Medicare, again

The special election won by Democrat Kathy Hochul in New York's heavily Republican 26th Congressional District had national Democrats jumping for joy. Apparently, Paul Ryan's plan to turn Medicare into a voucher program was not at all popular up there in Erie County, and Democrats expect similar feelings extend nationwide. Probably, they're right.

Republicans claim Democrats "misrepresented" the Ryan proposal. Frankly, though, their chief problem seems to be that people understood all too well: just eliminate Medicare, the government insurance program, and replace it with a voucher to buy private insurance. Government savings only can come from voucher amounts always being significantly less than policy premiums. Those who can't afford to pay the difference wind up with no insurance, so they would not even be using their vouchers — leaving even more money to distribute in the form of tax cuts for the rich.

Republicans are right, however, in pointing out that Democrats have not offered a real alternative for reducing Medicare costs. The Obama plan, such as it is, depends mostly on reducing payments to providers — which logically would result in fewer providers accepting Medicare. We are still waiting the administration to suggest a replacement for the cost inflating fee-for-service model, which encourages providers to provide many unneeded tests and unproductive treatment protocols.

The chief reason Medicare is so costly, though, is that the people using it are older and sicker than the general population. To bring costs per patient down, the most sensible thing would be to bring younger, healthier individuals into the pool. In the past, I've recommended selling Medicare policies to major employers who wish to provide coverage to their workers. Since Medicare does not have to advertise nor pay out profits to stockholders, it ought to be able to offer real competition to private insurance companies. To stay competitive, the privates would either have to cut rates or offer better coverage and service.

Yes, this would look a lot like a first step towards a single-payer system, but if the private sector really is so much more efficient than government, it just might be able to steal away Medicare's customers — including the ill and the elderly. Now wouldn't that be a triumph for the free market?

Just forget national health care

The only thing I really liked about the Obama plan for reform of health insurance was the idea of creating a government sponsored health insurance plan to compete with private insurers. As you would expect, the privates freaked.

Competition makes for a great sound bite, but not when you know you're sure to lose. The privates, and their allies in Congress, are complaining that a government plan would put private insurers out of business and lead to a single-payer system. Oh, my! Wouldn't that be a shame!

Chuck Schumer has proposed a "compromise," which would require the government plan to be self-sustaining, paying claims from the premiums it collects; not require doctors and hospitals to participate; pay more than Medicare; and, like private insurers, maintain a reserve fund.

Somehow, I don't think that will satisfy the private companies -- unless they are guaranteed the right to profitably cherry-pick the healthiest health care consumers and dump anybody with a serious or chronic medical problem on the government. Without that provision, they still would be at a competitive disadvantage merely because their shareholders expect them to turn a profit.

A system in which the government insurer is stuck with everybody likely to make a major claim isn't viable. The government plan would become too expensive for employers to purchase for their workers, too expensive for individuals not receiving sizable government subsidies, and hence too small to bargain successfully with doctors, hospitals, and pharmaceutical companies.

Without a genuinely competitive government sponsored insurer in the mix, the Obama plan is nothing but a giveaway to the insurance industry. Government subsidies provided to the uninsured poor would go straight into private pockets, and the expense of making sure everyone required by law to buy insurance does so would become a taxpayer sponsored engine to churn new business for the private companies.

Personally, I'd prefer to see no health care legislation at all over a giveaway to private health insurers.