone.

This explains why both President George Bush and Senator McCain have supported "means-testing" benefits, charging some seniors more than others. It also sheds light on why Sarah Palin quoted Ronald Reagan in her closing statement during the vice-presidential debate earlier this month.

McCain's Advisers Send a Signal

Begin with Palin. During the October 5 debate (the day before the Wall Street Journal story about McCain's new plan to fund his healthcare plan appeared), Sarah Palin turned to Reagan, as she reminded her audience that if we want to protect our liberties, we must be vigilant: "It was Ronald Reagan who said that freedom is always just one generation away from extinction. We don't pass it to our children in the bloodstream; we have to fight for it and protect it, and then hand it to them so that they shall do the same, or we're going to find ourselves spending our sunset years telling our children and our children's children about a time in America, back in the day, when men and women were free."