The Covert Rationing Blog

Wonkonians Should Read Their Own Work Product

March 6th, 2008 by DrRich

According to Fortune Magazine senior editor Geoff Colvin, if you ask Alan Greenspan what the biggest threat is to the U.S. economy, he answers with one word: Medicare.

Greenspan is relatively sanguine about the sub-prime troubles, the housing crash, the falling dollar, and the trade deficit, all of which are relatively routine economic challenges which will “sort themselves out.” The real problem, he maintains, the one that dwarfs all the others and that all but guarantees some sort of societal upheaval over the next few decades, is the money we’ve all signed up to spend on Medicare, Medicaid and Social Security - but in particular, on Medicare.

Greenspan’s opinion merely reflects the bland prose of the 2007 Financial Report of the U.S. Government (FRUSG), recently published by the GAO. Not too far into the future, according to the FRUSG, the “required Medicare, Medicaid and Social Security spending and the related deficit financing costs will far exceed the Government’s ability to pay.” (Which is another way of saying it will far exceed its ability to tax, at least under the representative form of government which, so far, most of us seem to prefer.) According to the FRUSG, within many or our lifetimes these three entitlement obligations alone will consume more than the total revenue of the US government.

But not to worry; we’ll have either a revolution or societal collapse well before that happens.

Of these three massive entitlement programs, the FRUSG makes it clear that the Mother of All Fiscal Problems is Medicare. Even before we adopt “Medicare for everybody,” or one of the similar programs now being discussed by presidential candidates, Medicare already has unfunded obligations that reach the unimaginable sum of 34 TRILLION DOLLARS. (For those who have trouble with big numbers like this, $34 trillion is considerably more than the unfunded pension liability of, say, General Motors. Or of all the companies that exist in the universe put together. It’s more than half of the total GDP of the world. Really, it’s a whole lot of money.)

While the financial projections made by the FRUSG are truly dire, they are still too optimistic. They assume that certain absurd cost-cutting measures currently required by law (such as cutting Medicare payments to doctors by 41% over the next nine years), will actually occur. (The only way this will occur is if we have 41% fewer doctors than we have today - which, if the doctors I’m talking to are to be believed, is actually a possibility.)

With a healthcare-induced financial catastrophe like this staring us in the face, with healthcare reform being (intermittently, at least) the number one domestic issue; with the dire fiscal projections in the FRUSG being advanced not by agenda-driven right-or-left-wing nut-jobs, but by plodding government accountants who are just adding up the numbers; and especially with with Medicare officially projected to go in the red during the very next presidential administration; one might think that at least one of the candidates from one of the parties might want to start talking to us about it.

The fact that they’re all looking the other way, talking as if providing health insurance to those who are uninsured is the chief (and only) issue, ought to disqualify the lot of them. (To be fair, Senator McCain does talk more about controlling costs than his counterparts, but only to the extent that Columbus is closer to Antarctica than Cleveland.)

In any case, it is obvious that if we’re to address this problem effectively, then rationing healthcare (i.e. withholding by design at least some useful healthcare from at least some people who would benefit from it) is going to have to be part of the solution.

It is also obvious, since the government employees who produced the FRUSG took our present activity into account in making their projections, and since our present activity includes extravagant, wholehearted, flagrant covert rationing, that covert rationing does not work. This, of course, goes without saying since covert rationing requires complexity, opacity, tangled incentives, waste and inefficiency, as per Corollary 4 of the Grand Unification Theory. (We should note the irony inherent in the notion that the lack of “universal coverage” is the chief problem, when in fact, having tens of millions of uninsured Americans is an integral part of the covert rationing solution.)

Since rationing is unavoidable we need to try rationing the other way, the open way, to figure out how to ration healthcare so as to optimize the balance of fairness, outcomes, and efficiency. But, of course, we can’t, since we’re Americans and Americans don’t ration. Until we give them leave to tell us the truth, a truth nicely documented by the eyeshaded branch of the Wonkonians’ own family, our Wonkonian presidential hopefuls have no choice but to ignore the fact that the government healthcare obligations we’ve already adopted are hurtling us toward the abyss.

Posted in Wonkonian Rationing, Healthcare economics

One Response to “Wonkonians Should Read Their Own Work Product”

1. james gaulte wrote on 03/6/08 at 5:59 pm :

   I would be interested in your thoughts regarding the Fuchs-Emanuel proposed Universal health care Voucher as discussed in their recent JAMA article in which they talked about the Myth of shared responsibility.

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