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Friday, August 24, 2012

It's not a Medicare cut...It's price fixing!...or a shibboleth?

When formulating public policy, evidence should be accorded more weight than ideology, and facts should matter more than shibboleths. The Romney-Ryan plan for Medicare reform depends on assertions that are ideologically consistent. But the Republicans plan is not supported by the evidence and does not survive serious scrutiny.—Laura D'Andrea Tyson
Well, how can I ignore an article where the first sentence has the word shibboleth in it? I looked it up, I admit it. Essentially it means a word which is pronounced differently by two different—perhaps even oppositional—groups of people. Laura is starting off her opinion piece with a common-sense statement that everyone would agree with. See how reasonable she is? She reminds me of that old western movie trope where the offended man always turns away from his belligerent aggressor and his [away] hand drops down low before bunching up into a tight fist. This is sometimes called "telegraphing a punch." Laura's common-sense statement is an obvious telegraph that a sucker punch is on its way. My only criticism is that I honestly don't think "shibboleth" conveys the concept Laura had in mind. I wish she'd decided to use the word she had in mind before her thesaurus look-up. Ah well...but please, pardon my wistful velleity.

I'm glad Laura has noticed the elephant in the room and is ready to talk about it. Romney and Ryan have a plan, and she has some serious problems with it. She says it is not supported by the evidence and does not survive serious scrutiny. Great! Let’s see the evidence and the objective scrutiny.
In Mr. Ryan’s latest premium-support proposal, the government would provide a subsidy to Medicare beneficiaries to choose among competing insurance plans, including the traditional fee-for-service Medicare plan. Starting for 65-year-olds in 2022, insurance plans would take part in an annual bidding process to compete for Medicare beneficiaries. The bids would reflect the actual growth of health-care costs and would determine the size of the federal subsidy.

Advocates of premium support argue that competition would encourage more cost-sensitive behavior by beneficiaries, providers and insurers. The facts do not support this. Just consider that despite competition and choice, private insurance premiums per enrollee for comparable coverage have increased more rapidly than Medicare spending per enrollee for more than 30 years. Medicare’s superior performance is all the more remarkable since its elderly beneficiaries include a sizable share of the sickest individuals who are the largest consumers of health care services. And Medicare’s cost advantage is likely to continue into the future.
Yes Laura, but for that same thirty years medical professionals, clinics, hospitals, and pharmacies have ever more stridently started refusing to accept Medicare enrollees. Pardon my turn of phrase but Medicare denials have become an epidemic! Not only is Medicare going bankrupt because it was never anything but a glorified Ponzi scheme, but in addition it's wholly insufficient for the medical needs of seniors today, to say nothing of those poor saps who'll be relying on it after its projected bankruptcy date.

A huge contributor to the increased price of insurance premiums can be attributed almost unambiguously to ambulance chasing malpractice lawyers. With ever-higher malpractice insurance premiums and the use of defensive medicine, patients and their doctors are the losers and law-firms and insurance agencies are the winners. Another reason for the ever-increasing cost of insurance is the third-party payer system. There is no reason to hunt for bargains when someone else is paying the bill.
Mr. Ryan asserts that the 1998 bipartisan Medicare Commission proposed premium support as a solution to Medicare’s financing challenges. But he fails to mention that all of the commission members appointed by President Clinton, including me, voted against this idea.

Since then, the evidence has confirmed that competition among private insurance plans would not yield Medicare savings without harming beneficiaries. To achieve this goal, enforceable payment and cost-containment reforms like those in the Affordable Care Act are necessary.
There's a term for what Medicare as well as the Affordable Care Act both attempt: Price fixing. Price fixing is the opposite of capitalism. It's thinly veiled socialism and wherever price fixing has been attempted it has hurt the economy, it has failed to benefit those it's been designed to benefit, and providers of goods and services have fled from every government controlled market. Time after time we see this. You'd think they'd understand by now that if the government decides what an entrepreneur can charge for their work, the entrepreneur will find different work or find greener pastures, so-to-speak.

The obvious solution here is tort reform and somehow diminishing the role of third-party payers. Laura—a bureaucrat at heart—will always look to the sledge-hammer fist of government for solutions, when what is actually required is more like the delicate scalpel of a talented surgeon—a fiscally-conservative surgeon.

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