CATO Institute Believes Freedom Comes In The Form Of Government Vouchers

This video from the CATO Institute supports Paul Ryan's Medicare voucher contraption.

It claims it will solve "both of the big problems created by Medicare", namely:

1. it would protect taxpayers by putting a [GDP-growth constrained] limit on budgetary costs
2. by giving beneficiaries control over their healthcare choices by "reducing" the destructive impact of third-party payer outcomes on the healthcare system

Is this supposed to be a joke?

The voucher system, being chained to GDP growth (+1%!), ensures that so long as the economy isn't officially in a recession (facing quarters of decline in GDP), spending on Medicare will increase over time, not decrease. What's more, because government spending is a component of GDP, and Medicare spending is a component of government spending, increasing Medicare spending over the years actually creates a positive feedback loop by "juicing" the GDP growth stat and ensuring that Medicare spending grows a little bit faster still.

Additionally, the voucher system does absolutely nothing to fix the agency problem inherent in a third-party payer system like Medicare. Whether a government bureaucrat makes the decision about what to spend money on and how much of it is to be spent, or the actual individual receiving the service, the economy of the choice being made is irrelevant when it is Other People's Money (OPM) that is being spent. The voucher system is a taxpayer-funded scheme, meaning the money being spent was never earned by the person spending it so they have no reason to be thrifty as it costs them nothing to spend it.

In fact, it's worse than that-- a voucher system is a "use it or lose it" system. You don't get to save the value of your voucher payments if you don't spend them, thus encouraging voucher users to spend wisely and only when necessary. If you don't spend the full value of your voucher, the excess value is gone. This is a strong incentive to maximize the amount spent per transaction.

This voucher proposal is a horrible scheme which will do absolutely nothing to solve the economic problems related to government intervention in the healthcare market. And that is without taking time to address the fact that this is a proposal which ultimately maintains the political system's control over the healthcare system and the voters' lives who are concerned about it. Like every "reform" proposal, this is a not-so-clever way of rearranging the way the government controls this aspect of the economy, not any kind of deregulation or gradualist plan for getting the government out entirely.

The only solution to the government healthcare debacle is complete and total withdrawal. If you want to discuss the merits of different political strategies for getting to that point they should all revolve around how soon you end further participation in such systems by current and future generations and what kind of payouts existing participants should expect to receive along the way.

Quit hacking at the branches. The CATO Institute demonstrates, yet again, why it is a complete disgrace and a nefarious libertarian doppelganger.