Daniel Drezner worries about the policy implications of the new Medicare bill. Indeed, while the political implications of the Medicare bill are a major boon for the GOP, the policy implications are anything but rosy.
The prescription drug bill is currently budgeted to cost around $400 billion in liabilities over the next few years. The fact is this cost is probably a small fraction of what the actual costs will be. The Heritage Foundation finds that the Medicare bill will add $2 trillion to the $5 trillion shortfall in Medicare by 2030. Such a regression simply cannot survive for long.
Eventually Medicare will have to be reformed at a far more fundamental level than this bill would provide. Medicare is based on the idea that insulating consumers from having to make choices is a sound way of running any kind of economic system – something that is simply not true. By insulating consumers from having the ability to make choices you only encourage wasteful spending and inefficiency. If we ran our overall economy like we did Medicare the US would be a Third World country right now. You cannot expect to have a system that does not provide choice or accountability and expect to see that system perform well – it flies in the face of the basic rules of economics. It’s as foolish as thinking tying a bed sheet to your neck will let you fly with Superman – it may seem like it’s working until the moment you hit the ground.
A real solution would be a system that allows for greater choice for Medicare recipients and allows increased free-market competition between Medicare and private providers. It would also include tort reform to keep the increasingly dangerous malpractice insurance costs down which is hurting physicians and raising prices for everyone. It would also streamline regulatory processes and eliminate costly rules that have no impact on patient safety or quality of health care. Of course, those changes would be much more politically difficult than another budget-busting entitlement program. However, they will be necessary sooner or later, and Congress and the President may find that avoiding making the hard choices now may hurt them after 2004.
