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Monday, January 23, 2006
Time for juxtaposition
Time Magazine has an article on Medicare Part D. Two paragraphs warrant a closer look:
Any talk of turning Medicare into market share, of course, is catnip to Democrats, who are ready to use the Medicare mess against Republicans in the November midterm elections. Seniors tend to turn out for midterms in higher numbers than younger people, "so there's a real opportunity here," says Democratic pollster Mark Mellman. The Democratic Congressional Campaign Committee is advising candidates to visit senior centers and press the argument that the drug benefit was written by and for the health-care lobby. Those candidates hope to point out, for example, that drug manufacturers lobbied to avoid negotiating drug prices directly with Medicare. Instead, Medicare provides funds to insurers, which use intermediaries called pharmacy benefit managers, who then negotiate with the drugmakers. That system breaks Medicare into smaller purchasing pools, and drugmakers get higher prices. Insurers, meanwhile, successfully lobbied for a provision that limits potential losses in the first two years.
...Ultimately, the future of Medicare Part D will depend not just on Republicans or Democrats, insurers or drugmakers, pharmacists or health-care experts. It will hinge on the willingness of the millions of people eligible for Medicare to submit to this experiment in free-market health care. Americans could decide that the health of the old, the sick and the needy deserves a system separate from the one that rules whether Internet companies and T shirt makers live or die. But if enough people agree to endure the smaller upheavals that are sure to come, Part D gives them a drug benefit based on the American ideal of unlimited choice. Some plans will change their rules or increase their prices; others won't survive, and their members will again have to navigate a new plan. For those without any drug coverage at all, that may be a risk worth taking.
Wal-Mart is successful for two reasons: the American appetite for cheap crap is insatiable and Wal-Mart uses its sheer size to negotiate rock-bottom prices from its suppliers. If every individual Wal-Mart store had to negotiate directly with suppliers, prices would sky rocket. Ignoring for a moment the abuses inherent in Wal-Mart's system, it's a simple formula for delivering low-cost goods to customers. It's free market: and Part D expressly forbids Medicare from using its size as leverage.
Part of the market is risk -- unless you have a congressperson in your pocket. The insurance lobby did -- and their risk is sharply reduced by the legislation. The poor, the weak, the desperately ill get no such relief in the market. It's all a matter of priorities.
The point, of course, is this: Part D is not an exercise in the pure market. It's yet another example of crony capitalism gone amok. Where profits are concentrated among the lobbying class and risks are shifted to real people. It's a cruel shell game merely masquerading as bad policy.
