Tuesday, June 07, 2011
Fixing a Ponzi Scheme
Economics columnist Robert Samuelson is calling for civility in the Medicare reform battle, casting Paul Ryan's controversial plan for Medicare in a sympathetic light. For being a Newsweek staffer, conservative Republicans will find him a voice of reason on this issue of eminent importance. Democrats might not want to hear him out, but the fate of the nation may very well hang in the balance.
Within American politics, the most toxic issue for any politician to openly discuss is reform of entitlement programs like Medicare and Social Security. The American people were suckered into these Ponzi schemes with the promise of paying in now, and collecting during their retirement. And entitlement programs are truly Ponzi schemes on a scale that Bernie Madoff would only dream of; after all, they rely on having more people paying in than cashing out at any given time. The difference is that Bernie Madoff's victims made a choice to join his scam, while the American people have no say on whether they partake in Medicare of Social Security.
Any time a politician proposes the slightest threat to Medicare or Social Security benefits, Americans revolt into wild gyrations. When President Bush broached the subject of Social Security reform in Spring 2005, he saw a major dip in his polling which he never recovered from. Even modest changes like raising the age of retirement meet with fierce resistance. (The age of 65 was set during an era when the average life expectancy was 68. Is it so unreasonable to change this now?)
So far, Paul Ryan's taken a similar amount of heat for the Medicare voucher idea (even though his plan won't go into effect until 2022 at the earliest, if ever.) The Ryan plan works on the principal that if retirees get government vouchers to cover their medical care, the health care providers won't order unnecessary tests or charge exorbitant rates for services. As it stands, the government already caps the amount they will pay for services under Medicare, and that hasn't led to any reform of the system.
Within the auto repair industry, consumers are protected from being gouged by industry standards for how many hours can be charged for a job, based on the work that needs to be performed. Right now the medical industry does not have a similar system to prevent doctors from performing unneeded tests on patients.
In a larger sense, the issue of uncontrolled Medicare costs is tied to a bigger cancer that has spread throughout the healthcare industry. The risk of malpractice lawsuits increases the professional insurance premiums that doctors have to pay--and often motivates them to schedule excessive diagnostic testing. The American people, the taxpayers and the doctors are getting squeezed, while the trial lawyers and insurance providers are getting richer. We know that Obamacare has failed as a comprehensive answer to America's healthcare crisis because it sidesteps the pervasive problems that are driving up the cost of care. It will be impossible to control Medicare costs with any approach that steers clear of medical malpractice reform.
