THE MEDICARE MESS, PART 5: Barack Obama, 'The Truman Strategy' and the Politics of Health Care in 2012

Editor's note: This is the fifth and final installment in a five part series looking at Medicare by Fox News contributor James P. Pinkerton.

In the previous installments of this series (click here for Part One , here for Part Two , here for Part Three and here for Part Four)

Politicians sure move fast when their survival instinct kicks in. Just 11 days after House Speaker John Boehner and 234 of his Republican colleagues voted in favor of the “Path to Prosperity,” budget plan, the Speaker started walking it back.

After a week-and-a-half of being pounded, mostly on the Medicare cuts included in the “Path,” Boehner told reporters on Tuesday that he’s “not wedded” to the plan put forward by Rep. Paul Ryan (R-Wis.), chairman of the House budget committee. “Paul Ryan has an idea that’s certainly worth consideration,” Boehner said. “Now other people have other ideas.”

And there you have it. That big fat “aye” vote notwithstanding, the Ryan plan, Boehner said, is just one of many plans--it’s nothing for fearful voters to focus on. And indeed, as times goes by, the Ryan plan will face, because many other fiscal plans will emerge. Boehner is a survivor; he wants to be Speaker for more than a single term, and this is what survival looks like.

Now two questions come to mind: First, will Republicans survive the self-inflicted wound of the “Ryancare”? And second, will either party come up with an acceptable plan for Medicare’s future?

The answer to the first question is probably “yes,” because Republicans are showing good damage-control instincts.

And the answer to the second question is definitely “yes”--if politicians can get through their heads that not every solution to every problem comes from Washington.

In the earlier installments of this series, we saw that Republicans hit a buzz-saw of popular opposition to the “Path to Prosperity” plan but forward by Rep. Paul Ryan (R-Wis.). That opposition was encouraged, of course, by Democrats, eager to retake the House next year.

Indeed, reaching back to the 1948 presidential playbook, President Obama seems to be planning to replay the “Truman Strategy” against the GOP; in that long-ago campaign, the Democrats won a huge presidential and congressional victory.

For their part, the Republicans, scrambling to save their skins in the face of angry town hall meetings, demonstrated good football wisdom: The best defense is a good offense.

In view of the anti-Ryan reality of public opinion polls and the new blitz of Democratic ads, the GOP approach has become less of a defense of the Ryan plan and more of an attack on the Democratic health plan-- that is, the Patient Protection and Affordable Care Act, also known as ObamaCare, which included Medicare cuts of its own.

Republicans scored a big victory against O-care last year, and so naturally they would like to repeat those gains next year. Indeed, Republicans can further argue that while RyanCare is merely hypothetical, ObamaCare is very real--it’s the law of the land, and it’s already impacting senior health.

Since Monday, House Speaker John Boehner’s website, has included a side-by-side comparison of RyanCare and ObamaCare. Sample line from the Speaker’s site: The Democrats’ plan means that an “unelected ‘rationing board’ of bureaucrats forces hundreds of billions of dollars in cuts.” That “rationing board” is real: It’s the Independent Payment Advisory Board, a cost-cutting regulatory body created by the ObamaCare legislation and championed by the president ever since.

So in their own way, both political parties aren’t looking ahead, they are looking backward.

Republicans wish to go back to the happy days of 2010, when the American people voted against health care rationing.

For their part, Democrats yearn to replay the victory of 1948, when the Democratic president defended the welfare state against cuts and thereby whomped not only the Republican Congress, but also the Republican presidential candidate that year.

Yet the rest of us might ask: Is this the best we can do?

The American people voted against Democratic health care rationing in 2010, and now, as they look at the Ryan and Obama plans, they are threatening to voting against health care rationing in 2012 once again. Can’t one or both parties put forth a health care plan that the American people truly like?

We will explore answers to those questions, but first, one more comment on RyanCare and ObamaCare. On the surface, the two plans are hugely different: RyanCare is premised on individual choice in Medicare (the patient chooses his or her plan), while ObamaCare emphasizes planning from Washington (IPAB).

That distinction might seem huge, but in fact, autonomous individual choice in health care is something of an illusion, because almost nine-tenths--88 percent, to be exact --of the nation’s healthcare budget the country is paid for by third parties, public or private.

That is, either a private insurance company, or the government, or some other third party, picks up almost 90 percent of the national tab for all of our health care, some $2.6 trillion. And so, on the principle that the payer has the power, it’s those third parties who are making health care decisions, in the name of the patient---but not necessarily for the good of the patient.

The nation fell into this third-party habit during the 1940s, and many have said that such third-party payment is a mistake--because it separates the consumption of health care (by the patient) from the financing of health care (by the third party payer). That is, the patient goes to the doctor, gets the treatment, and someone else pays the bill. It’s easy to criticize this system, because it disconnects the recipient of the treatment from the cost of treatment, thereby encouraging overconsumption and cost-escalation.

And yet at the same time, it’s hard to come up with an alternative solution, because most Americans aren’t educated health consumers, especially if they are old or infirm. Given these myriad sensitivities of health care finance, any change in the third-party payment system will have to be cautious and gradual.

And so, for example, the Ryan plan, for all its “empowerment” rhetoric, doesn’t actually give seniors empowering cash in lieu of traditional Medicare. Instead, it gives them “premium support”--critics call it a “voucher”--to buy their own health insurance policy from an approved list of companies.

So if the Ryan plan were ever to be enacted, the Medicare beneficiary would still see his or her bills being paid by a third party. So the patient, as well as the health care provider, would still have to deal with a bureaucracy--a private insurance bureaucracy, as opposed to the Medicare bureaucracy. Is that really so different?

(Yes, under Ryancare, the individual would have the power of choice among insurance companies, but the competing plans, necessarily overseen by government regulation, wouldn’t necessarily be all that different; nor is it necessarily easy to switch insurance plans once enmeshed in a particular plan).

Another embedded similarity between RyanCare and ObamaCare is that under either approach, Medicare would seeks to control costs through quiet kinds of rationing; both public and private entities seek to muscle down prices and costs from health care providers. Private insurers are perhaps more aggressive about pinching pennies, but at the same time, private insurers have to include a profit margin, including high salaries for their executives; the CEOs of the seven largest health insurance companies, for instance, were together paid more than $68 million in 2008.

So as we can see, both RyanCare and ObamaCare depend on “demand side” cost control. They both would seek to use the power of big purchasers, private or public, to demand lower prices on behalf of the patient--whether such demands lower quality or not, whether the patient likes it or not.

So that’s cost control from the demand side, and, frankly, from the point of view of the patient, it ends up looking like rationing. And again, rationing is what the voters opposed in 2010, and what the voters will oppose again in 2012.

So if “demand side” cost control doesn’t work that well--if it causes its proponents to be voted out of office--then what’s the alternative?

Well, there’s saving money on the “supply side.” That is, making the supply of things cheaper, by making them cheaper, through innovation and mass production. If we look around our world, we see just about everything made better and cheaper thanks to technological advance and free enterprise.

And the same innovation and industrial revolution that made Americans rich also made Americans healthier. Scientific research found cures, vaccines, or effective treatments, to many of the leading cripplers and killers of the 20th century, such as tuberculosis, smallpox, malaria, polio, and AIDS. And during that same 20th century, aspirin went from being a scarce wonder dug to being a dirt-cheap wonder drug.

The formula is as obvious as it is time-tested: Spend heavily on research (public, private, or both), then, once the discovery is made, turn it over to the private sector. From there the medical will be mass-produced, which will make it cheaper, and then it will go generic, which will make it cheaper still.

Meanwhile, other competing ideas for treatments will enter into the marketplace, and so health care providers and patients will have a choice. Health insurance will still be an issue, of course, but health insurance is less of an issue when the decision is a pill, as opposed to surgery. A statin drug, costing a quarter a day, is a much better plan for dealing with heart disease than a coronary bypass.

And yet it takes vision to think that an investment now will pay huge dividends in the years to come--not only for health, but also in terms of budgetary savings. That is, the people running the health care system, be it public or private, need to see that investments in better treatments could lead to the same sort of personal and fiscal breakthroughs as did the Salk Vaccine for polio.

In the end, the visionary approach is the smartest approach. The smartest approach, that is, because it cuts the cost of health care on the supply side, by making the supply of medicines cheaper. And so it’s also the smartest approach for politicians, because they can seek re-election on a platform of more cures, not less health care.

And that takes us to back to Medicare. Alzheimer’s Disease, for instance, a nearly $200 billion hit on the economy now, mostly through Medicare. And its costs are rising fast, toward a trillion dollars a year by mid-century.

Yet thanks to science, there’s hope: We now we see reports of a possible vaccine against Alzheimer’s; if we had such a vaccine, we could all think about working longer, thus increasing the national output. And perhaps we could also raise the retirement age--that would make the Medicare fiscal crisis go away.

But are such hopes for a medical breakthrough pie in the sky? There are no guarantees of success, of course, but our own track record of scientific problem-solving should give us hope. All that’s been required in the past has been a sound fiscal and regulatory climate--plus a little political leadership--that gave inventors and entrepreneurs plenty of space to work their techno-miracles.

Thus the lesson for today’s politicians, left and right. The heart of the Medicare challenge is not financial, but rather medical. If people get sick, their care will be expensive, no matter which third-party, public or private, is footing the bill.

If we want Medicare to be cheaper, let’s address the source of those Medicare costs. Let’s harness the power of the industrial revolution and apply it to the costly medical challenges of our time.

Politicians in both parties naturally miss that techno-industrial option, because let’s face it: Pols know spin and ideology, but not science and technology.

Yet now that the American people have sent a clear message: In rejecting Obama and Ryan health care policies, the only choice remaining--for politicians and for all of us--is to embrace the transformational power of technology.

If we do, our lives will be healthier and longer--and also wealthier.

James P. Pinkerton is a writer, Fox News contributor and the editor/founder of SeriousMedicineStrategy.