Barack Obama Archives - The Midwest Guy

That’s a question that seems to be befuddling many in the media, including in reporting, fact-checking, and editorial circles. Is Medicare simply medical insurance for American seniors, regardless of its form? Or does its form dictate its function?

Of course, this all revolves around the proposal by Rep. Paul Ryan (R-Wisconsin) to completely overhaul Medicare. Under Ryan’s proposal, the current single-payer system of government provided and underwritten insurance would disappear, to be replaced by a voucher system provided to seniors in order to help them purchase a plan on the private health care insurance market. One of the key sticking points here is that, while health care costs are rising at a rate far above inflation, the amount that the vouchers would increase year by year would be pegged to inflation. This means these vouchers would, until health care costs come under control, be valued less and less by the year.

Nobel prize-winning economist and New York Times columnist Paul Krugman is adamant that what Ryan proposes is, inherently, NOT “Medicare.” On the other side of the coin, you have highly respected news organizations, like the St. Petersburg Times‘ PolitiFact.com saying, though it may be drastically different, it’s still Medicare.

So…two serious heavyweights with impeccable credentials weighing in on opposite ends of this debate. Who’s right?

I have nothing but the utmost respect in the St. Petersburg Times. As a journalist, I find they do fine work, especially in their PolitiFact.com project, which has since been extended to several other state newspapers, including some in the Midwest (including the Milwaukee Journal Sentinel and The Columbus Dispatch). However, I think they’re almost being too stuck in the mud on this one. Let me explain myself.

Medicare was established by the Johnson Administration in the late 1960s in order to address a massive market failure in senior healthcare. In the first half of the 20th century, the single greatest cause of economic dependency among senior citizens was the cost of healthcare. It’s understandable, considering that’s the period in life when a person is going to rack up most of their medical expenditures. Simply put, from a medical point of view, getting old is expensive.

Medicare is brilliant in that it bypasses the perpetual market failure of healthcare. That is, demand always outstrips supply. Always. It has in the past. It does at present. And it always will. Why? Because people have an instinctual desire to survive.

Economists have been trying to overcome that biological instinct for decades to their complete and utter failure. Chicago-school economists are world-renowned for their inability to factor in the innate irrationalities of humans (if they were right, we’d all be living in Tennessee, Florida and Alaska simply for their lack of income taxes). But they haven’t succeeded, and until they do, it’s best we ignore this market-approach to healthcare, since we’ve already seen what it gets us.

Don’t tell that to Paul Ryan, though. The Ryan Medicare overhaul program would completely recreate the market-created problems that the current iteration of Medicare solved. Insurance companies would be saddled with millions of seniors who are exceptionally expensive to cover, they would have to charge much higher premiums (both to seniors and non-seniors) in order to keep their balance sheets in the black, and seniors would only be provided vouchers, paid directly to the insurance companies, that are wholly inadequate to cover the current cost of coverage, and become increasingly inadequate as time goes by. Once again, those vouchers would only increase in value at the rate of inflation, while the cost of medical care is increasing at a rate FAR beyond that of inflation.

And while Ryan continues to insist that seniors covered in his plan would not be turned down by the private insurance companies for their pre-existing conditions, and other, expensive medical maladies, he’s only telling half the story. No, insurance companies cannot turn you down, necessarily, but they can price your plan beyond your reach. And if you cannot afford the plan that covers the issues you experience, voucher or no voucher, what good is it?

Yes, there would still be a government-funded “insurance program” for seniors, if you want to call it that. Yes, it would make coverage more affordable than the complete ending of Medicare and tossing seniors to the pits of the insurance market. But is it “Medicare”? Does it even resemble the system that seniors today currently enjoy?

It actually brings to mind a conundrum that Ford Motor Company experienced back in the 1980s. They were exploring a new design concept with Ghia of Italy for a new line of two-door sport coupes. At one point, they floated the idea of naming the new car “Mustang.”

Mustang enthusiasts (though not having much to be enthused about back in the 80s) were incensed, and began a letter-writing campaign to Ford, saying, in a sense, “this is not a Mustang.”

And it wasn’t. But Ford still made the car. They just had the good sense not to call it Mustang. Instead, a new name was glued on the back. “Probe.” And I think that the analogy works here.

The Probe was still an interesting looking, two-door, four-seat, sporty coupe wasn’t necessarily a bad car, and had many of the same qualities as the Mustang. It was cheap. It was sporty. It was fun to drive. But it was far enough away from the original concept to be rejected by the users of the original. And it wasn’t rejected for the mere fact that it was different. It was rejected soundly because it was significantly “worse.”

And that’s where we are with Ryancare. Ryancare is the Ford Probe to Medicare’s Mustang.

And people wouldn’t call the Probe a Mustang. Just like they don’t call the Sears Tower “Willis Tower.” And they don’t call the corpse flower a “rose.” Those re-namings don’t work.

The definition of Medicare is that program which we call Medicare. I don’t care what we call the program we use to give old people health care, so I’ll leave that to the spinmeisters to fight over.

The heart of the problem is that demand outstrips supply by a massive amount once old age is reached. Medicare as it exists now has not magically solved that problem. Medicare tries to meet supply by writing a blank check (with thousands of pages of regulations and limitations concerning that check), and that cannot work for much longer.

As noted by many, healthcare costs are rising no matter how it is paid for. Our aging population will also cause costs as a percent of GDP to greatly increase as well. Basically, the number of people who will consume medical procedures is rising faster than the number of people who will pay for it, while at the same time those procedures are also rising in cost and our seniors are living longer. Too bad you liberals are so aghast at smoking, or the elderly would be dying off much faster and cheaper.

There is debate about exactly which year we run out of money to fund it, with some estimates ranging from 2024 to 2029. Ryan’s plan will control the inevitable cost increases using market forces and means testing. Without a major overhaul, Medicare will control the inevitable cost increases by decreasing funding and service, as Obamacare did to the tune of $500 billion.

I do not think it is fair to say that vouchers only increase at the rate of inflation. In every government health care plan spending will increase at the exact same rate: whatever Congress decides it will.

Ryan’s plan has vouchers increasing at inflation because that is what he decided to put in it; whatever the final plan has will be whatever compromise Congress decides upon, same as any plan including the current one.

The real difference between Ryan’s plan and the current system is a philosophical difference that touches upon the heart of what it means to be a liberal or a conservative; do you believe that government regulation and control are efficient, or do you believe that market forces are efficient? Unfortunately statistics can be brought up to bolster either side, with most of those statistics being suspicious either due to the source (see smoking source above) or misinterpretation (see almost every usage of statistics).

For example, government healthcare costs have risen slower than private insurance costs. But private insurance has risen in quality faster than government healthcare. What does this say about a government program that uses private insurance?

Whatever you want it to.