MEDICARE : AMERICA´S ATHENS SYNDROME / BARRON´S EDITORIAL COMMENT ( HIGHLY RECOMMENDED READING )

Editorial Commentary


SATURDAY, MAY 28, 2011

Medicare: America's Athens Syndrome

By THOMAS G. DONLAN

Rule by the people is dangerous if the people won't do the math

Newt Gingrich was right before he was wrong. His reading of the American public's attitudes about saving "Medicare as we have known it" unfortunately was correct. "Too big a jump," was his verdict—not because he wouldn't like to see Medicare converted into premium support for private health insurance, but because he wouldn't like to see his party lose the 2012 election.


A GfK Roper poll for the Associated Press confirmed Gingrich's judgment. When it comes to Medicare, the majority of Americans are as suspicious and resentful as the Greeks in the streets of Athens. Give them a little more time to get fired up, and Americans will be in the streets of Washington protesting the Medicare plan drafted by House Budget Chairman Paul Ryan (R., Wis.). The public wants what it wants, when it wants it, and it doesn't want to pay for it.


According to the poll, a clear majority, 54% of Americans, believe that the nation's fiscal problems can be cured without cutting Medicare spending. This is the political equivalent of trying to get your way by holding your breath until you pass out, but so what? America today is a democracy with the feature that the founding fathers most feared. Citizens can vote for benefits, secure in the knowledge that someone else will pay the taxes.


Cuts Ahead


What is more ominous for the future of the country, a majority of that majority with stubborn faith in the viability of Medicare also believes that the powers-that-be will go ahead and cut Medicare unnecessarily, for dark and mysterious reasons of their own. It is hard to run a republic without the trust of the citizens; it is completely impossible to run a democracy in such a situation.


Those suspicious poll respondents are correct—about the result if not about the reasoning. Both parties will do what they can to reduce Medicare spending, just as they have in the past. They see the need to reduce the rate of growth in Medicare spending. They have seen it for decades, though they haven't done enough to offset the growth in beneficiaries and the cost of improvements in medical treatments.


At different times, both parties have done their best to save Medicare—imposing price controls, raising taxes, reducing the value of benefits and introducing elements of competition into the system. Republicans believe in the power of the profit motive to find efficiencies and contain costs—a nice way of saying the market and insurance companies will ration care. Democrats have put a provision in Obamacare that would empower a board of 15 experts to decide what treatments are not sufficiently effective to be worthy of federal support—a nice way of saying that bureaucrats will ration care.


Dangerous Choices


Like the country boozer with a jug of bad moonshine, today's Republican party leaders don't know whether to "puke or go blind." They can save their lives or they can die happy. They are standing on a principle they must realize the country doesn't share.


For the time being, the Republican leaders are sticking with principle, and doing everything they can to present a solid front to the nation. The flamboyant Georgian's well-honed instinct for self-preservation brought him quickly back to party loyalty.


After changing his mind, by the way, Gingrich declared that he never changed it—he merely misspoke: "Any ad which quotes what I said on Sunday is a falsehood," he said on the following Tuesday, "because I have said publicly those words were inaccurate and unfortunate." Emphasis on "unfortunate," especially for a has-been pol trying to resurrect a career in the national circus tent.

In a once-obscure Congressional district outside Buffalo, N.Y., fired-up voters last week made their views known more directly.


The unfortunate Republican Jane Corwin lost a by-election for a seat held by Republicans for nearly 40 years. Democrat Kathy Hochul was well financed by national Democrats who were trying to prove once again that the public will respond to calls to protect Medicare. She issued a wave of broadcast ads on the issue, and the polls showed Corwin was severely damaged in the eyes of voters.


There was a third candidate, Jack Davis, who confused the race ideologically. He had run several times without success as a Democrat, and this time he ran as an independent claiming support from members of the Tea Party movement.


In a sense, however, Davis caused the race to reflect the real ideology of the people: A majority of voters in the race supported the candidates who wanted drastic cuts in government spending. A different majority supported candidates who wanted to preserve Medicare without adjusting for its looming expenses. Only a plurality elected Democrat Hochul, who wants to preserve all forms of government excess, from Medicare to the Departments of Energy and Education.


Earning a Victory


House Majority Leader Eric Cantor suggested last week that Ryan should run for president on his own platform. Ryan has said repeatedly that he doesn't want to run, at least not next year, but Cantor's basic idea is sound. The Republicans must sell their program. They cannot win unless they deserve to win. They cannot deserve to win unless they convince the voters that "Medicare as we have known it" is financially unsustainable, requiring either the elimination of all federal functions except health care, or taxes at levels that will undermine the private economy.


If there's reason for hope about the American fiscal dilemma, it's that Americans can come to their senses and sign on to something like the Ryan plan. Converting Medicare's open-ended payments of fees for services to means-tested payments for health insurance makes so much sense that reformers from both parties have embraced it at times. A bipartisan coalition even enacted it in the extension of Medicare to cover prescriptions. But ending fee-for-service Medicare has also frightened so many voters that demagogues in both parties have opposed it over the years.


The 2012 election may come down to this: Which frightening vision of the future is more frightful?

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved