Wednesday, July 22, 2009

The Fatal Flaw of Democracy?

Look, we love Democracy and all, but under the Democratic system we are about to willingly fuck ourselves over for the next 20 years. Why are we about to fuck ourselves over? Old people.

In 2003, George W. Bush signed into law the Medicare Prescription Drug Improvement and Modernization Act (MMA) which contained Medicare Part D. It was a heated process involving numerous close votes, working through 4 A.M. in the morning, and a lot of arm twisting. Without boring you with the details, the main players were Dick Cheney, Tom DeLay who twisted many arms to get the bill to pass, Speaker of the House Dennis Hastert, who introduced the bill. This was the costliest expansion of Medicare since its inception. And the party of fiscal responsibility just drenched the U.S. government in debt with the Baby Boomers about to start taking advantage of free prescription drugs provided courtesy of the US government.

Why did the party of fiscal responsibility, smaller government, and lower taxes decide to pass the largest fiscal expansion since Medicare's inception? Old people.

It was 2003. The mid-term was just around the corner and if there's one thing we know about old people it's that they vote. And there's a lot of them. They're about to swallow the entire damn country. And they're about to sink the whole ship.

Flash forward to today: the health care reform brou-ha-ha.

During the campaigns Obama ran, he continually stressed that he would do whatever it took to reduce the costs of entitlements. He appeared to understand the trajectory that the US was on was unsustainable. That meant reforming Social Security, maybe even cutting benefits. More importantly, it meant finding some pricing measures for the medical community. He also claimed that he was both above the petty party bickering and unassailable by any particular special interest group. He repeated that the future of this country was too important to let fall into the hands of special interest. He also spoke at length about how difficult was for the road ahead. In his inauguration speech he intoned that there would be shared sacrifice for the betterment and the well-being of this country, and we were ok with that. In fact, we even felt empowered, like we were the Next Greatest Generation. The Baby Boomers may have gotten all fat and happy, but we were going to be the generation that restores fiscal sense to our markets and our budgets.

(Ed. Note: as we reread the previous paragraph, we realize it's a bit meandering and scattershot. What we are trying to do is paint the portrait of a generation of Americans who were promised shared sacrifice in order to make this country great. And that that is exactly what Obama spoke about and embodied. You probably see where this is going.)

There are two quick, simple, and ultimately critical ways to drive down health care cost inflation and Obama and the Democrats have pretty much squelched both.

1. Taxing Health Care Benefits. Obama hammered McCain over this in the campaign. It's probably part of the reason why he won. But if health care benefits were taxed properly we'd have an incentive not to go see the doctor. Or to stay healthy. Obviously we want people to be able to see a doctor if they're sick, but it would incentivize wellness in a real and tangible way. It would mostly affect those with golden goose health plans. And these people are A) rich, or B) part of a labor union. We all know that Obama and the Democrats are ok with squeezing the rich, but they wouldn't dare cross the UAW, who have managed to negotiate extremely posh health care packages, if not better wages.

2. Cutting Medicare Benefits. There's simply no way around it: America is going to go bankrupt once the Baby Boomers start cashing in on all their years of bitching about their kids and getting botox. But just like Republicans in the early 2000's, there is no chance the Democrats are going to alienate the largest swath of reliable voters this country has.

And this appears to the fatal flaw of Democracy: you want to win elections. It incentivizes staying in power, rather than making the country better long-term. We're not sure what else there is to correct this. And it's probably not such a problem in countries that don't have a population so disproportionally represented. But as it stands, our elected officials have taken off the table the two measures which could eventually make the country fiscally solvent. And if that means driving the country off a cliff financially in order to stay in power, then so be it.

The health care reform act as it's currently being constructed is doing nothing to lower costs. Without proper incentives to drive down health care costs, it doesn't really matter what form the bill takes: mandates, universal coverage, public plan, no public plan. That's all moot, really.

In order to make this country financially solvent, a generation of politicians is going to have to get elected and say, "Old People, Labor Unions: thanks for your vote. Now you're going to have to give up some of the goodies you've been promised by prior politicians and share the sacrifice with all of us." Frankly, we thought that politician was Barack Obama. Now we're not so sure.

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