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Medicare: “Worse Than Wrong, It Was A Mistake!” ~Talleyrand

Those on the Left hail the passing of the Healthcare bill as a great victory for the middle class. Meanwhile, across the aisle, those on the Right are labelling it as the first step on the slippery slope toward state control and socialism.

We can argue the ideological implications of this decision long into the night, but all this exercise does is distract us from the fact that the compromise solution is an unmitigated disaster that has been doomed from the get-go.

Early on in the debate the full public option (socialized medicine) was removed from the table. From that point onwards, the discussion has drifted from one variation of a hybrid of socialized and private medicine, to another. This is like trying to combine an elephant and a donkey – whatever the outcome, it can only be ugly.

This compromise is destined for failure for a number of reasons:

1. It places the government in competition with existing firms in providing health care to the public. The government has limitless reserves to draw upon in relation to any competitor, thereby giving it an unfair advantage. Also, there are no guidelines as to what this will look like in practice.

2. There is no precedent for such a hybrid solution, therefore there are bound to be a whole slew of secondary and tertiary consequences that have yet to be considered. The level of overhaul being proposed is an immense administrative challenge. The fractious atmosphere in Washington, and the lack of consensus of public opinion, means that the administration has nowhere near the leverage to effectively implement such sweeping changes.

3. The existing Medical System is a model of corruption and incompetence. Expanding such a system without first doing a thorough housecleaning, is only throwing good money after bad. Even well functioning systems can only sustain a limited rate of expansion. In this case, a defective system is supposed to multiply in size, practically overnight. Under such circumstances the risk of creating complete chaos, is almost a certainty.

4. The notion that this legislation will not add to cost is reminiscent of Stockton’s Voodoo economics – the plan to increase military spending while balancing the budget during the Regan presidency. (Of course that seemed to be far less offensive to the Republicans then Health Care is today.) These specious arguments typically are based upon estimates of inefficiency within the system, and then mathematically extrapolating what such systems would yield if all the inefficiencies were eradicated. For anyone knowledgeable about systems, this is nothing more than a cynical attempt a blind the public with science.

5. The federal government is effectively bankrupt. Where is the additional funding supposed to come from?

The greatest tragedy in all this is that a great opportunity to reconnect Washington with the man in the street was squandered. The concept of socialized medicine itself was not the problem. If the government could have negotiated better terms with the pharmaceuticals, net savings could have largely offset the additional administrative expense of expanding the system. The problem lies with an unrealistic appraisal of the likelihood of such legislation making it through the system.

It took over two centuries for Washington to descend into its present state; a leviathan of cynically motivated Players, so concerned with their own narrow self interest, that the thought of addressing the real issue at hand never seems to cross their mind. How then, can anyone expect all those in power to suddenly have an epiphany, and put bipartisan biases, and special interests behind them, and work together for a better, somehow saner tomorrow?


3 thoughts on “Medicare: “Worse Than Wrong, It Was A Mistake!” ~Talleyrand

  1. This is a tad overstated. Regarding:

    Point #1 Have you considered the postal service as just one example of public-private competition? The USPS is in direct competition with private firms to deliver packages. If it cannot compete, it will be driven out of existance. If government is so inefficient, what does the private sector have to fear?

    Point #2 This is an argument for government doing nothing because the unintended consequences cannot be predicted and consequently is specious.

    Point #3 Unless you have a magic wand, I can’t see anything like this happening … are you really asking the federal government to step in and completely reform the health care delivery system? Is that what you truely want to happen? And, if you look at the cost increases in Medicare services, they are far lower than in the private sector. Once one has control of the purse strings, one has some modicum of control. Right now, private insurance companies have control of the purse strings.

    The insurance companies have overhead and profit of somewhat less than 20% of revenues. Medicare has overhead of roughly 3%. What is the value added by the private insurance companies. They provide no helath services, they merely push paper. Medicare does that for a few percent of revenues. Private insurance companies used to do that for just a few percent. But not that those companies are darlings of Wall Street, they must make more than just afew percent ROI, a lot more. (Why? Because investors want it–the only reason.)

    Point #4 Who claimed Medicare would have no cost? This is silly. This is what payroll taxes are paid for. Let me ask you this. If Medicare were replaced by magic by private insurance, same coverage, everything the same, do you believe costs would go down? If you do, you have to ask where private insurance profits are going to come from? Adding a substantial percentage (as profit) to the cost of every service given to senior citizens will mean that the total cost of everything goes up. And if you believe in the magic of competition and markets driving prices down, why has that not happened in the private sector so far?

    Point #5 Either the health services are not given, or someone has to pay. The question is whether one wants to pay the Medicare prices (substantial lower than private) or the private insurance prices. So, pay them we shall, in some manner.

    You might consider that federal taxes are the lowest they have been since roughly 1950. You might consider that federal revenues are too low for the level of services people want. Like any business, you can tell if your prices are too low by how many units you sell. If you sell out repeatedly, your prices are too low. If you have too much inventory you can’t sell, your prices are too high.

    Let people pay for their Medicare through higher taxes and then let the discussion begin: is the value worth the cost?

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