MEDICARE UNSUSTAINABLE

The American people need to be engaged in an ordered and calm discussion about the design of Medicare. It is unsustainable in its current form.

There is no value in a political debate over defending the current model. At the end of that debate, whether Democrats win it at the ballot box or Republican somehow manage to explain their position, the current system will still be unsustainable.

Medicare is a command-and-control system. Bureaucrats, under the direction of Congressional budgets, set rules about what procedures will be covered and at what level they will be rimbursed. These rules take scant account of the value that is delivered to patients by various medical procedures. The Medicare price schedules are used by private insurers to set their rates. Medicare is thus the price-setting player in the market.

Medicare sets prices through a political process. Congresspeople and bureaucrats are influenced by providers, medical companies, and their lobbyists. This results in distorted pricing and incentives. A poor technology that is reimbursed sells more than a better technology that is not reimbursed.

Since the advent of the Medicare program, there has been one constant in the U.S. healthcare system: 8% annual increases in outlays. This is not a consequence of insurance companies, which Democrats and our President love to demonize. It is due to the structure of the market.

Medicare is broken, and it has broken our healthcare system.

What we need is a true market: individuals shopping for price and quality healthcare. This is what the Paul Ryan program proposed to do, and it is a shame that Republicans have done so poor a job of explaining it, and that the media is so busy focusing on the political debate to burn a few brain cells understanding the real issues.

Posted in: US