End Medicare

Preserving a scam in the vain hope of making it less offensive may be well-meaning, but it’s not right, and it’s not courageous.


Would you vote to save the Bernie Madoff scheme? Me neither. And when you get down to it, that’s why you can mark me down as a failure when it comes to the latest Beltway-conservative litmus test for commentary deemed worthy of adults. No, I won’t be gushing praise for the Ryan plan to save Medicare, nor reserving a seat at the coronation of its author as the most courageous, fiscally responsible Washington politician ever — or, at least, ever to vote for the prescription-drug entitlement, TARP, Keynesian “stimulus” spending, and the auto-company bailout.

Concededly, as creatures of Washington go, Rep. Paul Ryan (R., Wis.) is among the most admirable. I daresay that of all the Beltway pols who want to add trillions to the already unfathomable national debt, Mr. Ryan is among the best — his proposal is a veritable bargain at “only” $5.1 trillion more over the next decade. (And, putting aside the funny Washington math that discounts tens of trillions in unfunded liabilities, would someone please explain to me how House Republicans rationalize their admirable opposition to raising the $14.3 trillion debt ceiling with their votes in favor of the Ryan plan, which would increase the debt to over $15 trillion next year and nearly $20 trillion by 2021?)

We’re all sinners, and Congressman Ryan’s past walks on the wild side do not render hollow his earnest plea that we deal with the entitlement cancer metastasizing in our body politic. But his prescription is not a cure. It’s an aggressive treatment of symptoms that leaves the cancer in place, under the delusion that Dr. Government can be trusted to manage it.

Representative Ryan buys the foundational premise of Medicare: to wit, health care is a corporate asset — not a commodity subject to the assumptions of ordinary commerce (i.e., individual choice, controlled by one’s personal resources and priorities), but a fundamental right to which the central government must ensure access. This is the plinth of the entitlement edifice — the “second Bill of Rights” — that began construction in the New Deal, under the direction of designers who knew full well that it was financially unsustainable.

Sadly, this is the standard Beltway conservative position, too, as evidenced by the ablest of Ryan’s defenders, James Capretta of the Ethics and Public Policy Center. Writing in the May 2 issue of National Review, Jim explains, “The government plays an important oversight role in Ryan’s Medicare-reform plan, as it should.” That is to say, rest assured that we would never suggest scrapping Medicare, or that the government doesn’t have an essential supervisory role to play in the market for medical services — a role we somehow managed to do without for the first century and a half of the nation’s existence. And what is that role? Ensuring that “participating insurance companies must offer transparent pricing and meet minimum-benefit and -quality standards.”

Says who? If by “transparent pricing” Jim means insurers must be discouraged from engaging in fraud, there are already civil and criminal laws against that, and, as an additional prophylaxis, the states heavily regulate insurers. But why should the government be involved in setting standards for coverage, and what on earth does government know about quality when it comes to medical care? In a free society, those are matters for the market. At most, government’s job is to keep the market clean, not to dictate the inputs in the dreamy hope of controlling the outputs.

Medicare was a scam from the start. It had to be a scam because its ostensible purpose — providing health insurance for the elderly — was never the objective of its proponents. Instead, Medicare was a stepping stone to a utopia its champions dared not acknowledge: A compulsory universal-health-care system administered by government experts. FDR’s Committee on Economic Security initially intended to issue a health-care plan in conjunction with its universal, compulsory Social Security proposal in 1934. As Cato’s Charlotte Twight recounts, the former was dropped due to fear that pervasive opposition among the public and the medical profession would jeopardize passage of the latter. But Roosevelt got right back to it the day after he signed the 1935 Social Security Act, empowering the new Social Security Board to study the “related” area of health insurance.

There followed three decades of progressive proposals, each shot down by lawmakers animated by fierce public dissent. The Left realized the dream of socializing the health-care sector was not attainable in one fell swoop, so an incremental strategy was adopted: Get a foot in the door with less ambitious proposals; establish the precedent of government control while avoiding debate over the principle of government control. “Incremental change,” said Medicare scholar Martha Derthick, “has less potential for generating conflict than change that involves innovation in principle.”

She was talking about disability coverage, which was added to Social Security in 1956. The one-way government ratchet implanted by Social Security two decades earlier had made such narrowly tailored additions inevitable. As an insightful incrementalist, Ms. Derthwick realized that disability coverage was, as she put it, a “necessary prelude” to the enactment of Medicare. She would have understood, better than Representative Ryan I’d wager, how even an anti-debt crusader who now wants to reform Medicare could be seduced into voting for the Bush prescription-drug entitlement — the so-called Medicare Part D that was added by Representative Ryan and the Republican-controlled Congress just a few years ago, even though it was already well known that Medicare Parts A through C were driving the country to insolvency.

Everything about Medicare was fraudulent, beginning with the name “Medicare.” As Professor Twight notes, it was appropriated from “a term coined by a reporter to describe a previously established comprehensive health care program” that had won support because it was tailored to military dependents. Although Medicare’s architects were knowingly laying the groundwork for fully socialized medicine, they narrowly proposed to underwrite only care for the elderly — who, after all, were already benefiting from Social Security. Proponents pretended to be removing the aged from “dependency” when they were merely shifting the burden of dependency from its traditional obligors (personal responsibility, the family, and private charity) onto taxpayers. They claimed to be relieving the young of responsibility for their aging parents when they were actually burdening the young — and the young of future generations — with an ever-increasing tab for an ever-ballooning population of elderly dependents.

Of course, if Medicare had been on the up and up, proponents could have sculpted a welfare plan for the 15 percent of seniors who arguably needed assistance. But that would have disserved the goal of fully socialized medicine. So proponents instead followed their successful (and equally unsustainable) Social Security model and gave us what David Hyman has tartly called a “reverse Robin Hood” scheme that “robs from the poor and the working class and gives to the middle class and the rich.” They pulled it off by caricaturing the elderly as uniformly destitute, even though, factoring in assets rather than just income, the elderly as a class were (and are) better off than many of those paying the freight.

More shrewdly, proponents misrepresented Medicare as an “insurance” program, with a “trust fund” into which working people paid “contributions” and beneficiaries paid “premiums” that would “entitle” them to claim “benefits.” In reality, there is no “trust fund.” Workers pay taxes — at levels that can no longer satisfy the pay-outs for current beneficiaries. This state of affairs was entirely predictable when Medicare was enacted in 1965 with the Baby Boom well underway. Back in the early days, when the program was flush, the surplus of taxes passed from the “trust fund” into the federal treasury, which redistributed the money to whatever chicanery Washington happened to be heaping money on. In return, the “trust fund” got an IOU, which would ultimately have to be satisfied by future taxes (or by borrowing from creditors who’d have to be repaid by taxpayers with interest). And the “premiums” largely turned out to be nonsense, too: The pols endeared themselves to elderly voters by arranging for Uncle Sam pick up more and more of the tab, or by using the government’s newfound market power to demand that providers accept lower payments.

When Medicare was enacted in 1965, the inevitability of its many adverse consequences was crystal clear. The system was grossly underfunded. The fee-for-service structure (expertly described by Capretta) was certain to increase costs exorbitantly with no commensurate increase in quality of care (indeed, care is mediocre, or worse). But most palpably, the fact that government was at the wheel made Medicare instantly ripe for political gaming and demagoguery. The ensuing 46 years have not only made the obvious explicit; Medicare and its tens of trillions in unfunded liabilities are actually worse than even its most fearful early critics predicted it would be.

Former House Speaker Newt Gingrich steered the break-out of his presidential campaign into a ditch a couple of weeks ago by suggesting that the Ryan Medicare reform was “right-wing social engineering.” He was wrong, but not for the reason cited by his critics. To be more precise, Representative Ryan’s plan is a surrender to left-wing social engineering on terms the right wing naïvely believes it can accept. Ryan is the darling of a Washington breed of conservative wonk convinced that we can make the welfare state work if we just incorporate a few free-market, family-friendly tweaks. It is a futile political strategy for two reasons.

First, the pathology to which all Medicare’s ills trace their origin is the involvement of government. If you don’t get government out of the mix, transient politics will eventually undo any reforms you put in place. Look at welfare reform, which took Republicans years to achieve but took the Obama Democrats a relative nanosecond to dismantle with their stimulus spending. In Medicare, the pattern is seen again and again. It was no less a stalwart opponent of socialized medicine than Pres. Ronald Reagan who signed off on an “administered pricing” scheme that allowed the government, rather than private health-care providers, to dictate the price of hospital services — in a well-meaning effort to address a Medicare payment system design that drove prices ever higher. Part of President Clinton’s pound of flesh for agreeing to balance the federal budget was the creation of Medicare Part C, extending the already over-extended program to managed care. The creation of Part D, the reckless prescription-drug benefit, was driven by the Bush GOP’s election-calendar craving to be seen as just as compassionate as Democrats have always been with other people’s money.

Reformers such as Representative Ryan always ignore this inevitable trajectory of entitlement politics. They rationalize that they can make a government-sanctioned bribery system run better, or at least preempt Democrats from making it run worse. Hoping to stave off Medicare, congressional moderates in 1960 passed a bill to provide means-tested medical assistance to the elderly. It only greased the wheels for not only Medicare but Medicaid. In Massachusetts, Romneycare was another well-meaning attempt to install a compulsory statewide health-insurance system that would be less autocratic and costly than the one the Left would have imposed. It is, predictably, a disaster that tends toward ever-more-suffocating government control.

The second and perhaps more obvious political flaw is manifested by the new commercial that depicts a Ryan lookalike pushing granny (in a wheelchair, of course) off a cliff. It does not matter how modestly conservative reformers would modify Medicare, “bend the cost-curve,” or whatever unthreatening descriptor is applied to their good-government proposals. It does not matter that Paul Ryan actually tries to save Medicare, which will soon implode if nothing is done. Conservatives will still be demagogued. They will still be accused of trying to destroy Medicare and kill old people.

Medicare deserves to be destroyed, and destroying it would be better for current and future generations, young and old. So why not make that case? Other than a committed socialist ideologue, no one in his right mind would vote to implement Medicare today — not if we were on a clean slate and knew what we know now about its ruinous operation. Ryan’s essential point is that health care is increasingly expensive because it is not permitted to function as a regular market commodity — one with sentient consumers shopping carefully, spurring competition, driving down prices, and encouraging innovation. That kind of market can never happen with the government as a central player. And we can provide some sensible measure of assistance to the truly needy without giving everyone an unsustainable “entitlement” that will destroy the economy.

Medicare is a scam. The people who designed and perpetuated it would be serving more jail time than Bernie Madoff if they pulled a fraud like it in the private sector. As it is for the victims Madoff swindled, so it is for we who’ve been swindled by Washington: The money is gone. We can make provisions for the needy elderly who are about to hit eligibility and have relied on Medicare in their assumptions. But the party is over — and the sooner we grasp that, the fewer victims there will be.

Preserving a scam in the vain hope of making it less offensive may be well-meaning, but it’s not right, and it’s not courageous.

—Andrew C. McCarthy, a senior fellow at the National Review Institute, is the author, most recently, of The Grand Jihad: How Islam and the Left Sabotage America.