Thursday, August 4, 2011

McCarthy on the Secret History of Medicare

There's nobody I agree with 100% of the time, but I honestly can't remember ever finding Andy McCarthy's commentary lacking. You should take the time to read his take on what Medicare's architects were really thinking, and why the system deserves to die:
Medicare was a scam from the start. It had to be a scam because its ostensible purpose — providing health insurance for the elderly — was never the objective of its proponents. Instead, Medicare was a stepping stone to a utopia its champions dared not acknowledge: A compulsory universal-health-care system administered by government experts. FDR’s Committee on Economic Security initially intended to issue a health-care plan in conjunction with its universal, compulsory Social Security proposal in 1934. As Cato’s Charlotte Twight recounts, the former was dropped due to fear that pervasive opposition among the public and the medical profession would jeopardize passage of the latter. But Roosevelt got right back to it the day after he signed the 1935 Social Security Act, empowering the new Social Security Board to study the “related” area of health insurance.

There followed three decades of progressive proposals, each shot down by lawmakers animated by fierce public dissent. The Left realized the dream of socializing the health-care sector was not attainable in one fell swoop, so an incremental strategy was adopted: Get a foot in the door with less ambitious proposals; establish the precedent of government control while avoiding debate over the principle of government control. “Incremental change,” said Medicare scholar Martha Derthick, “has less potential for generating conflict than change that involves innovation in principle.” [...]

More shrewdly, proponents misrepresented Medicare as an “insurance” program, with a “trust fund” into which working people paid “contributions” and beneficiaries paid “premiums” that would “entitle” them to claim “benefits.” In reality, there is no “trust fund.” Workers pay taxes — at levels that can no longer satisfy the pay-outs for current beneficiaries. This state of affairs was entirely predictable when Medicare was enacted in 1965 with the Baby Boom well underway. Back in the early days, when the program was flush, the surplus of taxes passed from the “trust fund” into the federal treasury, which redistributed the money to whatever chicanery Washington happened to be heaping money on. In return, the “trust fund” got an IOU, which would ultimately have to be satisfied by future taxes (or by borrowing from creditors who’d have to be repaid by taxpayers with interest). And the “premiums” largely turned out to be nonsense, too: The pols endeared themselves to elderly voters by arranging for Uncle Sam pick up more and more of the tab, or by using the government’s newfound market power to demand that providers accept lower payments.

When Medicare was enacted in 1965, the inevitability of its many adverse consequences was crystal clear. The system was grossly underfunded. The fee-for-service structure (expertly described by Capretta) was certain to increase costs exorbitantly with no commensurate increase in quality of care (indeed, care is mediocre, or worse). But most palpably, the fact that government was at the wheel made Medicare instantly ripe for political gaming and demagoguery. The ensuing 46 years have not only made the obvious explicit; Medicare and its tens of trillions in unfunded liabilities are actually worse than even its most fearful early critics predicted it would be.
McCarthy also throws some cold water on Paul Ryan fanboys like Bill Kristol and Charlie Sykes:
Former House Speaker Newt Gingrich steered the break-out of his presidential campaign into a ditch a couple of weeks ago by suggesting that the Ryan Medicare reform was “right-wing social engineering.” He was wrong, but not for the reason cited by his critics. To be more precise, Representative Ryan’s plan is a surrender to left-wing social engineering on terms the right wing na├»vely believes it can accept. Ryan is the darling of a Washington breed of conservative wonk convinced that we can make the welfare state work if we just incorporate a few free-market, family-friendly tweaks [...]

Reformers such as Representative Ryan always ignore this inevitable trajectory of entitlement politics. They rationalize that they can make a government-sanctioned bribery system run better, or at least preempt Democrats from making it run worse. Hoping to stave off Medicare, congressional moderates in 1960 passed a bill to provide means-tested medical assistance to the elderly. It only greased the wheels for not only Medicare but Medicaid. In Massachusetts, Romneycare was another well-meaning attempt to install a compulsory statewide health-insurance system that would be less autocratic and costly than the one the Left would have imposed. It is, predictably, a disaster that tends toward ever-more-suffocating government control.
Go read the whole thing, as well as McCarthy's rebuttal to critic Peter Wehner.

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