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Killing the "But We Have Medicare" Argument

By Hunter Baker on 8.13.09 @ 10:26AM

Manning my trusty treadmill at the gym last night, I watched Laurence O'Donnell debate a woman who had passionately called at a townhall for a return to the kind of nation the founders envisioned.  His primary strategy was to ask her if she wanted to repeal Medicare, which he characterized as "smart, pragmatic socialism."  

The idea here is that, hey, Medicare works to cover seniors and therefore we could just cover everyone with a Medicare style plan.

This idea, voiced by Laurence O'Donnell who should know better, is not a good one.  Medicare works, to the extent that it does, because it is basically parasitic on the private market for healthcare.  Doctors are able to earn reasonable compensation (given their training, skills, and level of difficulty of the work) because of the existence of that private market.  All Medicare does is to provide a way for a segment of the market, lower income seniors, to pay for healthcare.  Many physicians will accept that reduced payment from Medicare because:

They want to help patients, including those who often can't pay much

They have the money earned in the private market to allow them to handle the poor payments from Medicare.

Without the private market, can you imagine doctors paying for their substantial overhead (including massive prices for malpractice coverage) on what they make from Medicare alone?  Government solutions work somewhat acceptably at the margins, but not when they overtake the market completely.  Pointing to Medicare is not a way to win the argument for a government option available to everyone.