January 18, 2005

Entitlement Reform

I think that Robert Samuelson's missing the point when he complains about Bush's SS Reform efforts. Samuelson would rather that we tackle the whole problem at once. "[T]he debate becomes harder, but it also becomes more honest and meaningful." That may be true but if the debate gets too hard, you end up with a deadlock and the unsustainable status quo survives. Time is not on our side. The longer we wait, the more drastic the changes will have to be and the more human suffering will happen as people can't get adjust in time and have poorer retirements because of it.

I'm starting to suspect that Social Security reform is the domestic version of Iraq and Medicare is the domestic version of N. Korea as far as Bush policy goes. Social Security is going to get the full assault treatment because it's strategic, people understand it well, and it's about the biggest problem we can handle with that approach. Medicare is too tough, too confusing, and much more susceptible to a quiet "python" approach. So we get shifts in medical care that will tremendously increase savings like forced computerization on pain of reduced reimbursements, standardization, tort reform to reduce costs, and introducing the pharmaceutical revolution into the world of government funded senior care so we don't continue to prefer expensive surgery to inexpensive pills. This is similar to the slow squeeze we're inflicting on N. Korea with the six party talks. There isn't anywhere for the N. Koreans to play their usual games of strategically playing one great power off against another. They're all at the same table talking at the same time.

A great deal of the problem on Medicare is that I believe that government accounting simply can't take into account the substitution effect of pills for surgery. I've yet to see any credible figures for how much surgery care is going to be cut because of increased pharmaceutical use due to the Medicare drug benefit. Without those, you can't really measure the net effect and because those substitution savings are going to show up further out, we're going to hit a nasty lag period in the meantime. Economists like Samuelson could explain that but few seem to have grasped the cost savings potentials.

Too bad.

HT: National Center

Posted by TMLutas at January 18, 2005 09:36 AM