“What this means is that the system is facing a funding problem principally because of the “rising per capita costs” of the PROVISION of healthcare. It doesn’t mean the Medicare insurance program itself is broken just that the product they are paying for is becoming much more expensive so that they might not be able to afford it. Like most people you fall into the trap of confusing the paying side (Medicare, Medicaid, private insurance) and the providing side (doctors, hospitals, drugs).”

It is you, Otto, who is confused. The cost of provision cannot be divorced from the means of funding. This is an economic problem, as well as a political one. You cannot separate the paying side from the providing side if you want to address the problem. There is also the consuming side. Because the paying side is between the consuming side and the providing side, the consumer has little incentive to price shop or to economize, and the provider has little incentive to compete on price. So we get the feds setting reimbursement rates based on a byzantine schedule of codes, and insurance companies largely basing their rates on those of the feds, and some providers either working the system for honest but wasteful extra revenues, or defrauding the system, which is easier to do because of Medicare’s famously low admin costs, and all the while some consumers call 911 to get a ride to the hospital because they have no car, or go to the ER for a cold or to the doctor’s office just to socialize. (If an insurance company allowed as much abuse as Medicare, it would not be in business long.)

Bottom line: the Medicare of which you are so enamored is in fact an entitlement program (one is entitled to benefits by virtue of age, correct?), it is tremendously expensive and wasteful, it is gradually destroying incentives for providers which can only lead to shortages and lesser quality, and it is rapidly threatening the nation’s fisc. How many recipients really cannot afford their own medical care? I don’t know the answer, but we ought to call it what it is – a transfer program from the young to the old. What is just about that? A voluntary program of course would not be objectionable, but a coercive one is flat wrong.

According to Otto:

“Broadly speaking the net losers are going to be the healthcare industry who are basically going to have to become more efficient and will inevitably become less profitable. Insurance companies for example are not going to be “forced out” of the insurance business but it’s going to be a lower margin business with all that that implies. Sorry to mix metaphors but we’ve been can kicking for years, it’s time to fish or cut bait.”

Otto seems to think everybody knows what needs to be done. Then he obliquely refers to measures that will injure providers and insurance companies. This is so asinine it is sickening. Why should this “crisis” be solved on the backs of doctors and nurses and insurance agents and stockholders? That is patently unjust. How many times does it have to be demonstrated in real life that these theoretical fixes – interventionism, and especially price controls – do not work. They do not work. They never have. Communism was able to survive as long as it did only because it had free markets to exchange with, and to steal pricing from. Eventually, it caved in, and so will socialized medicine. Collectivism destroys the price mechanism, and that destroys an economy. Medicare, according to Otto, basically works well. If high costs are the no 1 issue, then Medicare does not work well. When a product or service has very little cost to the consumer, the demand for that product is very nearly infinite. Medicare/Medicaid is the primary reason for high medical care costs in the US. Interventionists (going back to Marx, up to and including Otto) love to call out the bogeyman of profits — profits come out of the workers’ earnings, profits are what jack up costs. That is hogwash. The incentive to make a profit is what drives competition and spurs improvements in productivity and efficiency. Profits are the heart and soul of every market, and it is markets that create wealth and provide better and cheaper goods and services. Those who cannot make a profit at the market price do not survive. They go do something else. That is, of course, in virtually every market except medical care and medical insurance.

It is not the case that markets have failed so we need government intervention, but rather that intervention has so distorted the market that it is no longer recognizable as a market. So we call it a “system,” which of course implies some type of control, and that naturally is to be provided by the all-knowing state. There is infinitely more information exchanged in a free market by way of the price mechanism than the entire government can master. That market information is what ought to drive resource allocation, not the dictates of some committee of Obama’s. Why don’t we need government food and drink? Shoes, clothing, automobiles, housing? Because these are provided by willing sellers and purchased by willing buyers. Nobody has to cap the “reimbursement” for dry cleaning services or gasoline – because they are capped by competition.

The other socialized medicine plans that are referred to admiringly by Otto and his fellow interventionists (logically leading inexorably to socialism), because they supposedly provide the same care for less money, are relatively new to the scene. Canadian Medicare started up in the 1970s. It is clearly unsustainable, and it sucks. Our Medicare is also clearly unsustainable, and it sucks if you are a doctor, receiving compensation for a procedure at the same rate as you did 20 years ago. More of that will get us fewer doctors, and they won’t be as good. The talent will follow the money. Just ask the Canadians. If the money in American sports was in soccer, then the best athletes would play soccer. But as it stands, they play basketball, football and baseball, because that is where the money is. When my wife had surgery ten years ago, it was wonderful to know that she was being treated by one of the best surgeons in the US, and therefore the world. Nobody has better doctors than the US. The average French doctor earns less than a big-city cop does in the US – do you suppose the best talent is attracted to medicine? Can you see American doctors going on strike like French doctors do? Those measures that put the US 37th in the world are a joke. Sure our life expectancy is lower than Canada’s – entirely because of murder and accident rates more than twice theirs. Compare apples to apples and we come out on top. And we spend a lot of money on health care for three reasons: 1. We want a lot of health care; 2. We can afford it; and 3. The government and employers shield consumers from the true cost of their consumption, so they naturally overconsume, and they don’t shop prices.

Obama’s solution is to have the government gradually take over the entire “system.” The real solution is to get the government 100% out of the medical care and medical insurance markets. The market will develop competition, it will improve medical care and medical facilities, it will vastly improve the information available to consumers because consumers will demand it, it will much more efficiently allocate all types of resources so that productivity improves and prices come down. Repeal the tax deduction for employee health insurance benefits. Acknowledge that Medicare is just welfare, and phase it out, leaving Medicaid to address the needs of the truly needy. There is no reason a middle class, even lower middle class, family should not be able to purchase the health insurance they need. Insurance companies need to be free to innovate with packages. Mandates need to be eliminated, and restrictions on who can buy from whom eliminated as well. Sure, there will be discrepancies in the level of care, but we don’t all get the same housing, food and transportation. We can choose equality, or we can choose freedom and prosperity. Not both. If people can afford housing and transportation without assistance, they can afford medical insurance. A whole lot more medical care needs to be paid out of pocket; insurance should be for catastrophe, as it is everywhere else. This will be sorted out by the market. We need to abolish the mentality that every person is entitled to the best care no matter the cost, or that he is entitled to care equal to his rich boss. The former idea is a fantasy, and the latter is Marxist, and they don’t fly in a free society that respects the sanctity of private property.

The solution is laissez-faire, but I’d settle for incremental steps in that direction.

…..Your words were:”Regardless of the cause of the funding problem ” in the context of saying Medicare was broken…..It’s not broken……It’s got a funding problem because of the escalating cost of providing care

” But really, who cares. You have probably paid your fair share as I have and as I continue to do so. ”

…………Well I do when you say you’re paying for my Medicare which is what you said originally……You clearly don’t understand I’m still paying taxes…..quite a lot actually but I don’t whine about it……and it isn’t an entitlement system…….it’s a system of national insurance…….that’s intended to give the elderly access to medical care and save them from having to live under bridges…..ask your parents if they want to give up SS and Medicare…….If I’m around I’ll ask you in about 30 years

And you may have paid more taxes than I, since you have a few years on me but, then I have spent most of my time in the states. So, who knows. But really, who cares. You have probably paid your fair share as I have and as I continue to do so. Nonetheless, because of the increasing unfunded liabilty, you enjoy benefits that are not available to me and may not be available to my children. No offense meant. That’s just the way the entitlement system works.

……….Midcon: you can’t disregard the CAUSE of the funding problem because the CAUSE of the funding problem IS the problem! That’s what this is all about because we’re spending twice as much on it as anyone else…..why is that? And there’s the certain probability that the cost of providing healthcare is going to increase from the currrent $2.4 trillion (about 16.5% of GDP) to around $4.4 trillion (well over 20% of GDP) over the next 8 years…….And can you spare me all the rather nasty personal stuff since I’ve probably paid more taxes than you’ve ever paid some of which are funding your parents Medicare and SS as well as mine. I could live quite easily without my SS checks, in fact I lose some of it because of tax, could your parents?…….Sorry but you need to get beyond the simplistic bumper sticker logic.

(*SIGH*)

“They” don’t care, Mid.

(*SHRUG*)

By “they” I of course mean Obama, Pelosi, Reid… and, yeah, RINO Republicans as well.

Yes, OBVIOUSLY Ayn Rand’s “Atlas Shrugged” was a work of fiction, a philosophical tome in the guise of a novel, yet the extreme portrayal of “the destroyer class” is indeed based upon the reality of human nature – the reality that “the haves” (and I’m talking the movers and shakers, the politicians, the wealthy, the top ten percent of the professional class, et al) will still by and large be getting the best still existing medical care and power and food and both the luxuries and necessities of life in far greater abundance than the “common folk” as the system is driven to the brink.

Hey… you’re still toughing it out, Midcon. Your parents are too. Hey… so am I. Mike’s gonna be fine. But I’m talking the coming decades of decline. I’m talking right now the situation our kids who have just graduated college find themselves in. I’m talking the stagflation I expect down the road, next year. I’m talking national brownouts in five years, seven years. I’m talking following the numbers as we know them to their logical conclusions.

(*SIGH*)

After “they” break America… (*SHRUG*)

BILL

Hmm. Interesting about indemnity health insurance. Thanks for sharing that, I hadn’t been aware.

“What we need, and the French have, is a system which pays for catastrophic illness but not for routine care. Now, the French system does pay for routine doctor visits but only AFTER the patient has paid the doctor at the time of the visit and only 80% or less of the national fee schedule.”

I agree with the first part – that we need a system that pays for catastrophic illness but not routine care, but if I’m following your description of the French system, the French don’t really stick to that logic; instead, they reimburse their citizens for 80% (or less) of the physician’s routine fee schedule for routine visits.

I don’t see why Americans (or the French for that matter) should expect routine medical care to be reimbursed at all, subsidized to any extent. I mean, sure, I see the surface logic of the “carrot” approach as regards encouraging routine physicals and other routine preventive care, but I believe the “stick” approach would be a more rational economic bet. For example:

Just as we charge smokers more for insurance (and we should charge the obese more – and I’m sure others could come up with other examples) it seems to me that if government requires everyone to have catastrophic insurance which kicks in at a certain threshold of yearly expenditure, you employ the “stick” of increasing the threshold for folks who don’t complete a “checklist” of routine care or else you simply fine them (perhaps the better option – indeed, upon further thought definitely the better option) for not “living up to their part of the social contract.”

“The fatal mistake we made 50 years ago was to convince insurance, and Medicare, to pay for routine care and to make that payment “payment-in-full.” It is illegal for me to bill above the Medicare allowance. As a result, an increasing number of internists are refusing new Medicare patients and many are dropping out of Medicare altogether. It is even happening with orthopedic surgeons.”

Agreed (re: the fatal mistake.) And, yes, the Medicare/Medicaid model is deeply flawed and indeed for all intents and purposes puts doctors into a sort of “indentured servitude” to the system – all the while the government winks and nods when doctors pass on the cost of loses from Medicare/Medicaid treatment they provide onto the backs of the insurance companies via the privately insured and out of pocket payee patients they see. It’s a sick, smoke and mirrors, dysfunctional system and because it is… it’s falling apart.

“Obama will attempt to continue the regulatory model of Medicare with private, and public, insurance. It will not work. Either doctors and patients begin to arrange private care outside the system, sort of like private schools where the parent pays twice, once for the public school and once for the private school, or the entire system will crash.”

Yep. But beyond further squeezing doctors and the middle class, I fear your average liberal isn’t so far removed from the belief that if “need be” our society should simply “draft” medical professionals into “governmental service” – if not as formal employees, then by controlling their “private” incomes via regulation.

“…we have to get rid of the Obama political agenda and that may be impossible.”

And there lies the rub. No matter how much sense Mike makes… no matter how little sense Obama (or McCain or Bush or name your favorite boogieman) makes… the Dems control both Houses of Congress and the Presidency (and arguably the Courts). As with energy… as with economic policy… as with environmental policy… the politicians are going to continue to lead the country in the wrong direction – full speed ahead.

GOD HELP US!

BILL