Privatizing Medicare: A Fool’s Errand

     With the recent election of Donald Trump and especially considering his lukewarm relationship with Paul Ryan, the media has largely ignored what could be the greatest threat, not only to Medicare, but to all government agencies.  The last person to seriously suggest that Medicare be privatized was the befuddled George W. Bush who, thankfully, was talked out of the idea by the majority of his wiser Republican colleagues.  I have always considered Paul Ryan a sincere conservative as was his beloved mentor, Jack Kemp.  While many Republicans, in recent years, have followed the Dick Cheney concept of privatizing as many government functions as possible and virtually raping the public for as much profit as possible, I have never considered either President Bush or Mr. Ryan one of these miscreants.

     The discussion of  Medicare as an isolated government “entitlement,” is truly a fool’s errand, but it seems to be the method of choice for both major political parties.  Instead, Medicare must be considered in the context of medical insurance, the economy, and the massive failures of both the insurance industry and the Congress to meet the needs of both seniors and the average citizen.  Without an understanding of these issues, voters are bombarded by equally ignorant politicians trying to sell them ideological snake oil in different flavors.

     First of all, the so called “healthcare system” which we currently have, is no “system” at all.  It is an ill designed mistake, born of the same lack of planning and vision that inept Congressional leaders of both parties have so often been guilty.  In the 1940’s the business community, desperate to fill a war depleted work force, sought perks to entice returning veterans.  One of the perks was a new concept called “health insurance.”  Medical costs, however, were not really significant at the time.  To encourage insurance companies to provide policies, however, companies were willing to pay top dollar.  The Roosevelt administration sought to give the insurance industry virtual immunity from antitrust laws by permitting them to fix prices.  Republicans protested.  In exchange for price fixing, a deal was made to have the states regulate medical insurance licensing and rates, except for instances of crime and interstate commerce.  In most states, the insurance business was monitored by a state insurance commissioner, who was either elected or appointed.  In either case, unless overseen by a state's legislature, commissioners were usually under the direct control of the insurance industry, either through political donations or the promise of lucrative jobs after the expiration of their terms.

     Much like the Affordable Care Act, though well intentioned, through lack of planning and vision, the hastily assembled “system” that we have today, fails to meet the needs of our citizenry.  Few people seem to understand just how disastrous the situation is for various portions of the insurance industry.  In fact, under our present “system,” the industry is clearly and completely unqualified to write either medical or homeowners insurance policies.  Homeowners insurance is already on life support, completely dependent on declarations of disaster by state and federal governments.  Even the largest companies cannot afford to purchase adequate reinsurance to cover even a significant fraction of their unfunded liability!  Currently they survive entirely on the huge contributions of corporate welfare donated by state and federal governments.  The Affordable Care Act amounts to a bumbling attempt to save the medical insurance industry which is on the exact same path to self destruction as homeowners insurance.

     Consider that before the Affordable Care Act, medical insurance rates were already pricing themselves out of the market.  Individuals not eligible for group rates could hardly afford insurance even if they were healthy.  Add a few pre existing illnesses and rates soared, a few more and medical insurance became unavailable.  Now, with the elimination of preexisting illness clauses, rates had to go even higher.  As a result, young, healthy people were reluctant to purchase insurance, older people with medical problems could not afford insurance even if they were fairly well to do.  The only real source of payment for decent medical insurance policies had to come from businesses covering all or part of enormously expensive rates.  How long do you really expect this absurd “system’ to survive before the insurance companies implode?  It should be abundantly clear that the companies are not able to own the insurance policies that they sell and that the situation can only worsen!

      Mr. Ryan would take some sixty million seniors, the majority with many pre existing medical conditions and add them to the rolls of the private insurance companies.  He would then have the companies placed on a massive program of corporate welfare, the government pouring in premium subsidies as well as billions of dollars in unpaid reinsurance that the insurance companies could in no way afford.  This would continue forever.  According to conservative estimates, the unfunded liability for Medicare is well over one hundred trillion (not billion) dollars and rising.  Thus he would add the medical insurance industry to the homeowners insurance industry already covered by the Cheney “free money” system. 

     Ah, but wait!  It gets worse.  Mr. Ryan’s innocent plan has the private insurance companies increasing dreaded “entitlements” by hundreds of billions of dollars, but he has them “double dipping” as well.  Don’t forget, as most conservatives have, that it is the American businessman unfairly stuck with the bill for the vast percentage of overpriced medical costs!  Under the current “system,” it still costs almost two thousand dollars more to produce a car in the U.S. than in Canada just because of the cost of health insurance to the manufacturer.  So our pseudo system of medical insurance not only rewards undeserving insurance corporations, but at the same time punishes innocent businesses and corporations as well as the entire U.S. economy. 

     If the federal government is already the deep pocket for both homeowners and medical insurance, than it needs to own it!  The insurance companies are expert bean counters and they cannot legally take bribes from lobbies as congressmen and senators are so conveniently encouraged to do.  They know how to run insurance even if they are no longer economically capable of owning the policies.  Congress needs to be forced by voters to regulate the medical and homeowners insurance companies and then bow out!  In fact, without Congress and its lobbies’ bloody hands choking the life out of it, “Medicare to all” might eventually become a viable option after all.

Al Finkelstein (Ofinky), 11/26/16