Friday, October 19, 2012

Rent Rent Rent Rent Rent

The Romney Ryan plan for privatization of Medicare, like most "privatization" schemes is a scam. Matt Yglesias pointed one big hole: the plan gives new Medicare patients the option of taking a voucher to buy private insurance rather than traditional Medicare - initially a good deal for the youngest and healthiest patients but one that would suck the money out of traditional Medicare. Supposedly, the private insurance policies would offer some guaranteed benefits. Romney-Ryan saves money by making the voucher worth a lot less than the policies are likely to cost. A purported miracle of the free market is supposed to make that happen.

The point Matt makes is that what you have really done here is introduce another layer of rent seekers in the stack of those feeding at the government purse. Like providers and beneficiaries, they have a strong interest in keeping their cash flow and profit as high as possible, and like providers and beneficiaries they will add their well funded voices to the chorus screaming for voucher increases.

I think describing a Medicare voucher system as a “choice-based cost control program” is a terrible way of looking at it. The best thing to consider, if you’re purely concerned about levels of Medicare spending, is the brute political economy of it. Right now scheduled Medicare cuts keep not being implemented (i.e., we do the “doc fix”) due to complaining from the following groups:

— Old people.

— Health care providers.

If you turn Medicare into a voucher plan, then you’ll have the following groups lobbying against implementation of scheduled cuts:

— Old people (who’ll be more numerous in the future).

— Health care providers (who’ll be more numerous in the future).

— Insurance companies receiving RyanCare vouchers.

Vouchers aren't privatization - they are another layer of mouths at the federal trough.