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Social Engineering Medicare

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This week Newt Gingrich, as is his way, is at the epi-center of the brouhaha over his comments about Paul Ryan's (R-WI) plan to replace Medicare with a voucher system. Let me say right now, I like vouchers. I like the idea of allowing a broad array of solutions for a problem and letting the marketplace determine the best solution. I now have to caveat this statement: I only like vouchers if they are not designed at the outset to place the burden of Medicare on the elderly (i.e., a voucher needs to have a fair market value).

The whole Newt-Voucher thing started me thinking about how confused I am about government and political identity. I don't know about you, but I want to go back to those good old days when government expanded and the USA was King of the Mountain. Bill Clinton was Alan Greenspan's favorite Republican when it came to fiscal conservancy. My favorite Democratic president is Richard Nixon. You know the Richard Nixon who created the Department of Education and the Environmental Protection Agency, as well as opening up China. Sure he had some frailties, but I don't talk about Clinton's foibles; why belabor Nixon's? All this said, I know when Nixon was alive, I did not recognize his contributions.

I particularly like the following June 4, 1971 special message to Congress from Nixon:

We believe that part of the answer lies in pricing energy on the basis of its full costs to society. One reason we use energy so lavishly today is that the price of energy does not include all of the social costs of producing it. The costs incurred in protecting the environment and the health and safety of workers, for example, are part of the real costs of producing energy -- but they are not now all included in the price of the product.

Makes you want to cry when you think Nixon was really a closet liberal.

Republicans (Newt aside, well, Newt prior to his numerous mea culpas) like vouchers but do not like insurance exchanges. They think insurance exchanges are socialism. A recent news item in The Denver Post noted:

House Democrats on Wednesday had to rescue a Republican-backed bill to set up health insurance exchanges in Colorado, legislation blasted by Tea Party activists as furthering "Obamacare" and "socialism" but roundly supported by businesses.

The Republican Party has not always been the Party of NO. Eisenhower's party wasn't no. Nixon was certainly not no. Reagan wasn't no (he actually raised taxes). Bush 42 was noblesse oblige. But now the definitions of socialism and capitalism have been warped to such a degree that our vocabulary is unable to provide clarity for a politician's opinions. Seems like today's Glenn Beck Republican is about anti-socialism, pro-capitalism and an Ayn Rand philosophy of Me FIRST and You NEVER. Here's the strange part about it, none of this has anything to do with what the majority of Americans believe -- even the majority of voting Independents and Republicans.

What would happen today if some ranchers or farmers joined together to form a coop to gain better market force? The nerve of those pinkos: Coops are definitely socialism. Yet, what is the difference between an insurance exchange and a coop? Nothing.

Forty years ago, I worked on school vouchers for the Office Economic Opportunity (OEO), a predecessor to the Department of Education. School vouchers made strange bedfellows. The religious right banded together with disenfranchised minorities; both seeking a better choice, in their eyes, for their children's education. Charter schools are now the result of people seeking empowerment and by all metrics a good solution.

Vouchers for Medicare may have the same peculiar base of support. AARP, unions and employers may end up banding together to reap the same billions of dollar windfall that insurance companies see in vouchers. Yet, their motives may be very different. Those billions of funding dollars can be the basis for the creation of insurance exchanges, employer self-insurance and new insurance companies. More companies are self-insuring and using insurance management firms to provide accounting and claims administration. These firms provide claims management as a fee-for-service (i.e., a fixed cost per claim versus a percentage of the claims). Medicare vouchers offer the possibility of transforming the insurance landscape.

So which is the Republican proposal and which the Democrats? Medicare vouchers can ignite market forces through insurance exchanges that Tea Party members label as socialism. Vouchers can also be priced so retirees face an increasing financial burden. It's confusing. Newt was right; social engineering is hard to explain.

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