Tuesday, June 21, 2011

Balancing the Budget by Screwing the Old

Fortune Magazine's Geoff Colvin wrote an article titled Why Can't We Fix Medicare Once and For All?, in which Colvin announces the solution to bringing Medicare costs down: Pay less for Medicare.  Ah, genius!  Why didn't anyone think of that before?

As he sees it, there are two approaches to solving the problem: The "Brute Force" solution and the "People Aren't Dummies" solution.  And yes, Colvin plays us all for dummies, by using a bad name to describe the option he doesn't like and a good name to describe the option he does like; even though the labels serve no descriptive purpose other than to make us favor his solution while opposing the other.  It's as if we're all so stupid that he's just going to win us over with silly labels.

The first approach is to use the strength of the government to keep costs low by using its purchasing power to force health providers to charge reasonable rates.  And he says this doesn't work because:
Turns out that if you unilaterally cut prices, some providers will quit providing services and some patients won't get care, so you can't cut too much. And if you pay providers barely profitable rates when they perform a given service, they will overperform those services, grossly inflating the government's costs. That's what has happened.
Ahh, of course.  If the government uses its power to keep costs down, greedy health providers will game the system for their own advantage.  The solution?  Tossing old people to those same greedy health providers in hopes that they can achieve cost savings the government couldn't.

Quality Rises, Costs Stay Reasonable, and Magic!

Here's how he puts it:
Providers aren't dummies, so they'll innovate in ways that bureaucrats would never think of. Consumers aren't dummies, so they'll choose what works for them. Quality rises, and costs stay reasonable.
Yes, innovation that will happen magically once providers realize that seniors won't have unlimited funds.  And this is different from the Brute Force model of  keeping costs low because...uh, well, because...magic! It's as if we're to imagine that health providers only bristle at low pay from Medicare because they hate government, but they'll gladly invent new ways of providing better services for less money if Medicare steps aside.  Of course.
Now granted, there is a way that government intrusion could be causing healthcare to be more expensive than what our bright individuals would do for themselves.  For example, if the government was forcing hip replacements on people who would otherwise prefer to walk funny to save a few bucks.  But more likely, it's Medicare recipients who are choosing to have their hips replaced, and the government is the one trying to cut corners and keep costs low.

Apparently, Republicans haven't yet learned that the Freedom to Get Screwed really isn't such a great freedom at all.

A Screwing By Any Other Name

And of course, Colvin's article never says it, but it's not seniors who will make any of these choices in any case.  It's the insurance companies that would make the choices, not the seniors.  And the only choice the seniors get is to decide which insurer will be screwing them over.  Somehow, Colvin didn't think it necessary to mention this little aspect of his plan.

In fact, in his entire piece, Colvin never uses the word "insurance" at all.  Not even once.  Someone unfamiliar with his plan could easily assume that this New Medicare involves letting seniors pick their health providers and the government will pay the cost for them.  But of course, that would be the Old Medicare that does that, while the new one guarantees nothing, as seniors might not be able to find a plan they can afford.

And even if they do get insured, there's nothing to guarantee that the plan will be there when they need it.  After all, the free market would surely punish any insurer who denied coverage for improper reasons, right?  I mean, yeah, that's how things worked until Obamacare came along, but...but...magic!

And of course, the word "voucher" never makes it in either.  Instead, we're given the focus group approved "premium support."  Yet I have no doubt that if the phrase "premium support" ever catches on to describe this plan, it'll be as unpopular as the word "voucher" and conservatives will demand a retraction from anyone who uses that phrase, too.

As I've said before, there's nothing magical about these words, and you could call Ryan's plan the Apple Pie & Matlock Medicare Bonanza and seniors will hate it as soon as they hear what it is.

Two Approaches: Big Daddy Government v. Screw the Old

So how could Colvin's No Dummies approach possibly work?  It couldn't and it doesn't.  The Ryan Plan for Medicare doesn't truly believe that senior citizens are smart enough to get providers to lower costs in ways that the government can't.  The Ryan Plan cuts cost by limiting the amount of money seniors will get for their care and forces seniors to pick up the difference, period. 

There's no mystery magical forces of free markets here.  We're saving costs because seniors just won't get enough for healthcare, period.  That's it.  That's the whole gimmick.  We're saving money because we just won't spend as much money, and if people suffer, well, that's their own fault for not being smart enough to pressure health providers into doing things that the experts in the government couldn't even do.

And as much as there is a mechanism for lowering prices, it's only by denying extra money into the marketplace; which is just like the "Brute Force" option Colvin derides; except it's far less likely to work.  More likely, old people will still need to have their hips replaced, but they'll have to figure out some other way of making that happen.  Perhaps with their new titanium hips they can turn to purse snatching or professional sports to help pay their medical bills, as it's quite unlikely that they'll get the care they need from the insurance companies.

And the kicker on all this is that the Republican plan most likely won't screw the elderly in the long run.  Just as Obama filled the "doughnut hole" that Bush's prescription drug plan created to keep costs low, if Republicans were somehow to bring Ryanicare into existence, it'll only be a matter of time until lots of angry seniors realized how little their voucher was getting them and Democrats would once again step in to save the day by making the voucher's work; thus removing any cost savings we might possibly have gotten from this misbegotten plan.

Or...we could just let the government continue to do the job for less money and not screw around with a good thing.  Is Medicare expensive?  Yes, because healthcare for old folks is expensive.  But if the only solution is to simply pay less and hope it magically works out, then that's no solution at all.

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