Posted by: theoptimisticconservative | June 2, 2011

Why Americans will never “grow up” as long as we have Medicare

Beth Haynes writes at Pajamas Media today that Americans need to grow up, and stop thinking we can, in her metaphor, choose and eat cake we haven’t paid for.

Her point is good, as far as it goes.  There ain’t no such thing as a free lunch.  But as long as we have “Medicare,” we’re going to continue, willy-nilly, to behave as if we think there is one.

It is not possible to do otherwise.  When people don’t see their arrangements for medical care as a fee-for-service proposition, but rather as a collective “social insurance” scheme, in which the emotion of the moment will always be the tiebreaker for lawmakers’ decisions about other people’s money, no one has to “grow up.”

How do people “grow up” in the course of normal life?  From what does the concept of “growing up” derive?

“Growing up” means assuming responsibility for yourself.  It seems absurd to have to point out anything so basic, but then, we’ve been living under a nanny state for quite a while now.  Growing up is what you do as you transition from infant to child, from child to adolescent, and from adolescent to adult.

At each step of the way, the transition is marked by your increased ability and willingness to assume responsibility for yourself.  At a certain point, you – and you alone – are held accountable for your actions.  With that accountability comes an autonomy that almost everyone looks forward to with longing, during his or her teenage years.  You can do what you want to do about the big choices in life: what career you choose, where and how you live, whom you marry.

The price of that autonomy is taking care of your own needs.  The more responsible you are about that, the less interference there will be from others – family, the civil authorities – in your life.

Before Medicare existed, “medical care” was something you planned for as part of that responsible mode of living.  Hard as it is to believe, people paid cash for all their routine check-ups, doctor visits, and prescription drugs.  Most in the middle class maintained insurance for what was called “hospitalization,” meaning the need for expensive in-patient care, whether because of an auto or work accident, childbirth, children’s illnesses, or the health problems of the elderly.

That insurance cost far less, as a percentage of income, than today’s health program premiums.  Premiums were higher, of course, for older rate-payers and those who were especially likely to make claims, such as young couples in their child-bearing years.  For many on the payrolls of large companies, medical insurance – on the “hospitalization” insurance basis – was a benefit provided by employers.  (Naturally, your pay was lower by the amount of the monthly premium.)  Whether you paid out of pocket or your employer paid, it was smart to enroll in medical insurance early in life, as that meant your premiums – if you stayed with your insurer – would be better when you got past 50.

People were very particular about buying their insurance, because they understood that their choices about it would determine the kind of services they could claim if they needed medical care.  The concept of paying some money by the month in order to have unlimited access to medical care did not exist.  It was understood that there would be limits on what the insurance company would pay for, just as there are limits with auto and home insurance.  Saving money “for a rainy day” was targeted on the kinds of contingencies insurance might not pay for.

But middle-class Americans had much more discretion over their income then.  They didn’t fork over everything they earned in the first four months of the year to three or four levels of government.  The social contract that was based on being responsible for your own medical needs came with the particular benefit that you kept more of what you earned.

None of this meant that there was no provision for the indigent.  States and counties across America maintained publicly funded hospitals and clinics whose purpose was to provide care for those who couldn’t pay.  Religious organizations provided medical care for the indigent as well, and in some places their facilities were the first resort.  The system wasn’t perfect, by any means, but it reflected the social contract of individual responsibility combined with compassion.

When Medicare came along, it changed all that.  Literally, all of it.  Medicare divorced medical care from any understanding about prior limits on contractual obligations.  It treated medical care not as an element of individual arrangements and responsibility, but as a political issue of collective entitlement.

When experts today point out that a Medicare beneficiary draws from Medicare several times what he paid into it, they are only noting what was supposed to happen.  It was the intention of Medicare to ensure that prior contributions and prior arrangements would not limit the care retirees would receive.  Of course that’s what it does.  That was the whole point.

Beth Haynes urges us to repudiate that idea, and she is right to.  But repudiating that idea is repudiating Medicare.  If we can be brought to repudiate it, we won’t need “Medicare” at all.  Indeed, it will be a hindrance to us.  There is no point in turning something over to the government if the basis for claims on it is not to be divorced from what we put into it.  Only if it is important to us that medical care be allocated on a political basis, for political purposes, is there a reason to continue Medicare on its current model.

No one has ever argued that today’s seniors should be left to fend for themselves.  We’ve had Medicare for nearly 44 years; most who are on it today spent most of their working lives paying into it – money they could have spent differently if it had been left in their pockets.  No changes to Medicare should adversely affect their access to care.

But I think one reason it has been so easy to flog the “Mediscare” theme is that at least some people intuitively understand that the Ryan plan may be a step in the right direction, but it doesn’t break firmly enough with the fundamentally unsound basis of Medicare.  If you “grow up,” as Ms. Haynes urges Americans to, and accept that what you get out of your medical insurance has to be limited, and has to be tied to what you chose to pay into it – then what do you need a government entitlement program for?

J.E. Dyer’s articles have appeared at Hot Air’s Green Room, Commentary’s “contentions,Patheos, and The Weekly Standard online.


Responses

  1. Medicare’s defined-benefit scheme for pre-paid health care caused all health insurance to evolve toward that model. A defined-payment Medicare is a necessary waypoint on the path to any “grown up” system for medical care for the elderly. It also is a waypoint for rest of our medical care system. Whether it becomes both a waypoint and a final destination is unknowable today.

  2. I must disagree, Richard Belzer. There is nothing inherently “grown up” about a government program defining benefits for the people. There is a very large lurking premise behind making such an assertion. I can guess what your premise is, but it would be more useful if you were to state it.

    I will stipulate at the outset that the old model of people buying private insurance for “hospitalization” was a defined-benefits system — although not for every purpose of argument.

    The question is what you see as better — and in particular, more “grown up” — about having the government do the benefit defining, and thereby eliminating the element of choice and voluntary contract between private parties.

  3. Dead right. I would leave all those indigent folks die. If they were meant to survive God would have given them rich parents.

    Actually, I would go even further. I think we should do as the Spartans did. We should put the kids of all the people who think we are going soft out in the desert for a few days to toughen ’em up. The survivors should be world-beaters. Any takers among the “medicare is making “us” soft gang?

  4. So, Paulite is really a hard core leftist. Who could have guessed?

    • Absolutely not.

      I believe that people should be self-sufficient and should make provision from their own resources. I also believe in equality of opportunity. I loath being preached at by hypocritical elites who have special priviledges.

      I have paid for health-insurance all my life. As a self-employed person I paid for it out of my own pocket. I also paid taxes to fund the socialized health-care and pensions provided for government employees, teachers, police, and of course, the military. The health-care and pensions provided for these elites with my money is hugely priviledged over what is available to you or I on the market. In fact, these elites get “free” (To them, not to the taxpayer, of course) health-care and pensions that provide cover for themselves and their families that are not available on the market at any price.

      The Opticon is from one of these priviledged classes. Yet she preaches at the rest of us. Her argument seems to suggest that the kids of a minimum-wage waitress in a restaurant (whose parent could never afford private health provision) will be softened or corrupted by government-provided health-care while her own kids won’t. Give me a break!

      I don’t believe in universal health-care. But I agree that the kids of our poorest citizens cannot be made suffer because their parents are sick or poor. I believe that our well-paid government employees (including the military) should pay the market rate for their pensions and health-care. (And I don’t buy the argument that they are “paying” by way of suppression of their wages – Government employees already get paid 25% more than people doing similar work in the real economy)

      What is really behind the Opticons rant is that while she is quite ok about the taxpayer paying for her socialized health-care, she resents having to pay taxes for the kids of the poor. Her argument also contains the elements of an ugly proto-Nazi argument – that we must be “toughened up”. Pity she exempts herself from this theory.

  5. Yep. It appears that the “Paul” in Paulite owes more to the Soviet apologist Paul Robeson than to Ron Paul. I hope his voice is as good as Robeson’s was.

    • See above.

  6. This essay is really an unfortunate mess of ignorance and silliness.

    —-“medical care” was something you planned for as part of that responsible mode of living.—-

    or it was something that you simply didn’t get, whether you planned for it or not.

    and that would still be the case today, because planning for something doesn’t mean squat when you can’t pay for it.

    • There will always be goods and services individuals can’t pay for, and pooling all our money (including extra bits from the rich) will just mean that there are goods and services we can’t, collectively, pay for, and that someone will therefore have to decide who gets what. The choice is between inequality and progress (because what the rich can afford now will become cheap enough for others later) and equality and stagnation–and resentment, authoritarianism and ultimately regression. Inequality breeds resentment as well, of course, but the mark of an adult is to realize that as long as you have a fair chance to prepare as best you could for the worst, there is no one to blame if the worst turns out to be worse than you could have expected–in short, maturity is realizing that, unless one has been directly oppressed or cheated, bad things happening might simply be “life.”

  7. —The choice is between inequality and progress —-

    you need to think that one through a bit more. really.

    • Not really–of course any progress STARTS in one place, with a particular technological advance available only to a very FEW and then SPREADS.

      Indeed, how else can you imagine it occuring? What would a “right to transportation” and the socialization of automotive technology done to the development of the car which, obviously, for a while, was only available to the affluent. Just like private homes, phones, and everything else we take for granted as private possessions within our means.

      How do you imagine innovations being made available to everyone simultaneously?

      • I imagine that new things are discovered without much reference to the number of people that have much money.

        Perhaps you can name the great discoveries that pushed humanity forward and that only occurred because of money?

        was the invention of money, a great bit of abstract thinking, the first great discovery?

        • I’m not sure I understand your question, but you can’t really be saying that a desire for profit has nothing to do with innovation and the diffusion of innovation, can you? I suspect that money was first of all used by a few traders, on the margins of larger systems; the auto was first available to a few and then to many; air travel; telephones; TV, etc. This all seems so obvious that I must be missing your point.

          • What I’m saying is that innovation is indeed NOT invariably linked to a desire to amass wealth.

            some things, incremental advances, are simply spread for profit. others are not.

            You think that Lister’s application to surgery of previous work on micro-organisms was for profit?

            You think that Galileo’s work, Liebniz’s calculus, Lavoisier’s work, Einstein’s, were all for-profit?

            you seem to be focusing on mass production and properties of marginal utility rather than upon more fundamental motivations.

            money plays a part, it’s not the leading role.

            • I don’t know about Lister, but if his innovation in surgical technique required new surgical instruments and, more importantly, the training of a new set of surgeons capable of applying it then that innovation would, indeed, have spread gradually throughout the medical community, and those surgeons capable of performing the new techniques along with those hospitals capable of providing the new service would, indeed, have been in a position to charge rather high prices and, in a market setting, would do so. Then, the price would gradually go down as the technique became routine. I’m not talking about Lister’s motivation, but of how a new good or service becomes available.

              I’ll bet Galileo would have been glad to sell the telescope with the improvements he made, but I don’t know the history here; Leibnez and Einstein discovered things, they didn’t innovate (what product did either invent?).

              I’ll stick with my examples, as they seem much more relevant to inventions and innovations in the medical field: cars, radio, TV, telephones–indoor plumbing, etc., etc. And, of course, computers–we all have them now, but who had them 25 years ago?

              Some lone genius might be happy to invent new life saving drugs for the sheer pleasure of it, but that has nothing to do with the billions of dollars of investments the drug companies make. And that’s the stuff government health care laws interfere with.

              • maybe I’m not clear, adam, but human progress is not all about whether Lister developed a better retractor or a vein clamp with an improved locking mechanism.
                Lister introduced theories about micro-organisms and infection and procedures for sterilization that dramatically reduced the incidence of post-surgical infection.
                Countless deaths were avoided and surgery was forever changed.

                THIS is progress and it wasn’t for the cash.

                Money is not the be-all and end-all, adam. It’s an abstraction and a part of a larger societal system.

                People are motivated by other things, OFTEN.

                You think that the winners of Nobel Prizes would be indifferent to the awards if the Nobel Committee decided to end the cash part of the award?

                Aren’t there any activities that fill you with joy?

                When you were a little adam, do you tell everyone that you wanted to grow up to be a rich man?

  8. Medicare warped a perfectly reasonable model of medical payment. People paid to go to the doctor that they could afford, for treatment that was reasonably priced and payments could be negotiated… and catastrophic medical conditions would be handled by insurance that was truly “insurance”.

    It was the old 80/20 plan, and Medicare actually started out as a poorer version of it at 70/30.

    Time, and dependency plus Liberal/Marxist/Democrat/Fascist (all the same thing) brought us to the fanciful notion that everybody had a right to hip replacement surgery for a $25.

    The case for how affordable very advanced medical care could be under a fee for service (medical savings, catastrophic insurance) plan with minimal legal regulatory provisos for transparency in pricing and reimbursement is made by the non-insurance covered medical industry (cosmetic and laser eye surgery). In both cases the prices have gone down, the care level has gone up.

    Medicare is a bad idea, brought about by Leftists looking to purchase votes with other folks money.

    The answer has always been the market.

    A medicare that would work would look like:

    Transparency laws requiring doctors and insurance companies to publish their prices and methods.

    Tax deductiblity for all medical expenses regardless of income level.

    Severance of health insurance from employment (except where voluntary on the part of the business for which beneficial tax deductions are given).

    Medical Savings Accounts that contain pre-tax dollars without limit for treatment payments. The money is both portable, heritable, and permanently tax free.

    A nationwide cafeteria market of competing insurance plans both individual and groups. Where any organization or association may form a group for better price negotiating power. (BTW this is how government employees purchase their insurance.)

    The market would also include high risk pools, limited risk pools, and catastrophic pools. So a church, gun club, benevolent association, etc. could go out and negotiate a group rate for insurance, and offer it to its parishioners/members.

    Then IF people have problems vouchers could be issued for the purchase of basic plans.

    But then the responsibility would be the person’s and not the governments’.

    I realize that this is “uninteresting” to the Social Welfare crowd. Anything that cuts them out of power over the individual is “uninteresting” and cast aside by them.

    Of course no matter what, the Leftist Ruling Elite will just get on a plane and fly to one of the various Health Care Resorts that are being planned and built in the Caribbean. They’ll leave the hoi polloi to wait months and years for state sponsored treatments… and take their wallets to the Cayman Mayo Clinc for high quality, on demand, fee-for-service care.

    Socialism DOES NOT WORK, EVER… UNDER ANY CIRCUMSTANCES!! We must stop the impulse, the notion, and the fallacy before it consumes us.

    At least after economic collapse and the demise of health care system everything will be fair…nothing for anyone… won’t it?

    R/TMF

  9. “When you were a little adam, do you tell everyone that you wanted to grow up to be a rich man?”

    I’m far from rich and spend much of my disposable income on books, so that’s not really the point. You still haven’t addressed the question of innovation–I’ll grant you the progress created and made possible by the sheer love of inquiry and creation; but what about that better retractor clamp? Or, to reiterate: cars, planes, radios, TVs, computers, medicines, etc.? Is it at all conceivable that such goods could be placed in 100 million homes simultaneously, or is some more or less drawn out diffusion process, based upon ability to pay and gradual lowering of price, INEVITABLE? If you try to buck this inevitability, will you not destroy the process of innovation itself?

    • adam, I absolutely agree, and think that I’ve previously granted, that capital and financial incentives play a part and usually a real good one.

      capitalism is good and should not be destroyed. regulated definitely or that INEVITABLE might not be, but regulated some.

      • In that case capitalism is also good in health care, and imposing price controls on medical treatments to ensure equality and accessibility will have the exact same effect as insisting in, say, 1946, that all TV sets be priced so as to be affordable for 90% of the population.

        • capitalism might be good in health care, but it requires extensive regulation, adam.

          the majority of people never have made rational and informed choices concerning health care. it’s not at all easy to make them.

          it is rather easy, however, to exploit the fear of death and suffering for fun and profit.

          • “the majority of people never have made rational and informed choices concerning health care. it’s not at all easy to make them. ”

            The default position of those who don’t think capitalism is particularly good anywhere. Let the government make everyone’s decisions, then–that’ll work out fine. Why you think you can stop this at health care is not at all clear.

            • adam, if you like capitalism, you might understand that “Let the government make everyone’s decisions” about some things is, in a democracy, pretty much a market choice.

              • Well, it’s one of those points at which democracy is at odds with liberty and there’s no doubt that the system is set up so as to allow that to happen; it’s also possible that no system that systematically privileges liberty could long endure, but I happen to think it’s our only option at the moment.

              • adam, every form of government and every government, hell every society is at odds with liberty.
                for that matter, capitalism, which only exists in society, is at odds with liberty.

  10. “the majority of people never have made rational and informed choices concerning health care. it’s not at all easy to make them.”

    From whose perspective? Where can we find the “law” on this matter, the holy writ that describes what “rational and informed” decisions are for all?

    The idea that there is a single, absolute standard for such a thing is the root of all collectivist schemes. You are welcome — no, entitled — to your opinion on what is “rational and informed,” but demanding to make government policy on the basis of their being a universal standard for these things is another matter.

  11. opticon

    “The idea that there is a single, absolute standard for such a thing” —
    is not my point.

    I’m saying that it’s easy to identify standards (choices) that are not rational (or effective in producing the outcome that the person making them wishes to obtain.)

    that there’s not an absolute best standard does nothing to obviate that there are better choices than are routinely made.

    • You haven’t made your argument more defensible by changing the wording, fuster. In fact, you haven’t even said anything different, and my point about postulating a universal standard remains.

      You are not in a position to judge what other people should be doing about their medical care.

      • as you failed to understand my argument, and didn’t address, I don’t yet have a need to defend it.

  12. “adam, every form of government and every government, hell every society is at odds with liberty.
    for that matter, capitalism, which only exists in society, is at odds with liberty.”

    I suppose that capitalism is at odds with a kind of running through the woods naked kind of liberty but otherwise it IS liberty. The same with society–only through engagement and exchange with others is there such a thing as liberty. You’re right about government, though, which is obviously the reason for keeping it minimal. By now, though, the question is less whether government should make decisions that people are “unable” to make for themselves; rather, the question is, what must anyone be thinking to imagine that government can make these decisions any better than the least competent individual? Government decision has become indistinguishable from government malpractice, with the partial exception, for now, of the more basic military and police functions.

  13. —– Government decision has become indistinguishable from government malpractice—–

    what country are you living in?

    • One in which a new health care bill will, if implemented, wreck the health care system; where financial regulations and Keynesian intervention create one (bigger) crisis after another; where the greatest natural resources (oil, gas, etc.) are used far below possible capacity; where the federal government piles up complex and idiotic regulations determining who can speak during political campaigns and how; where, especially, there is less and less law and more and more delegation of power to unaccountable bureaucrats.

  14. adam, you say “I suppose that capitalism is at odds with a kind of running through the woods naked kind of liberty.”

    But thinking about that, I’m not sure the two are at odds. If someone running naked through the woods isn’t free to engage in capitalism, then how much liberty does he have? The main limiting factor would seem to be the need for other humans. You can’t engage in any form of economic activity without at least two.

    • Have you no sense of irony – or shame?

      As part of the military you are the beneficiary of the biggest collectivist healthcare scheme in the country.

      You and your family are the beneficiaries of totally taxpayer funded “socialized” healthcare, and you have a totally taxpayer funded “socialized” pension which you get in your middle years.

      Both your healthcare and pension benefits are on far more advantageous terms than us ordinary private citizens can obtain on the market or from non-government employers.

      The question must be asked – why, if you believe the poor are likely to be corrupted or softned by state-provided healthcare, wouldn’t your own far more comprehensive health-cover not corrupt you or your child(ren)? In fact it must be extremely morally debilitating for the children of the military and other government employees to see their parents getting all this taxpayer largess. Where do they think it all comes from?

      Or is it your real point that you are quite happy to have mugs like myself pay for your priviledges while you resent having your taxes used to fund innoculations and other health provision for your less fortunate fellow citizens and their kids.

      I speak as someone (unlike you) who pays for their own healthcare.

  15. Yes, but the person who just wants to run naked through the woods would most likely experience and define the undeniable rigours of the capitalist system as an infringement on his freedom. But you get my point–freedom is a specifically human, and therefore social phenomenon. Bears run naked through the woods but aren’t “free.”


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