Thursday, June 2, 2011

Schultz and the Medi-Scare of 2011

By Zach Foster

A press release today put out by the Democratic National Committee quotes Chairwoman Debbie Wasserman Schultz as she “highlights the devastating consequences of the Republican plan to end Medicare.”  Schultz stated: “The Republican plan for balancing the budget on the backs of America’s elderly, poor, and vulnerable has been whole-heartedly embraced by Republicans in Congress. But their plan is more than wrong-thinking, it’s just plain wrong.  And you don’t have to dig too deeply to see why: it would end Medicare as we know it. The Republican plan would ‘save’ money not by reducing costs but by passing them along to seniors in Florida and across the country.”[1]

Chairwoman Schultz is correct when she says that it would “end Medicare as we know it.”  There is a popular rumor going around the country that private-sector health care is more expensive than Medicare and Medicaid.  This rumor is a half-truth at best.  It is true that Medicare and Medicaid are less expensive to the INDIVIDUAL consumer, but that is because the federal government—the Department of Health and Human Services, to be specific—is footing the bill through taxpayer money.  Some citizens are okay with their tax dollars going towards public health care.  The problem is that EVERYONE’s tax dollars go to public health care, and public health care is incredibly expensive, which is the last thing the county needs in a time of historic debt[2] (by the way, the debt ceiling might be raised again by Congress).[3]

The author does admit that the quality of care provided by certain insurance companies has eroded while prices have dramatically risen.  This is because the Department of Justice did nothing as health insurance companies merged and formed monopolies in the medical insurance industry.[4]  Whenever monopolies occur, they will naturally be devastating for the free market, since under monopolies there is no need to compete for a consumer’s patronage, therefore prices rise, consumer needs are largely ignored, and consumers are powerless (and often uninsured).  The DNC Chair doesn’t seem to realize that many of monopoly-enabling measures were taken by Congressional Democrats.  One example off the top of the author’s head is the House Energy and Commerce Committee’s 2009 amendment that protected monopolies by a select few pharmaceutical companies for over a decade.[5]  Luckily, where some Congressional Democrats allowed themselves to be bought by private interests, others have begun to pick up the slack by enabling anti-trust legislation aimed at these monopolies with a stranglehold on the health care, insurance, and pharmaceutical industries.[6]  With the free market unbound and enabled once again and new competitors allowed to compete for consumer patronage, costs will go down and quality will rise.

The DNC Chair’s recent statements would lead people to believe that the GOP plans would cruelly leave millions of people uninsured.  She didn’t seem to have a problem with President Obama’s plans to squeeze nearly $40 billion out of the Medicare budget which surely would leave many people uninsured.[7]  Yet there is all of a sudden a MAJOR problem with the GOP plan to balance the budget (the great debt contributor) “on the backs of America’s elderly, poor, and vulnerable.”  Once again, this is not the case.

First of all, if the vote comes to end Medicare (the bill has little chance of being passed before 2013, depending on how the 2012 elections go), Medicare would not even be ended until 2021, giving retirees aged 65 and older an entire decade to find another health insurance provider if they pleased.  Furthermore, the plan will NOT leave these individuals uninsured.  Rather than spending countless hundreds of billions in maintaining a national health care, the federal government will pay for senior citizens to receive private sector health care, which will be more efficient and higher in quality.[8]

In regards to the idea of the poor being uninsured due to the Medicaid “overhaul,” this is also a myth.  While the federal government will directly pay for the private sector insurance for former Medicare consumers, it will revamp Medicaid by turning it into a joint federal-state program.  It would give money to the states, which have a better chance of knowing the needs of their own citizens rather than the federal government which hardly knows the needs of 300+ million people, and federal funds could either pay for state-run Medicaid, or for the states to pay for private sector health care for the poor.  An Ohio-based political dispatch cites the Ryan plan possibly saving over $700 billion in federal funds while allowing 1.5 million uninsured people to have coverage.[9]

Contrary to the DNC Chair’s views, increasing the size of government’s presence in the health care and insurance industries would not be beneficial to the average consumer.  Bureaucratic policies, procedures, and red tape would be harmful to these consumers, since the quality of services would further degrade.  Increasing the size of the welfare state seems like a good idea in theory, but not in practice.[10]  The best hope for health care and insurance in the country would be: the shrinking of the federal government’s presence in the industry, which the Paul Ryan idea does; tackling the monopolies that restrict the free market, for which bipartisan efforts are being made; and strengthening the free market in order to improve quality and lower costs, empowering the private citizen.


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