One Man’s Savings, Another Man’s Robberies

It’s no wonder we cannot have an honest discourse over healthcare when our State’s flagship paper uses the words “savings” and “robberies” with apparent indifference.  I cite page B1 of the News Journal’s February 10 edition for two seemingly unrelated lead stories that demonstrate this confusion.

The right hand side of the page heralds the arrest of one Brian Wayne Sutton on a variety of counts of robbery and theft.  Mr. Sutton, a Maryland resident, allegedly used a .22-caliber rifle in a string of convenience store holdups (in addition to an apparently aborted attempt at a bank robbery as well as the successful stick-up of a pizza parlor).  Mr. Sutton is not charged with having physically harmed anyone, but is accused of carrying off a considerable sum of cash.  He is being held in Cecil County jail without bail while awaiting trial for these various armed robberies.

On the same day, just to the left of the story of Brian Sutton’s capture, appears the headline: “Del. Leads in Medicare Savings.”  In this piece, we receive the good word that more than 12,000 Delawareans on Medicare saved an average of $757 in prescription drug coverage in 2011—the highest per capita savings in the country!  What’s more, this is no one-year fluke.  Even greater savings can be expected next year as part of the changes to our national healthcare system as prescribed under the Patient Protection and Affordable Care Act (“PPACA” for short, or “ObamaCare” in slang).

As the article goes on to make clear, the key factors in the savings are actually mandated by the PPACA.  In the first instance, the federal government subsidized 7% of seniors’ generic drug costs in 2011, but will double that subsidy in 2012 (with further increases through 2020).  More significantly, PPACA requires drug companies to discount brand name drugs for Medicare recipients by 50% (yes, half).   Linda Nemes, assistant director for market regulation for the Delaware Insurance Department, sagely notes that “spending 50% versus 100% can be a huge savings for some seniors.”

I’m left wondering, if Mr. Sutton had brandished a card from the Delaware Department of Insurance instead of a .22-caliber rifle in his stick-ups, would he still be languishing in a Cecil County jail cell?  Of course he would.  After all, Mr. Sutton has no right to go around holding up gas stations or pizza shops—whatever his cause or bona fides.  The federal government, on the other hand, has every right to tax U.S. citizens and to mandate that pharmaceutical companies sell drugs at half the price they would otherwise charge if and when such actions have been approved through our system of lawmaking, as was the case with the Affordable Care Act.

What is every bit as criminal as Mr. Sutton’s stealing, however, is to report on the two events as if one is a taking and the other is not.  Here is where, regardless of your political stripes, you should lament the reporting on the new healthcare law.  There simply are no “savings”.  While paying for drugs for our eldest citizens is surely a politically conscionable act, let’s not pretend that the savings enjoyed by such citizens are not equal to the dis-savings of taxpayers and pharmaceutical companies.   If that’s not the case, then by all means, let’s be fair to Mr. Sutton and charge him with Armed Savings.

The bottom line that we all know but often refuse to acknowledge is that the political process does not create any free lunches.  When we allocate resources through public policy we create winners and losers—that’s how it goes in a democracy.  The new healthcare law is an incredibly complex and ambitious piece of legislation that was hotly contested and remains exceedingly divisive.  The voting public deserves to understand its ends and means clearly as it goes into effect.  On that score, The News Journal owes us a higher standard of reporting than to brag on Medicare savings on Friday and lament the layoffs and closures at AstraZeneca on Tuesday.

photo: dubswede, via flickr

Ken Simpler is a Delaware native, former investment professional and current student of public policy at the School of Urban Affairs and Public Policy at the University of Delaware. He is also a 2011 Leadership Delaware fellow. 

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About the Contributor

Ken Simpler

Ken Simpler

Ken Simpler has served as Delaware's State Treasurer since January, 2015. He is an owner of Seaboard Hotels, which develops and manages hotel and retail properties in Rehoboth Beach, Dewey Beach and Nags Head, NC.

4 Comments

  • Mr. Simpler is absolutely correct.  The News Journal and other media outlets consistently report about “savings” for seniors on their prescription drugs, but fail to mention someone else is paying for this.  President Obama’s 2013 budget proposal projects a deficit of over $1 TRILLION.  He is admitting he is giving away “savings” that we cannot afford, yet the media fail to hold him accountable or explain this simple math.  Every reasonable person knows you cannot have a NET reduction in spending without pain.  The social security, medicare/medicaid entitlement programs account for more than 50% of our federal budget, yet nobody except House Budget Chairman Paul Ryan and House Republicans have had the courage to vote for painful, yet neccessary cuts.  What did this get them? Media reporting that failed to challenge Democrats charges that Republicans were “throwing grandma into the street.”

  • Mr. Simpler comparing Medicare seeking huge discounts from drug companies – to some kind of robbery does not make sense. Free markets are all about supply, demand, buying power. Medicare is the 500 pound guerrilla when it comes to buying power. For some reason Medicare was prohibited from seeking drug discounts until Obama came along. When Republicans added Medicare Part D drug benefits a decade ago, they took the buying power away from Medicare. ACA changed that. Just like Wal Mart demands huge discounts, why not Medicare? Faulting the public sector for leveraging buying power, comparing it to stealing or robbery, is the kind of rightwing Tea Party thinking we are all getting tired of. Mr. Simpler seems like another decent Republican unfortunately blinded by whatever that anti-government light is that they see.

  • I’m sure with Ken’s aspirations some will find something political in this, such as saying that Ken is arguing seniors are thieves.

    Obviously not the case anymore than we in the morning, driving 95 into Wilmington would be thieves because we are riding on top of other people’s money.

    Of course, money has to come from somewhere. If I am not mistaken, Ken is simply saying that the News Journal should have been more fair (oxymoran: yeah, like that will EVER happen) and mentioned that that this money was coming from somewhere.

    Every doctor who ever gets a check back from Medicare for reduced payments for his services, knows exactly from where that savings came from…

    Now watch the Barney Campaign go and try distort this…

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