The Democrats’ Growing Medicare Dilemma

by alexvanbuskirk

The Democrats’ Growing Medicare Dilemma

By Yuval Levin @ National Review (August 15, 2012)

The second Democratic defense, the “it’s not so bad” defense, suggests the Democrats don’t grasp just how the fee-for-service design of Medicare that they’re eager to retain forever actually works. The basic argument the Democrats are trying to make is that because the cuts consist mostly of reductions in provider payments, they’re not actually cuts to benefits that seniors get but only to money given to the people who provide them with coverage or care. So, for instance, the New York Times today quotes a White House spokeswoman saying these cuts “do not cut a single guaranteed Medicare benefit.” But in a fee-for-service system, cuts to fees are cuts to services, especially because administrative price controls create supply shortages, which means seniors will have fewer options and less access. That’s exactly why the way to reform Medicare is through market competition—which increases options and seeks an equilibrium between supply and demand—rather than yet more administrative price controls.