Energion Roundtable Week 6 Medicare

Posted By Elgin Hushbeck

This week’s Energion Roundtable question with Bob Cornwall, Arthur Sido, Allan R. Bevere, Joel Watts, and myself is:

How would you evaluate the plans that each presidential candidate has for Medicare? Should senior citizens be concerned?

Let me take the last part first:  Should seniors be concerned.  The simple answer is yes.  Quite simply Medicare is going broke. Unless fixed, it will cease to exist in its current form.  According to the last report of the trustees, it will go broke in 2024, but that is if you accept the Obama administration’s double counting in ObamaCare.  If you don’t,  then it will go broke in 2016, and “if you listen to Medicare’s own actuary, Richard Foster, the program’s bankruptcy could come even sooner than that.”  But regardless of the date, it is going broke. The bottom line is that Government has shown itself totally incompetent when it comes to managing this program.

Obama’s plan for Medicare is unclear to me.  His web site promises more coverage for less cost with many services for free. But it was not at all clear how you can take a program going bankrupt, promise many more benefits, and make it fiscally sound.  In addition with a growing number of doctors refusing to even take new Medicare patients, it raises the question of what good is the promise of a free visit, if one cannot find a doctor to accept them as a patient.  In short it sounds like a lot of empty promises.

Romney has a plan that at least attempts to address the structural problems. One may not like the plan.  But at least it is a plan and a plan is better than no plan.  Romney’s plan is a mixture of premium supports and means testing, with “Lower income seniors will receive more generous support to ensure that they can afford coverage; wealthier seniors will receive less support.” A key element of the plan is to introduce competition into the program in an effort to drive down costs.

Herein is the really big difference between the two approaches.  Democrats trust government, Republicans do not.  Sometimes this is distorted into Republicans trust big business, but that is not the case.   In an abstract sense I do not trust business, big or otherwise any more than I trust government, but I do see a huge difference between them.  In a well-run market economy, businesses must compete for my business, thus while they ‘exist to make money’ as l teach in my classes on business, this is the paradox of business for a business that is only interested in money will go out of business very quickly.  To actually make money, or even just to survive, a business must provide a service that customers value and do it better than the competition.  It is the paradox of business that drives innovation to give the customer the best value.

Government does not compete; it mandates.  It does not innovate; it regulates. Rather than a bottom up approach of millions of consumers voting with their individual choices, it is a top down approach where standards of care will be determined by the 15 bureaucrats of the IPAB, whose mandates can only be overridden by a majority of the house, 3/5 vote of the Senate, and then signed by the President.

Supporters of government run health care point how insurance companies deny coverage, but so does government.  In fact Medicare’s rate of denied claims is “more than double any private insurer’s average.” But this takes us back to the big difference.  It is not that conservatives trust business or in this case insurance companies, but they do trust consumers who are given a real choice;  an approach that has repeatedly been demonstrated to work in many areas.

This is not a call to return to the system prior to Obamacare, for it was NOT based on choice and competition and in fact it severely restricted both. There are over 1300 companies providing health insurance in the U.S., many not for profit.   Yet, no one has this many choices.  For most, their choices are limited to the few offered by their employer. In addition there was significant government involvement in health care, through Medicare and other programs and regulations which are negatively impacting the system and driving up costs.

Real positive reform for both health care in general and Medicare in particular would increase choice and competition, and this is the direction in which Romney’ plan moves. It is simply a matter of numbers and freedom. If 1300+ companies are actively seeking better ways to provide health care, and customers are free to choose those who do the best job, than we are much more likely to see better health care at a lower cost, than by waiting for one entity, the government, with a proven track record of inefficiency and mismanagement, to come up with an improved system.

After all, with choice and competition if you don’t like your current provider you can change to some else. With single payer, if you don’t like your current provider, well there is a reason it is called single payer…

Sep 24th, 2012

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