This is a short, single-author policy essay from December 2003. Its scope is the newly passed Medicare prescription-drug expansion, but Sennholz treats the law less as isolated health policy than as evidence of a permanent political struggle over transfer payments. The essay’s thesis is that Medicare politics converts medical care into a competitive bidding war among parties, beneficiaries, industries, regulators, and future taxpayers.
Sennholz begins with the apparent reversal of partisan roles between the Clinton health-care debate and the Republican Medicare bill. He denies that this shift indicates any principled change. It shows, rather, how parties compete to distribute benefits while concealing burdens.
This sudden change in Party position obviously reflected no radical ideological conversion but merely a clever political maneuver by the party in power.
The early structure of the essay is fiscal and political. Sennholz notes the projected $400 billion ten-year cost, but stresses that this amount covers only a fraction of seniors’ drug bills. The uncovered remainder becomes politically useful because incompleteness invites future expansion.
The uncovered part obviously invites future "improvements" and provides a major battleground for both political parties vying for the votes of seniors.
His fiscal warning then widens into an intergenerational argument. Medicare and Social Security are presented as claims placed by present retirees upon future taxpayers. The burden is not merely budgetary; for Sennholz it is a political relation in which one group obtains legal power over another.
By 2025, Medicare and Social Security benefits together may command some 28 percent of all federal income tax revenue; by 2040, they may take almost one half.
The essay’s central conceptual move is to redescribe “social insurance” as coercive redistribution. Sennholz imagines what a rational political opposition would say: it would condemn laws that let one class “prey on another” through tax collectors, judges, and sheriffs. But he argues that both parties are committed to the same logic of entitlement expansion. This produces the essay’s sharpest public-choice formulation:
Politics rarely listens to reason and economics; it is search after power masquerading as a contest of principle.
From there Sennholz turns to the pharmaceutical industry. Though drug companies may initially benefit from public subsidies, he argues that new entitlements create expectations that private producers cannot satisfy. Rising costs bring complaint, investigation, prosecution, price pressure, and regulation. In this sequence, subsidy becomes supervision, and supervision becomes stagnation. The intended beneficiaries, meanwhile, will not be satisfied because political benefits are never final.
His language also attacks the moral framing of Medicare. Seniors may believe the benefit was earned through past taxes, but Sennholz rejects that claim as a rhetorical cover for welfare spending.
Actually, it is public assistance called “social insurance.”
The last part shifts from beneficiaries to “intended victims,” meaning future taxpayers. Sennholz predicts that they too will resist: by cutting levies, limiting expenditures, imposing restrictions on physicians and pharmacists, or using price controls. Thus the original transfer does not resolve conflict; it multiplies the fronts on which conflict occurs. Doctors, drug manufacturers, pharmacists, patients, taxpayers, and legislators are all drawn into a widening administrative struggle.
The conclusion gives the essay its title and its broader theory of politics. The Medicare dispute becomes one case of a general social order organized around state-mediated claims.
Politics is social conflict about burdens and benefits.
For Sennholz, this conflict is cumulative. Each legislative victory encourages new claims, new defensive reactions, and new regulatory controls. If carried far enough, he warns, democratic entitlement politics may call forth an authoritarian arbiter capable of imposing order.
When it finally turns into a fight without end, the conflict society needs a supreme arbiter who, endowed with emergency powers, restores and enforces social peace.
The essay’s relevance lies in its compressed libertarian critique of bipartisan welfare-state politics. Sennholz is not mainly analyzing pharmaceutical insurance design; he is arguing that entitlement programs transform politics into a permanent contest over who pays and who receives. Medicare matters because it exemplifies a broader pattern: benefit expansion, fiscal displacement, regulatory escalation, beneficiary disappointment, taxpayer resistance, and finally the temptation toward command authority.
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