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Kaine embraces bankrupt entitlements

On Monday, Tim Kaine released a statement [1] on the “47th Anniversary of Medicare and Medicaid.” It’s not usually a milestone one celebrates, and it was doubly odd to see him call attention to two government programs that are teetering on the edge of bankruptcy [2].

Kaine’s pitch: while in need of reform, the programs have managed to give grandma and grandpa “a stable and healthy retirement.”

Without getting too deep in the weeds, seniors have reaped substantial benefits Medicare. More than they have paid for [3] through payroll deductions and premiums.

It’s a massive wealth transfer program from which there is no escape. But even with the fix Tim Kaine urges — “like allowing for the negotiation of prescription drug prices—a measure that could save as much as $24 billion every year” — it will still go bust, and possibly as soon as 2014.

Making the program solvent, then, will require more drastic action. But even the middling steps urged by Rep. Paul Ryan earn Kaine’s scorn:

There are some, like my opponent, George Allen, who threaten to scale back these protections, and diminish benefits. George Allen has repeatedly praised Rep. Paul Ryan’s budget, which would dramatically shift health care costs onto the shoulders of older Americans, and replace the current Medicare system with one that could leave some seniors under age 67 without any health coverage at all. His all-cuts approach would slash spending to these vital safety net programs and attempt to solve our fiscal challenges on the backs of those who can afford it least.

That’s rich. If anything, Mr. Ryan doesn’t do nearly enough to steer us away from the fiscal iceberg that is Medicare. Kaine might know this, on some level, but it is far easier to pander for senior votes than tell them the hard truth: your entitlement program is bankrupting us, and no amount of fixes will changes that.

Or if we prefer to put a more academic veneer on those tough words, we could turn to Milton Friedman, writing [4] on one of his favorite topics, medical savings accounts:

A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns—the possibility of being impoverished by a major medical catastrophe—and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become “What’s wrong?” not “What’s your insurance?”

And that’s the important question, isn’t it? It’s also the one that the current system makes almost irrelevant. Mr. Kaine may prefer the current, unsustainable, regime for political reasons. But someone who truly cared about the nation’s fiscal and physical health would ditch it in favor of a system like Friedman advocated — one that puts patients and doctors back in charge of health care.