Ending Medicare as We Know It

As an inaugural post on WordPress, I offer this humble missive:

Rep. Paul Ryan (R-WI) has offered a budget that was passed by the U.S. House 235-193.  In President Obama’s otherwise highly tendentious speech of last week, he said that the Ryan Budget “ends Medicare as we know it.”  James Taranto of the Wall Street Journal suggested that perhaps this echoes Bill Clinton’s statement in 1992 that he [Clinton] would “end welfare as we know it.”  Obama’s echo of Clinton’s memorable phrase of 19 years ago supposedly suggests that Obama himself recognizes that Medicare as currently structured is unsustainable despite the rhetorical fellating of his base found in the balance of his speech.

Of course, welfare was unpopular in 1992, whereas Medicare IS popular in 2011, as Taranto points out.  Hence, a recent poll suggesting the Ryan budget (with respect to the Medicare issue) is opposed by 84% of the public.

Well, what if Ryan is right — that Medicare absolutely must be reformed — but at the same time a vast majority of the public isn’t willing to go along with the reforms?

Here’s my proposal:  If Ryan is right, and Medicare as presently constituted is so actuarially unsound and shot through with perverse incentives that it has become a vital threat to the Republic,  then we should propose cutting 25% or so from the cost of Medicare, but then deliver the same or better benefits by GUARANTEEING to make up the difference in whatever shortfall emerges.

Stay with me folks.  One of the things that inspired me in this line of reasoning was a trip to Wal-Mart in which I found that if I were willing to settle for AIM toothpaste, I could buy a tube for 85 cents.  I realized that this was so because I could also buy a similar tube of the same stuff at target or Rite-Aid for 92 cents (competition).  If the government were in charge of toothpaste, on the other hand, it would cost $45 per tube, we’d have to wait 3 months for it to be delivered, and they would still lose money selling toothpaste.

So, again, here’s the proposal:  What if Ryan — or some other GOP green-eyeshade type who wants to cut 25% off the cost of Medicare — proposes a budget that funds a voucher program for insurance for Medicare benefits at, say, 65% of current outlays — and then GUARANTEES that Washington picks up the balance — market forces may cut enough fat that Washington’s guarantee is minuscule.

If market forces truly are as powerful as I think they are, the original outlay might provide enough funding for most or all of the cost.  And the “federal guarantee” of the balance could be the spoonful of sugar that causes an infantile, risk-averse public to allow the medicine of reform to go down.  If so, then this could be the thing that gets a reform proposal passed.

Of course, if the health care industry sees an opportunity for profiteering in the “guarantee,” then this proposal has to be tweaked further.  But it’s a start.

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About DougBuck

Michigan Lawyer, age 53.
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