What Medicare Isn't

With the Washington Post, the New York Times, and certain New Democrats jumping on the Medicare's-a-mess bandwagon, it's worth knowing why Medicare's in bad shape and who, in fact, is probably to blame. That's where Matt Holt comes in:

Medicare and to a smaller effect Medicaid are extremely complex programs that don't give a direct benefit to their "members" but instead allow an entire industry (in fact many industries) to deliver goods and services to those people with the government picking up the tab. Yup, Medicare is closer to defense spending than anything else, and within it there's the same level of complexity, fraud and bad behavior as in that sector (and I never mentioned Halliburton once. Dang, just did!). In fact as Medicare sets the tone for almost all health care spending, but there are hundreds of payers rather than just one big one, health care is probably more complex, fraud-ridden, and inhabited by murky characters than defense...

More importantly the defense contractors doctors,hospitals, insurers and more recently drug companies were heavily involved in the writing of the original rules of these programs (for more read down in my Hillarycare article from last week). So they made the programs look as much like an open spigot to the US Treasury as possible, and the Federal government has been trying (and failing) to balance between the aggressive demands of those concentrated interests and those of the beleaguered taxpayer ever since.

So when you talk about Medicare, realize you're not talking about government-run health insurance, you're talking about government-funded health insurance. It's a big difference. It's a big difference because Medicare's failures and flaws are still part and parcel of the fractionalization and perverse incentives of private health delivery. It's not that the government side of things is perfect, but folks like Ken Baer and the Times should be clear that the fault isn't solely the government's because the program isn't solely the government's.

As Matt says, so long as private insurers and providers are involved, the incentive will always be to raise prices and accept a few individuals being pushed out of the pool in return for all the others paying more. If you want to force cost control, if you want make health care do more with less, you decide what the pool is (everyone, hopefully) and you limit the cash flowing in and out. Simple as that. It's worked elsewhere and it would work here. But it'll never happen so long as Democrats, our fantastically liberal media, and Republicans are all blaming government for health care failures that come form the private sector.

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