THE BLOG
03/18/2010 05:12 am ET | Updated May 25, 2011

Health Care to Suffer Fate of Welfare, Not Medicare or Social Security

The latest installment of conventional wisdom to emerge from liberal writers who support the current health care bill argues that the best entitlement programs come from bad bills. This caterpillars-into-butterflies narrative boasts Medicare and Social Security as the templates for how this flawed bill could form the cornerstone for single-payer, or something like it. Take, for example, Paul Krugman:

Bear in mind also the lessons of history: social insurance programs tend to start out highly imperfect and incomplete, but get better and more comprehensive as the years go by. Thus Social Security originally had huge gaps in coverage -- and a majority of African-Americans, in particular, fell through those gaps. But it was improved over time, and it's now the bedrock of retirement stability for the vast majority of Americans.

Yet, what they ignore is that so many entitlement programs enacted by Democrats, even the popular ones, are starved of funding, stripped of their authority, delegated to the states and left to fall by the wayside. Nothing exemplifies this more than the welfare programs enacted under the Lyndon Johnson's Great Society. From the moment of its inception it was slowly defunded and shrunken down only to be killed off - or rather 'reformed' (sound familiar?) - by the big-government ending Bill Clinton. A decade later, facing record unemployment, the federal government is compelled to re-authorize welfare payments to the states to stave of state bankruptcies and mass starvation.

And the current health care reform package in the Senate looks far more like a welfare program for the poor than Medicare or Social Security. Whereas Medicare and Social Security make the middle class stakeholders in a government run system, and entirely dependent on that system working properly and delivering results, the current reforms are selective in their effects, largely sidestepping those with employer based insurance. Instead, like welfare, the benefits are exclusive in nature, in this case targeting only those who are barred from the current insurance market, and thereby don't give the middle class a stake in its success. Without bringing these stakeholders into the policy it is far more likely to likely to follow the fate of welfare than Medicare or Social Security as services for the poor always become poor services.

With the Medicare buy-in and public option off the table there is no 'entitlement' or 'social insurance' program that can grow and expand. Instead there are subsidies to private insurance for those currently left out which are more likely to shrink over time than grow. For the liberals' argument to hold true, that the bill would get better over time, Congress would have to vote to increase the size of the subsidies at a rate higher the inflation of the price of health insurance. Given that nobody seriously believes this bill to "bend the curve" of costs, those subsidies would have increase greatly year-on-year just to remain at parity. The likely outcome is that the growth in subsidies will fall behind the rising cost of insurance, making health insurance more expensive, more regressive and less progressive as time goes on.

Without bringing the middle class into a new entitlement program, the health reform bill is only going to get worse over time, and not better. Let's not fool ourselves, this is as good as its gets.