The Neoliberal Dilemma

| Fri Aug. 5, 2011 11:29 AM EDT

Here's the latest on George Bush's Medicare prescription drug program:

Even as health costs continue to rise, Medicare beneficiaries will see the average price of a Part D drug plan decline slightly next year, the Obama administration announced Thursday....Popular with beneficiaries, the program has also proven far less costly than budget analysts originally expected, in part because of competition among private plans and the growing use of less expensive generic drugs.

....Though celebrated by the Obama administration, the widely acknowledged success of the Part D program is also fueling calls from conservatives to expand privatization of the Medicare program. Many House Republicans pointed to the drug program in pushing their plan to replace Medicare with a system of vouchers that seniors would use to purchase private health coverage.

These two paragraphs encapsulate perhaps my biggest frustration with public policy these days. On the one hand, I feel like I should acknowledge that I was wrong about the architecture of Part D. I believed that routing the benefit through hundreds of private insurers would prove both confusing and costly. But in the end, the confusion proved manageable once the kinks were worked out of the initial rollout, and competition among insurers has kept the price of the program significantly lower than expected. (Competition isn't the only reason it's come in under budget, but it's clearly a factor.)

So I'd like to take that as a public policy lesson, something we can all learn from. But where's the similar kind of acknowledgement on the other side? Nowhere. We already know what an architecture like Part D does for Medicare as a whole: it's basically Medicare Advantage, which has been a huge boondoggle. After more than a decade, the federal government still has to heavily subsidize Medicare Advantage providers, and the evidence is overwhelming that it fails to provide benefits anywhere close to its additional costs. It just doesn't work.

So that's a public policy lesson too. But there are no takers on the conservative side of the aisle. They simply ignore it, and instead insist on using the success of Part D to continue pressing for their ideological hobbyhorses.

This is pretty much the reason I'm no longer a neoliberal, but a recovering neoliberal. The neos believed that liberals should devote a lot of energy to getting public policy right, even if it meant gutting a few sacred cows along the way. The idea was that the public would never support an activist government unless they were convinced that it was being run as leanly and efficiently as possible. The problem is that this only works if the other side plays ball. After all, what's the point of agreeing to abolish a poorly working program if conservatives refuse to meet halfway and try to build a better program in its place? For most liberals, even a poorly working program is better than no program at all.

Politically, then, technocratic neoliberalism just doesn't work given the true-believer obduracy of the contemporary Republican Party. So we're left with trench warfare instead and no one's happy. Conservatives are unhappy because liberals keep defending programs that have poor track records, while those of us who suffer from the neoliberal temperament are unhappy because we're too busy fending off knife attacks to have a real chance of reforming the delivery of government services. Welcome to the modern world.