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Potomac Crossings --By George Mason
Free Drugs and Expensive Delusions
As we learned in catechism, there are lies of commission ( I wrote Hubert Humphrey’s 1968 convention speech) and lies of omission (I failed to tell you that there is no "lockbox" because one Congress cannot restrict the spending of any subsequent Congress). Then there is denial.
The nonpartisan Congressional Budget Office (CBO) released a report last week roundly ignored by both major candidates and the entire media. It says that even if the there is a steadily rising economy and the entire decade-long overpayment of taxes is used to reduce the national debt, the government will likely be unable to balance its books in the period after 2020. Spending on Medicare and Medicaid will triple in four decades as a percentage of the national economy.
According to columnist David Broder, the retirement and health care costs of the baby boom generation plus the shrinkage of the tax-paying workforce will push the nation back into deficits. By 2040, the public debt will rise to 60 percent of that year’s economy. That would create a burden on the next generation of Americans fifty percent larger than the current accumulated debt.
The CBO report concluded "If the nation’s leaders do not change current policies to eliminate the imbalance, federal deficits are likely to reappear and eventually drive federal debt to unsustainable levels."
By 2040, the percentage of Americans over 65 will rise from 13 percent of the population to almost 21 percent. Working age Americans between 20-64 will decline three percent to slightly over 55 percent. It is an irrefutable demographic fact that the ratio of workers to retirees will drop from about one in five to less that three to one.
Guy King is the former chief actuary of the U.S. Health Care Financing Administration, the folks who administer Medicare. His point is that for 35 years the government has failed to control prescription drug costs. Adding a new prescription drug benefit to a program whose costs have been out of control for decades is fiscally irresponsible.
Medicare is based on the premise that the current working generation pays the taxes that support benefits for the current retired generation. Medicare cannot succeed unless many more workers pay money in than retirees draw money out. Demographic facts assure us that this formula is about to reverse itself. Unless benefits are reduced and out-of-pocket deductibles or co-pays are increased the program is doomed. Baby Boomers and younger generations correctly perceive that this nearly bankrupt program for politically powerful seniors will never benefit them.
Three solutions have been proposed: cuts in provider payments, increased Medicare taxes and managed care. Reduction in payments is what has brought the system to bankruptcy. Government imposed rationing results in reduced quality of care and the rejection of patients by health care providers. Health care providers react to reduced fees by simply billing for more procedures and more costly procedures. To balance income and expense, Medicare taxes would have to be doubled. The use of managed care by Medicare has been a part of the system since 1984. It has cost, rather than saved, money. In the absence of rational deductibles and co-pays, health care users have no reason to shop and no reason to not run up a series of small bills for less-than-serious conditions.
At the moment, at least four Cabinet-level departments of the Clinton-Gore administration have billions of unaccounted for and missing funds. Accountants have reported that the current government management situation is a such a mess that they believe the accounts are unauditable. There is no compelling evidence that government can ever effectively manage large institutions.
The status quo elites have fought the one thing that would provide immediate help. Outdated federal and state tax policies provide unlimited tax relief for everyone who has health insurance through their jobs but deny equal treatment to those buying health insurance on their own. Repeal of that one provision would put choice in the hands of consumers.
The National Bipartisan Commission on the Future of Medicine chaired by Senator John Breaux (D-LA) and Representative William Thomas (R-CA) concluded that a healthcare system based on patient choice and competition would make Medicare spending more efficient, reduce the tax burden on working families and guarantee seniors access to high-quality medical care. It was soundly rejected by the Clinton-Gore administration.
The system the commission recommended is modeled after the Federal Employees Health Benefits Program (FEHBP). That program covers Members of Congress, their staffs, federal retirees and their families. The FEHBP offers its nine million beneficiaries premium support and a choice of plans that compete for enrollees. As summarized by The Heritage Foundation, the principal features are:
- Medical patients would be given access to a package of health benefits far more generous that the current program and including prescription drug and catastrophic coverage.
- Low-income patients (135 percent of poverty level) would be fully subsidized.
- Private health plans would have to compete directly for patient’s dollars.
The alternative offered by the socialist left, called HillaryCare by its critics, is a vision of universal health coverage, free or inexpensive medical services and prescription drugs, unrestricted access to care, doctors with complete clinical freedom and exemplary quality of care. It is remarkably similar in its vision to the government-funded and directed systems found in Canada and Great Britain.
The experience of those systems (as well as our own state program: TennCare) is waiting lists and long lines for treatment, substandard technology, out-of-date and less-effective drugs, frustrated doctors and patients and government rationing to combat runaway costs. Lack of access to modern technologies and state-of-the-art medicines poses high risk for patients, especially in cancer and cardiovascular disease situations, according to a recent World Health Organization (WHO) study.
"When government subsidizes the true cost of medical goods and services, patients naturally demand more than they would otherwise consume," says James Frogue, a health-care policy analyst. "Increased demand collides with limited supply and results in rationing." Because the government pays the bills, it has the final say in who does and who does not receive treatment.
In our aging population, access to newer and more effective prescription drugs is very important. Research has shown that dollars spent on drugs are four times more effective than expensive and risky surgical procedures. Modern drugs can make surgery unnecessary.
The answer lies in persuading the politicians that the people should have the same health plan the politicians have. No wonder no one talks about it.
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George Mason, 1725-92, was known as the Sage of Gunston Hall.
His Virginia declaration of rights, written in 1776, was the model for the first section of the Declaration of
Independence. A friend of Patrick Henry and Thomas Jefferson, Mason was an original drafter of the Constitution
and the first ten amendments to the Bill of Rights. He refused, however, to sign the final version of the Constitution
because he thought it did too little for individuals and, without the Bill of Rights, gave too much power to the
government.This column honors his memory.
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