LEGEND has it that the GOP got its symbol from elephants' supposedly long memories. Just as many Republicans no longer recall what it is that they reputedly "never forget," some also fail to remember their core belief in limited government. Take, for example, the Bush administration's Medicare prescription drug debacle.
When, in the course of political expediency, the "compassionate conservative" wing of the GOP betrays its roots, libertarians must remind our wayward brethren that there are certain fundamental truths about government welfare programs that are as inviolable as the laws of physics. Truths such as bureaucracy, inefficiency and the displacement of private charity. It comes as no surprise that the new Medicare Part D program has been plagued by all of these problems.
Under the 2003 Medicare law, the federal government was to pay the bulk of prescription insurance expenses for all senior citizens who agreed to share modest deductibles and co-payments. Back then, the Congressional Budget Office estimated the cost of this largesse at approximately $400 billion over the next decade, making it the largest entitlement spending since Lyndon B. Johnson's "Great Society" social welfare net. Since then, CBO estimates have doubled to more than $800 billion. Even LBJ might blanch.
This enormous expense might be mitigated if the government got some bang for its buck. That, however, will be the day pigs fly -- to the moon. Instead of delivering much-needed relief to ailing seniors, the program has been nothing but a prescription for migraines. A recent Associated Press poll reported that two-thirds of senior citizens find the program too confusing and difficult to enroll in.
Some might say the complexity stems from the multitude of private insurers that have contracted with Medicare to administer the program -- a felicitous "problem" of having too much choice. The alternative might be to establish a one-size-fits-all government monopoly that would offer even worse quality and no choice at all. Moreover, blaming the private insurers would be letting the government off the hook for a program that, at its heart, is wholly paid for and regulated by Uncle Sam.
Private insurers would not be falling all over themselves -- and causing the traffic jam of confusing plans we see now --if it weren't for the government's generous subsidies that distort supply and demand. In a natural marketplace, there would not be too many prescription drug plans, nor would there be too few. There would be just the right number of plans such that seniors could get what they need without confusion. Of course, the proverbial marketplace is seldom perfect, and seniors heretofore have been unable to afford prescription plans. More on that in a little bit.
The other fundamental truth about government social welfare spending is that it decimates private giving. Every dollar that goes into a new public program must come out of a dollar of private taxes, which in turn means a dollar less to spend on charity.
Moreover, once the government shoulders the responsibility to support some worthy cause, it also shifts that burden away from the private sector. Taxpayers are less inclined to give to cancer research or global debt relief if they know that billions of their dollars are automatically applied to those areas. To give a more familiar example, few would tip extra at a restaurant that includes the gratuity on the bill.
This disincentive on private charity is not theoretical. According to the National Center for Policy Analysis, charitable giving declined steadily after FDR instituted his New Deal welfare programs. Charitable contributions did not rise again until Ronald Reagan started paring back welfare. With respect to Medicare Part D, what is past is prologue. Last week, The Washington Post reported that private drug manufacturers, in light of the new government program, are ending their decades-long donations of free prescriptions to about a million needy Americans.
Given Medicare Part D's out-of-control costs and its suppression of private charity, a libertarian ideologue might argue for abolishing it altogether. However, the status ante Part D was clearly not meeting all seniors' needs. Thus, the second-best choice is vouchers.
To that end, the government should take the $800 billion that it will spend on Part D and simply give it to Medicare beneficiaries, beginning with the neediest, to buy prescription insurance for themselves. While this would still be government charity, at least insurers will no longer devise complex plans to impress government bureaucrats, who are the only ones who understand the current situation. Instead, insurers would be forced to answer to individuals on the basis of efficiency and comprehensibility. Perhaps -- just perhaps -- it would also remind forgetful elephants about their roots.
Eric Wang's column normally appears Wednesdays in The Cavalier Daily. He can be reached at ewang@cavalierdaily.com.
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