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January 23, 2014 12:35 PM Kuttner’s Two Big Shifts For Retirement and Health Care

By Ed Kilgore

In the American Prospect/Democratic Strategist forum on entitlements, Prospect co-founder Robert Kuttner is up today, and he offers two big-picture perspectives to serve as the progressive foundations for thinking about Social Security and Medicare. On the former:

What the retirement system needs is a universal, portable pension, to make up for the collapsing private pension system and the minimal retirement income afforded by Social Security. Such a system would acknowledge the reality of today’s labor market, in which few people stay with an employer long enough to qualify for a traditional pension, and few companies even offer one. But until that day comes, Social Security is the core of retirement and needs to be defended.

As for Medicare:

The primary cause of medical inflation in the United States is a commercialized and fragmented system, in which major players pursue sources of profit rather than cost-effective universal care.
This fundamental reality has defied four decades of cost-containment efforts, beginning with President Nixon’s reinvention of prepaid group health plans as commercial HMOs, and a long list of largely failed payment reforms and efforts to create incentives for physicians to communicate better, to shorten hospital stays, to order fewer tests, and to shift to generic drugs. The reason is that the system’s major players - hospitals, drug companies, doctor specialty groups - all behave as profit-maximizers. (With rare exceptions, this is true whether a hospital is nominally non-profit or for-profit.) This core reality has defied several decades of research demonstrating outrageous pricing practices by hospitals and indefensible variations in practice patterns. More refined cat-and-mouse efforts to constrain costs will continue to fail as long as the system remains a predominantly commercial one. Until the essential nature of health care changes, the infinite regress of cost-maximize and cost-contain will continue to evoke Mad Magazine’s “Spy Versus Spy.”

These perspectives are obviously inconsistent with the belief that downward benefit adjustments are necessary to “save” Social Security and Medicare. Kuttner is looking well beyond the programs to the basic services they offer and the kind of society they reflect, and thinks we need to do a lot more.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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