Video: Why free-market premium support will save Medicare

The debate over Newt Gingrich’s comments have breathed new life into the conflict between central planning and free-market approaches to public policy, especially on existing entitlements. Dan Mitchell explains in his latest video for the Center for Freedom and Prosperity that central planning has been the problem, and it can’t be the solution. The escalating costs associated with Medicare come from a lack of pricing signals to consumers, a problem that exists throughout most (but not all) of the health-care sector. The oft-cited “waste, fraud, and abuse” (WFA, for short) play a role as well, but that exists because of the nature of central planning and government intervention, not despite it.

Fortunately, premium-support reforms such as that proposed by Paul Ryan works to solve both rising taxpayer liabilities and WFA through competition and the act of returning government to a regulatory role rather than that of a monopolist third-party payer. Dan walks through the numbers, and laments only that Ryan’s plan won’t leave him with the choice of selecting a private insurer for his own care:

One point about the IPAB has been somewhat lost. Politicians should love the idea of getting rid of the IPAB, as it lets them off the hook for the consequences of life-and-death denials of care. They may think that the buffers that keep them from overturning IPAB decisions will free them from the political consequences of the panel’s decisions, but it’s much more likely that denials will produce strident demands to eliminate the IPAB and its unaccountable control over the lives of Americans. Passing those decisions onto insurers would be much easier on everyone, especially since seniors would have the ability to switch coverage rather than beg their Congressman for mercy.