I believe the National Center for Policy Analysis is the only think tank, right or left, that has consistently addressed two problems:

1.  The need to choose between health care and other uses of money.

2.  The impossibility of paying for health care for the elderly with Ponzi scheme financing.

We have focused on these issues for more than two decades.

Eventually others will come around. As with the AIDS crisis in Africa, even politicians and rock stars will get clued in - but in all probability after it is 25 years too late.

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When Medicare began, the program copied the popular Blue Cross insurance plan.  So for a while, seniors and non-seniors had basically the same health insurance.  But since one plan was controlled by the marketplace and the other by politicians, the two plans diverged over time.  Practically all of the structural problems of Medicare stem from this divergence.

Seniors are the only people in our society who must buy a second health plan (Medigap) to fill in holes in their primary plan (Medicare).  Also, millions of seniors are paying a third premium to a third plan (Medicare Part D) to get the drug coverage non-seniors have.  Even then, many face "donut hole" gaps that no one else faces. 

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At almost 17 percent of gross domestic product (GDP), the United States spends more of its income on health care than any other country. Some wonder how high health care spending can go. A lot higher, apparently.

A new NCPA study by Andrew Rettenmaier and his Texas A&M colleagues finds that:

• Health care today makes up about two-of-every-five dollars of seniors' total consumption (43 percent).
• In just 17 years (by 2024), health care will equal half of seniors' total consumption.
• For seniors age 75 and older health care already makes up more than half of all they consume.

The dollars we spend on drugs, from a social point of view, are giving us a bigger return than dollars spent on any other form of therapy.  Yet, ironically, some of the easiest ways to reduce spending on health care relate to pharmaceuticals - especially switching from brand drugs to therapeutic, generic and over-the-counter substitutes.

Indeed, the fact that more people are managing more of their own health care dollars is probably the single best explanation for the recent moderation of spending on drugs, which in turn is causing a moderation in health care spending overall.

As Devon Herrick explains in a new NCPA brief analysis, there are lessons here for seniors.  Those experiencing high out-of-pocket costs in the "donut hole" wouldn't be in the donut hole if they (or a family member) took advantage of tools available on the Internet - to choose less expensive drug options and plans that best fit their needs.

But since drugs affect people differently, seniors need to keep their options open.  Seniors as a group would suffer if we adopted a command and control approach like the VA system, which pays reduced prices but limits availability to a very restrictive formulary.  (The VA system covers only about one-fourth the drugs Medicare covers).

If it's Internet versus the VA system, the Internet is better.

Read the Brief Analysis

Nancy Pelosi and many other Congressional Democrats want the federal government to negotiate drug prices for Medicare enrollees.  They think this will lead to lower prices.  But as Alan Enthoven and Kyna Fong explain in the latest NCPA Brief Analysis, drug prices for seniors may not go down.  They may even go up.

The key to tough negotiations is the willingness and ability to walk away from the table with no deal.  Clearly the VA system does this.  Veterans have access to only one-fourth the number of drugs that Medicare covers.  But the wrath of senior voters and the lobbying power of pharmaceutical companies may make it impossible for Medicare to emulate the VA's approach.

A drug company with a (patent rights) monopoly has an incentive to price discriminate among private buyers - charging lower prices to some and higher prices to others.  But if the government negotiates a single price for everyone, the resulting price is likely to be higher than lowest prices paid by private buyers.

Under one common tactic, government links the price it will pay to the prices paid by other buyers - for example, by insisting on paying the lowest price paid by any buyer.  But instead of lowering the price paid by government, such a strategy may instead lead to higher prices charged to private buyers.  This appears to be what happened in Medicaid.