Tuesday, January 1, 2013

Blame the Right People, Brooks

In his column in the New York Times today, David Brooks has found the culprit for our fiscal miseries. Surprise. The guilty party is the American voter. And Brooks’ proof is this statement:

The average Medicare couple pay [sic] $109,000 into the program and gets $343,000 in benefits out, according to the Urban Institute.

Brooks’ implicit assumption is that the American voter has consciously arranged things this way and that the voter controls the prices paid for medical services as he/she controls the actions of the politicians. Having noted my initial reaction, I thought I’d find the numbers at the Urban Institute’s web site. In that process I learned, with some bemusement, that Brooks had used these numbers before, on October 8, 2012. And the NYTimes eXaminer, a fact-checking site, published (here) an analysis of that statement the day after noting that Brooks’ numbers evidently came from another source. That site also pointed to an Urban Institute document (last revised in 2011) where similar numbers are cited. That document is here.

In that tabulation (a Table titled “Two-earner couple both earning an average wage ($43,500 each in 2011)” — alas there are no page numbers) the Urban Institute cites lifetime payments cumulating in 2011 to $119,000 and benefits to $357,000. Close, to be sure. In Brooks’ case the “unpaid” amount is $234,000, in the Urban Institute’s case it is $238,000. Thus, based on Brooks’ attribution of his numbers to the Urban Institute, all he may be accused of is laziness. But let’s look at the other issues. The Urban Institute figures are all inflation-adjusted, not nominal.

Now Brooks’ assumption of voter control is a pure projection. Voters do not control medical pricing. Medical practices have vastly changed, not least the proliferation of extraordinarily expensive testing devices and their essentially routine use. The very existence of a national insurance program for the elderly—without a national cost control program that accompanies it—will lead to an expansion of prices just because the insurance exists. We notice the same phenomenon in student loans—where government loan programs, without cost-control imposed on tuition levels, has caused tuitions to sky-rocket. Voters also do not control the legislators in any direct way, thus relating specifically to medical insurance management.

Ultimately the responsible parties for the mess are the legislators. They are not managing correctly. That is why, in my opinion, national health care, to work properly, must include management of medical service providers and the pharmaceuticals industry as well. Until it does, politicians will get the credit and the voter will get the blame.

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