Wednesday, August 26, 2009

Republican Hypocrisy on Health Care

In a move motivated by politics rather than good economics,

The Republican Party issued a new salvo in the health debate Monday with a "seniors' health care bill of rights" that opposed any moves to trim Medicare spending.

This "Medicare Manifesto" aims to rally seniors against Obamacare.

The problem is that Medicare spending is excessive and should be cut, with or without Obamacare. Medicare, like all subsidies for health and health insurance, encourages excessive use of the health care system by shielding patients from the full costs of the health care they consume.

One approach to reigning in Medicare is to phase in a higher age of eligibility, since life expectancy and health at older ages have increased substantially since Medicare was created in 1965.

A second approach is to expand co-pays and deductibles. This both reduces expenditure and encourages beneficiaries to think more about what care they really need.

Either way, Medicare should be reduced or eliminated. Opposing government health insurance by defending government health insurance is disingenuous, at best, and utlimately counterproductive.

54 comments:

Chee Heong Quah said...

Absolutely true.

If government is allowed to start a business in medical care industry, then the situation will resemble that of mortgage market in which Frannie and Freddie messed things up by offering negative real interest rates to house speculators.

In the medical care case, the government firm will offer very cheap price but at exorbitantly high risk.

The difference- in the medical case, human lives are at stake!

Dr. Michael Kitchens said...

Great post! It reiterates some of the same thoughts I have been having as the debate over health care seems to be reduced to these irrelevant, contradictory, and "missing the point" arguments.

The reason to NOT have gov't run health care is not because the private sector is unable to compete with gov't (they can, do, and do well), it is not about the number of illegal aliens included in the "47 million uninsured" number (I heard this argument on Hannity's radio program yesterday), and it is not about "death panels."

Even more frustrating is that some on the right seem to argue that this is a bad idea because there are flaws in the plan. If they could design it, it would be better. Romney is talking about a Massachusetts’s model.

The real reason to NOT have gov't health care comes down to a few simple, clear points:

1) The Constitution does not give the federal gov't the powers to provide health care to everyone

2) Taking money by force to provide for everyone is inconsistent with a free society.

3) The answer to the "health insurance problems" is not more health insurance. We are presented with a false choice (i.e., either the current system of bureaucracy, regulation, and insurance vs. more insurance/more bureaucracy).

Other arguments are valid (e.g., a profit driven system produces innovation , healthcare will inevitable have to be rationed if MORE (health insurance) is provided for LESS (money)), but all these points seem to be reduced to silly arguments. The 3-points here are really the foundation for opposing gov't intervention.
On another note, I really have enjoyed your blog since I found it. I look forward to the book.

Don said...

Where would this plan fit in?:

"Let me ask everyone a question: Do you consider price and discount when buying Tylenol and Pepcid? I answer in the affirmative.

Here's another question: Do you consider price when considering brain surgery? I answer in the negative.

Therefore, I suggest splitting health care costs into two categories:
1) Medical goods that a consumer could price and shop accordingly on.
2) Medical goods that a consumer cannot price and shop accordingly on.

Once you do this, you can split up medical costs into:
1) Costs subject to a deductible.
2) Catastrophic Costs.

And, further, you can say the following:
For 1) You don't want third party payers, since you want the consumers to shop for the best price.
For 2) You can have a third party payer. In fact, you can have one: the Federal Government.

Now, here's Milton Friedman's plan:

"A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns—the possibility of being impoverished by a major medical catastrophe—and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become "What’s wrong?" not "What’s your insurance?"

Don the libertarian Democrat

John B. Chilton said...

Interesting that the Conservatives in UK yesterday were doing the same sort of thing, scoring points off Labour by reporting the shortage of maternity beds and promising Conservatives wouldn't let that happen.

I'm not sure, though, I'd call the Republicans hypocritical. They're highlighting a reality that Democrats are dancing around -- universal healthcare coverage is going to cost somebody something whether in terms of higher taxes, cuts in programs, or shifting of the obligation to future generations. Despite claims to the contrary, there is no demonstrated way you can cut costs without rationing. What may be true is that rationing may eliminate costly procedures which have very low probability of producing a cure.

Zachary said...

are they afraid that cuts in medicare spending will be used to justify starting up Obamacare?

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Anonymous said...

I think where Mr. Miron goes wrong is that we have already forced seniors to pay into Medicare for their entire lives. I think anyone reading your blog agrees that Medicare was a bad idea, but what do we do with people who now have been taxes their entire lives (in lieu of saving) for this care?

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