Telling the Truth About Medicare

At last! Andy McCarthy throws down the gauntlet in his column, “End Medicare.” Why should Republicans be in the business of saving a program that, in my opinion, is Congress’s most disastrous blunder since the Kansas-Nebraska Act? Let it go over the cliff! Let it crash and burn! Medicare, along with its cousin Social Security, has perverted our government into one whose principal purpose is to transfer wealth from the young and the middle-aged to the wealthiest segment of our society, the elderly. Medicare is and always has been a financial disaster–not to mention a scheme whose essence, in Lincoln’s words that Scott often quotes, “tend[s] to rub out the sentiment of liberty in the country, and to transform this government into a government of some other form.”
Andy writes:

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….
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. …
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. …
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. …
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.

All true. McCarthy’s arguments are principled and historical, not actuarial. One could elaborate at length on the statistical nature of the Medicare fraud. The most critical feature of any Ponzi scheme is that the early entrants must do well. Why did people crave the privilege of entrusting their money to Bernie Madoff? Because those who did so in the beginning got wonderful returns, through good times and bad.
Likewise with Medicare: those who are now enrolled in the program are consuming medical services at a rate that dwarfs the modest payments they made over their working lives. They are making out like bandits, just like Madoff’s early investors. And, exactly like Madoff’s early marks, the vast surplus they are reaping has nothing to do with any “investment” they made. Rather, it represents the government’s deliberate perpetration of a fraud–in this case, a fraud that is intended to make Medicare politically sacrosanct so that it will survive, for now, despite the fiscal train wreck that we all know is coming. The liberals’ plan is that when Medicare does crash, the market for medical services will be so distorted and so government-driven that it will be too late for any alternative except socialized medicine. We see that already in Obamacare.
Perhaps the winner of the Power Line Prize will be someone who succeeds in conveying to the younger generation that its future is being blighted by government scams, foremost among them Medicare.


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