Friday, May 9, 2014

Social Security is NOT a Ponzi Scheme ?

That MP FDR post led to some very interest comment strings.  Here is one discussing Social Security, and the opinions vary greatly.
“Just One Little Minor Correction

…I can't speak for Libertarians, but most Repubs I know (geezers and others) expect to get what they've paid for; no more, no less.”

What most Repubs (and Dems, Libertarians, Independents, Innocent, Oblivious, etc.) will get from SSI and Medicare is far in excess of what they contributed. Most retirees get back from Social Security in 3 or 4 years the sum total of what they (and their employers) put into the system. After that, unless they're independently wealthy, they're living on someone else's dime.

And, of course, if all you expect to get back is what you've paid for, we can eliminate the "return" on a whole host of investment vehicles, from passbook savings (where the return comes close to being eliminated already) to T-Bills to real estate to whatever substance you want to buy "futures" in, be it oil, hog bellies, or chicken feed. I look forward to meeting the Republican who insists that charging interest on a loan is usury, and expecting to get back more than she's put into a low-risk bond is simply greed." Ray


"Most retirees get back from Social Security in 3 or 4 years the sum total of what they (and their employers) put into the system. "

Like all Ponzi schemes, that was true for the earliest "investors". We're reaching the bottom of the pyramid...or have reached it.

"Social Security has reached another critical threshold: For the first time, a typical husband and wife retiring today can expect to collect less in benefits than it paid in payroll tax over the course of their life." Yahoo SS Not the Deal


If you're comparing SSI as an investment, I'd be remiss not to point out it's an extremely poor vehicle.

As for true investments, getting a positive rate of return certainly falls under the category of getting what you pay for, since an investment inherently implies a gain of some type. Expecting others to subsidize a loss falls short of the definition, and that is what the left is suggesting." Thomas
"Social Security is not a Ponzi Scheme:

Once again a claim is being made here that is contrary to fact. A little research on the matter will lead to the conclusion that the title of this comment is correct.  For example, from the Economist, a slightly conservative but respected publication on Finance

"Social Security: A monstrous truth"

"NO PONZI scheme in the history of the world has ever lasted 75 years."

"Social Security is not a Ponzi scheme. The entire population of working Americans has already been subscribed to Social Security for decades, yet the system continues to pay out benefits on time. That is because the actuarial calculations underlying its revenues and benefits are sound."

Please read the entire article for more information. Mr. Swift's disparaging and incorrect questioning of Social Security as an investment is also addressed:

"If you wanted to call Social Security an investment, you would say it is a play on the proposition that America's GDP will continue to grow over the long term. This is the safest play one can imagine making, which is why the returns are so modest. Like any investment, it could go bad. But if it goes bad, if the economy of the United States ceases to grow over the long term, it is inconceivable that any other investment large enough to feed a pension plan covering the entire working population could do better."" Bill

 
"What would you call a government program that taxes the well to do the highest premium and then to stay solvent pays them the lowest benefit? I am not sure if Ponzi is the correct term, however it sounds a lot like typical welfare.

"Those costs are limited and, measured as a percentage of GDP, will flatten out. They can be absorbed through a modest, gradual increase in Social Security taxes and modest reductions in benefits for wealthier recipients."

By the way, the big problem isn't SS Retirement... It is SS Disability and Medicare... The premiums paid in the past do not cover the planned benefits." G2A
 Thoughts?

G2A Life Expectancy and SS
G2A FICA Income or Benefit
G2A Just Say NO to Programs
G2A The Magic of THEY
G2A Debt the Gift to our Children
G2A Prodigal Son Revisited

Some interesting quotes from the SS Medicare Fund Trustees
"Neither Medicare nor Social Security can sustain projected long-run programs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits. "
"Social Security’s Disability Insurance (DI) program satisfies neither the Trustees’ long-range test of close actuarial balance nor their short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds. DI Trust Fund reserves expressed as a percent of annual cost (the trust fund ratio) declined to 85 percent at the beginning of 2013, and the Trustees project trust fund depletion in 2016, the same year projected in the last Trustees Report. DI cost has exceeded non-interest income since 2005, and the trust fund ratio has declined since peaking in 2003. While legislation is needed to address all of Social Security’s financial imbalances, the need has become most urgent with respect to the program’s DI component. Lawmakers need to act soon to avoid reduced payments to DI beneficiaries three years from now. "

"A temporary reduction in the Social Security payroll tax rate in 2011 and 2012 reduced payroll tax revenues by an estimated $222 billion in total. The legislation establishing the payroll tax reduction also provided for transfers from the General Fund to the trust funds in order to “replicate to the extent possible” payments that would have occurred if the payroll tax reduction had not been enacted. Those General Fund reimbursements amounted to about 15 percent of the program’s non-interest income in 2011 and 2012. The temporary payroll tax reduction expired at the end of 2012. "

"While the combined OASDI program fails the long-range test of close actuarial balance, it does satisfy the test for short-range (ten-year) financial adequacy. The Trustees project that the combined trust fund asset reserves at the beginning of each year will exceed that year’s projected cost through 2027. "

"Conclusion
Lawmakers should address the financial challenges facing Social Security and Medicare as soon as possible. Taking action sooner rather than later will leave more options and more time available to phase in changes so that the public has adequate time to prepare."

93 comments:

Anonymous said...

This is a discussion I have had a lot. I think the place to start is defining what a "Ponzi Scheme" is. Then you have to decide whether what you have defined as a Ponzi Scheme is a good or a bad thing. Among other things, is is sustainable or not?

Here is an instance of the definitional problem. A Ponzi Scheme is often spoken of as a system that rewards early investors at the expense of later investors. Fine. But how does that differ from the system we have under which participants in an IPO sell their stock in the market to new investors for more than the cost they paid? Is that system too, a Ponzi Scheme? And if so, is it a bad thing? Should it's proponents be jailed?

--Hiram

Anonymous said...

One of the things that both frustrates me and bores me about our national discourse is this widespread if we are successful enough in attaching a pejorative label to an argument, we have decided the argument.

==Hiram

Anonymous said...

What I have long suspected is that the popularity of the term "Ponzi Scheme" as a pejorative label has to do with the fact that the word "Ponzi" seems strange, alien. It's the same reason by labeling people an "Alinsky" disciple is so popular in some quarters.

When talking about a system that rewards early investors at the expense of late investors, would we be so quick to apply a label if the system was linked to success rather than failure? Could it be for example, that Social Security is an "Apple Computer" Scheme?

--Hiram

John said...

Wiki Ponzi Scheme

The "SS Ponzi Scheme" as noted by the Trustees is definitely not sustainable as it stands. The money invested over the decades, plus the interest earned on the principal, plus the future contributions will not support the payout.

John said...

Buying IPO stock and selling it is no different than buying a car and selling it. Sometimes you gain and sometimes you lose.

And more importantly these are all "free will" decisions. Both the buyer and seller enter into this arrangement voluntarily.

Whereas Payroll taxes are mandated enforced by law.

John said...

I think intent figures into the equation. When people buy and sell stock on the open market, there is a chance they can make or lose money. And people buy/sell because they think they can win.

And it is illegal to trade on "insider information"... Meaning that someone can be placed in jail for trading a stock that they "know" is going to cost the buyer money.

In the case of Social Security, the government is openly forcing people to invest in a policy knowing full well that the assets will not be in place to pay the full benefits that are advertised. In business it would be considered fraud or insider training.

Anonymous said...

"A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator."

How is this different from an Initial Public Offering, one where operators of a business get returns from the sale of their stock to new investors?

"Buying IPO stock and selling it is no different than buying a car and selling it."

So does that man that selling a car is also a Ponzi Scheme?

"Whereas Payroll taxes are mandated enforced by law."

How is that pertinent to the Ponzi-ness of the scheme? Is a Ponzi scheme any less of a Ponzi Scheme if the later investors are forced to make the investment, as opposed to making it of their own free will?

"I think intent figures into the equation. When people buy and sell stock on the open market, there is a chance they can make or lose money."

So how does this go? Ponzi Schemes commonly require an act of will. Some guy persuades some other guy to make the investment promising unsustainable terms. Does the fact that SS is funded out of mandated payroll taxes, not out of an act of persuasion, mean that SS isn't a Ponzi Scheme?

"the government is openly forcing people to invest in a policy knowing full well that the assets will not be in place to pay the full benefits that are advertised."

As has been demonstrated with extensive quotes here and elsewhere, the government has been very candid and open about the problems associated with Social Security. That's how we know about them. The government does not know that assets will be in place in the future, because the government cannot predict the future. The point of the disclosures being made now is that people can understand the nature of the problem and provide solutions such that the promises Social Security has made can be kept.

Nothing here is surprising. What's happening now is what was supposed to happen, yes was even predicted to happen in the deals that were made by President Reagan back in 1983. The promises will be kept, if and only if, we have the political will to keep them.

--Hiram


--Hiram

Sean said...

Arguing over whether or not SS is a Ponzi scheme is a semantic argument which does nothing to advance the actual discussion.

John said...

"Conclusion: Lawmakers should address the financial challenges facing Social Security and Medicare as soon as possible. Taking action sooner rather than later will leave more options and more time available to phase in changes so that the public has adequate time to prepare."

And yet the Democrats continue to ignore the problem....

John said...

Hi Sean:
What discussion is that?

The politicians have promised more benefits than the premiums they have collected can sustain.

To make things worse they used general fund money (ie deficit spending) to provide make up funds for 2 years while giving workers a payroll tax holiday.

The Democrats want to turn it into a form of welfare. Where the well to do pay the most and receive the least. (or none)

John said...

I am of course sensitive to this since my company and I have been paying ~$15,000/yr in premiums for me. And it is likely that I will get little of that back.

Imagine what that would have added up to if I could have saved and invested it in my own 401K account and/or disability insurance?

John said...

If we want to turn social security and medicare into welfare... Then let's just discontinue it and have the poor older folks sign up for welfare and medicaid.

Then the more well to do folks will not qualify until they have spent down their wealth.

The other upside is that the low income folks would not be required to pay fixed rate payroll taxes. Thus their tax rate would drop.

Anonymous said...

And yet the Democrats continue to ignore the problem....

It's simply one of the many problems that our system is incapable of solving. There just isn't a support for any possible solution. The natural compromise is a de facto reduction of benefits, combined with an increase in taxes on the wealthy. Obama indicated a willingness to accept a benefit cut in the form of the "chained CPI" inflation adjustment. That proved a non starter with Republicans, and fairness, wasn't exactly wildly popular with Democrats either, and was quickly taken off the table.

As long as Democrats are in a position to stop it, any cut in Social Security that isn't accompanied by a tax increase on the wealthy is a total non starter. That is an unalterable political reality. For that not to be the result, Republicans would have to control both houses of Congress and the White House, and even then, I question whether stand alone cuts in SS are politically possible. Republicans represent lots of poor people who are counting on Social Security too.

Welfare. Tradition holds that Social Security has three natures, sort of like God. It is a pension plan, and insurance plan, and a welfare plan. Achieving and once achieved, disturbing the balance between these three, sometimes conflicting natures, is very fraught politically.

==Hiram

Sean said...

You have a lot of nerve complaining about Democrats on Social Security and Medicare, especially considering the large, totally unfunded Medicare expansion that occurred in the last Republican administration.

Meanwhile, Democrats haven't ignored Social Security and Medicare at all.

It was President Obama who sought the "Grand Bargain" on entitlement cuts. When he proposed Chained CPI, Republicans ran ads against him and Democrats accusing him of cutting Social Security.

On Medicare, Democrats did the little thing known as the Affordable Care Act, which over time should work to bend the cost curve on health care and reformed wasteful Medicare Advantage plans.

jerrye92002 said...

Sean is right, calling it a "Ponzi" doesn't advance the argument with facts and logic. It's just name-calling. A more neutral and perhaps applicable term would be a "pyramid scheme." In these schemes, the folks at the top, the early "investors" are given big payouts from the next round of investors, thereby encouraging successive levels of investors to join in. The problem is that at some point there aren't enough people in the world to create another round of investment, and so the bottom folks get nothing. We're rapidly approaching that point with Social Security. There is no real "income" to pay the "investors," the only money paid out comes from those still paying in. When SS first started, there were more than 40 workers for every recipient. We are now down below 3 on our way to two. That is the effect of a pyramid scheme, pure and simple. Not only that, SS has been running "in the red" for a few years now, and it can only get worse.

OK, it's not a Ponzi scheme, but it's a poorly designed and unsustainable program nonetheless.

jerrye92002 said...

"It is a pension plan, an insurance plan, and a welfare plan."

In that case, it is a complete failure. As a pension plan, it never "vests," which means that if you die at one month before age 65 (or 66, now), you get nothing and your family gets nothing. It does pay out for your entire lifetime, assuming that those 2 or 3 workers are able and willing to continue to pay in enough, but its most ardent supporters admit that it was never intended to do anything except keep you out of poverty, if that.

As an insurance plan, it has the same problem. Dying gets you nothing at all, regardless of how much you paid in, though if you live long enough you get the $250 death benefit. Whoopee.

It's not a welfare plan, either, because it isn't means tested. True, you get more if you paid in more, but that is backwards from usual welfare programs, and if you change that, as some suggest, you put the lie to it ever having been something else, like an "investment."

The fourth thing, the way this program was and continues to be "sold," is as an investment. It's a terrible investment. Again, it's not a part of your estate, ever, and it's not even an "account receivable" to which you have a legal claim. Those retiring now are only "earning" about 1% on their investment, on average and if they live long enough, while the "risky" stock market has averaged almost 6% per year, NOT counting dividends, over the last 75 years.

John said...

Business Insider Progressives Kill SS Deal

John said...

Reuters Rate of Return

It actually looks like the rate of return is not too bad... If you ignore that your company also contributed... That being money that could have been paid to the employee.

Of course it also offers disability insurance, surviors benefits, health insurance, etc. Of course it is great deal... That is why it is going bankrupt...

Especially for the lower income folks.

John said...

Forbes SS - Taxed

I am thinking taxing it is means testing enough... And as the writer says, it is likely to get worse.

John said...

Personally I think it is a good idea since many seem incapable of saving, investing and buying insurance for themselves.

We just need to reduce the benefits for all and/or increase the payroll taxes (ie premiums) until everything balances out.

Anonymous said...

In that case, it is a complete failure.

More an incomplete failure, or perhaps an incomplete success. Given the three things SS does, it's pretty much a given that it won't do each of them as well as it could if it were a stand alone operation. But there isn't any other single program that does these things well. As with a lot of things, I am sure Social Security could be improved. But in these decadent times, we no longer have the capacity in our society to make things better. The most we can hope for is to slow the rate at which things get worse.

--Hiram

Jon Miners said...

I see the article on how progressives took Obama's proposed concessions off the table. That's just the way things work in politics and in life. Offers have expiration dates, and you have to strike while the iron is hot. Republicans could have made a deal when Obama was politically weak, but they didn't because they thought he would get weaker, and the possible deal would get better. He didn't, and the Republicans didn't really want the deal the deal anyway. As I have noted elsewhere, Republicans represent lots of poor people too, particularly in the south, and they don't get much political advantage from being the party that cut Social Security for all their talk about fiscal responsibility.

--Hiram

Anonymous said...

To digress, the answer to the thing about the difference between Ponzi schemes and IPO's can mostly be found in the word "fraudulent". To be a classic criminal sense, fraud must be involved, which in this case lying about the deal. "Lying" is a frequently misunderstood term. A lie isn't just a statement that turned out to be wrong, it requires an intent to deceive. I am sure conspiracy minded critics could sift through the data for evidence to justify pre-existing conclusions, but for the rest of us, it's pretty clear that the Social Security Administration has done the opposite of lying here. The stream of information we have received from them has been constant and reliable, and is the reason we know why Social Security is in the state that it is in. There will be people claiming that they have lied to us, but they will be wrong.

--Hiram

John said...

I am not sure people are lying necessarily, however I think they are being terribly negligent...

Private businesses are legally required to keep their pension funds fully funded, yet these politicians seem indifferent to the pending default.

Just as they are indifferent to the huge national debt they are just watching grow year after year...

Anonymous said...

am not sure people are lying necessarily, however I think they are being terribly negligent..

Well, fraud isn't about negligence. And the decision we have made not to do anything about Social Security didn't come from the Social Security Administration. It's just another decision we have made by choosing not to decide anything.

--Hiram

Anonymous said...

Private businesses are legally required to keep their pension funds fully funded, yet these politicians seem indifferent to the pending default.

That's because they can't print money.

--Hiram

jerrye92002 said...

"Lying" as regards Social Security is an interesting question. I don't believe there was an intent to deceive the general public or taxpayers by those supporting (originally and even now) the thing. I think it started with good intentions, was continued (into the 80s) by believing that Congress could mandate good outcomes. It continues now because some, mostly Democrats, want to deny reality and seize political advantage, while Republicans mostly see the reality but are afraid of political disadvantage. One wonders what level of calamity will be required before the next WRONG solution will be tried.

Anonymous said...

"Lying" as regards Social Security is an interesting question. I don't believe there was an intent to deceive the general public or taxpayers by those supporting (originally and even now) the thing.

It's more a question of keeping promises. I just don't think the thought ever occurred to Ronald Reagan that the promises he made wouldn't be kept. He wasn't someone who thought that way.

--Hiram

John said...

Please be specific. Which promises?

Laurie said...

I believe SS is projected to be able to pay something like 85% of benefits and the shortfall can easily be fixed by raising the cap on how much income is taxed. The wealthy can easily afford to pay a little more, while most beneficiaries would have a hard time getting by on less $.

jerrye92002 said...

Sure, sure, Laurie. I hear those numbers all the time, and I keep asking "why?" What is the point of continuing to keep this monstrosity afloat, with its poor return on investment, highly regressive taxes, drag on the economy, and obvious over-promises?

No, what should have happened long ago, when it would have been a lot less painful, was to start a transition away from the Social Security system in favor of [mandatory, if you insist] personal retirement accounts. That is, the youngest workers would put the equivalent of their Social Security taxes into a private [government approved, if you insist] retirement account, like an IRA is today. At retirement they would receive no Social Security benefits because they will not have paid in to the system. 40 years from now, Social Security will basically just fade away, replaced by the much larger returns on those private investments. Those nearing retirement would continue to pay in at the full rate and would receive full benefits at retirement. There would be a sliding scale in between. For those who reached retirement age having been chronically unemployed or underpaid, there would be a welfare system, but also the option to keep working without penalty!

John said...

Laurie,
If you make the wealthy pay more and receive less or nothing, SS and Medicare just become Welfare and Medicaid with different names. Might as well combine them and save on administration costs.

Anonymous said...

I hear those numbers all the time, and I keep asking "why?"

Because that was the deal made in 1983.

What is the point of continuing to keep this monstrosity afloat, with its poor return on investment, highly regressive taxes, drag on the economy, and obvious over-promises?

Because it's the only retirement plan many Americans will have.

--Hiram

jerrye92002 said...

"Because that was the deal made in 1983."

No, the deal made in 1983 was to "rescue" a Ponzi scheme that was unraveling, and it was supposed to make the system PERMANENTLY solvent, which as we all know is not true and not possible. That money must come from SOMEWHERE; it can't just be created out of thin air, which is what is paying benefits today.

"Because it's the only retirement plan many Americans will have." And it is insufficient except to keep them out of poverty. If they were mandated to put that same amount in a private investment account, they likely would do considerably better, and for those who did not, there would be a means-tested alternative.

One of the curious things about efforts to sustain this creaky old wreck of a program are the constant "reform" ideas to raise the retirement age. Just imagine if there were no mandatory retirement age, so people could retire early if their personal accounts had grown fat, and others could keep working as long as they wanted and were able, without penalty?

jerrye92002 said...

"Might as well combine them and save on administration costs."

Better yet, we could combine Medicaid and Medicare into a single, privately operated HSA system, with means-tested premium support, and eliminate the two biggest drivers of the federal budget deficit, over time. Medical care would greatly improve and total costs would drop.

Anonymous said...

"No, the deal made in 1983 was to "rescue" a Ponzi scheme that was unraveling, and it was supposed to make the system PERMANENTLY solvent, which as we all know is not true and not possible."

Well, no. The actuarial problem was well understood back then. They thought they were implementing a 50 year solution, and they were basically right. The shortfall we are experiencing right now was predictable and predicted, that's why Social Security built up the surplus over the last thirty years. They were anticipating the retirement of the baby boomers and saving for it.

--Hiram

jerrye92002 said...

OK, have it your way, that they had a "50 year solution." The problem is, the system is broken TODAY-- paying out more than it is taking in-- and the "trust fund" is a complete fabrication. It consists only of government IOUS that it owes itself, a special form of treasury bond. Curiously enough, if those bonds were simply passed out to future retirees, they would instantly become a real asset that could be used to jump-start private SS accounts.

Anonymous said...

The problem is, the system is broken TODAY-- paying out more than it is taking in-- and the "trust fund" is a complete fabrication. It consists only of government IOUS that it owes itself,

You may not like it, but that was the solution that was reached. I suppose there were alternative policies back in 1983, but they weren't the policies accepted. We can't go back in time.

Governments don't owe money; people owe money. If we dissolved the United States, the debt would remain.

--Hiram

Laurie said...

My suggestion involves the wealthy receiving the same amount as the current program not "less or nothing." You draw some very strange conclusions.

John said...

They are already getting less since the benefits were made taxable.

Now you want them to pay 1, 2, 3 or more times as much in premiums while giving them no additional benefits. Even if their benefits are not cut, it is an expansion of the wealth transfer aspects of these programs.

As one of my links explained, the best payout of the systems is for those who made moderate contributions. (Ie full benefits without max payments)

jerrye92002 said...

"You may not like it, but that was the solution that was reached."

I don't like it because it is NOT A SOLUTION. It was just one of many cases where Congress has played "kick the can down the road" and we're coming to the end of the road. Let me ask again, because I really want to know: How big does the calamity have to get before the problem actually gets solved, and will it be solvable by then?

jerrye92002 said...

"If we dissolved the United States, the debt would remain."

That's funny. We can't possibly pay it as it is, and if we dissolved the US (or it became insolvent), the owners of our debt would have no way to collect. I would say their was a moral obligation to repay, but the moral thing for our government would have been to never run up that debt in the first place.

Laurie said...

when I used the phrase "pay a little more" I was thinking something along the lines of 20% more, not triple their current contribution. Once again you have made a strange projection to argue against.

John said...

Laurie,
I apologize, most of your peers want to eliminate the maximum... I made a poor assumption.

Unfortunately I don't think 20% of the people paying 20% more is going to solve the SS Disability and Medicare problems, though it may be enough to help with the SS retirement problem.

jerrye92002 said...

And again, raising the retirement age or the amount collected from "the rich" (aka upper middle class) only breaks the "promise" further and kicks the can down the road a few years. How often do you have to run that old car into the shop before you decide to get one that actually works?

To me raising the retirement age, while it makes some sense (who in 1935 knew people were going to live so long?) is still breaking promises, as far as I'm concerned. I would have done a LOT better if I had that money in my personal account. And because I have a 401k through my employer, even with lower contributions, I will take out a lump sum greater than what SS will pay me in 16 years-- coincidentally my life expectancy at age 66.

Anonymous said...

We can't possibly pay it as it is

That is possible, although we haven't bounced any checks lately. I get this all the time, they we can't afford to pay back the money we borrowed from ourselves, that we can't afford to pay America's health care bill. There are a lot of naysayers out there. While this may be true, but it's not an argument that is very convenient when we are cutting taxes and buying iPads. There's lots of stuff to try before we start employing death panels.

--Hiram

John said...

I didn't know there was such a thing... "America's health care bill"

I thought individual citizens incurred health care bills...

Sean said...

"Better yet, we could combine Medicaid and Medicare into a single, privately operated HSA system, with means-tested premium support"

So you'd turn it into Obamacare?

jerrye92002 said...

No, I would turn it into the opposite of Obamacare, with everyone controlling their own health care and health insurance, subsidized in some (hopefully means tested) way, such as a one-size-fits-all tax credit to buy an HSA.

Sean said...

How do you square "means tested" with "one size fits all"? They aren't the same thing.

What -- specifically -- would be different about your notion of "controlling their own health care and health insurance" versus today's Medicare and Medicaid?

John said...

Wiki HSA

I think he is proposing eliminating Medicare and Medicaid. (ie single payer systems) Probably should eliminate the VA while we are at it...

Sean said...

I know what he's proposing.

jerrye92002 said...

With MC, the government controls what treatment you can have, how much the doctor gets paid, what YOU pay, and which doctor you can see. That is the epitome of you NOT having control.

Actually, giving everybody the same subsidy is perfectly means-tested, because all those who need it most get it, while those who need it least find it a drop in the bucket. Of course, if you want to complicate it by making it progressive, and possibly spending more on administration than you would just passing out equal checks, you need to propose a scheme for that.

Sean said...

If that's your definition of means-tested, I guess I use a different dictionary.

Anyway, I guess I don't see how control is significantly enhanced by your plan. Instead of Medicare determining those things, an insurance company will now do so. (Of course, if you're offended by Medicare's options today, you can get a Medicare Advantage plan instead.)

John said...

The big difference is that it is the insurance company and policy that you have chosen. Not some one size fits all entity that is managed by politicians and bureaucrats.

Sean said...

If the government is paying for a portion of the policy, though, don't we have to mandate some minimum level of coverage? If so, how is that fundamentally different?

I get that you'd draw the line in a somewhat different place than it's drawn today, but it's still the same concept.

John said...

I think many would consider the elimination of "single / government" payer programs as more than moving the line.

The problem with this exercise is that society would need to allow people to reap what they sew, unfortunately that is unlikely to happen based on our current "free loader" problems.

John said...

By the way, I have no problem with mandatory insurance or minimum benefit rules.

I just think it was foolish to put female birth control in as a mandatory requirement. I don't see that as "health care" in most cases. (ie it is more like condoms or motorcycle helmets...)

And I don't think much of making the middle and upper income citizens pay more so the poor get free healthcare. Maybe that is where are different lines reside.

Anonymous said...

I thought individual citizens incurred health care bills...

Who else would America be?

"The big difference is that it is the insurance company and policy that you have chosen."


Why does that make a difference? do insurance companies you choose write checks in a different color than those of insurance companies you didn't?

--Hiram

Anonymous said...

I just think it was foolish to put female birth control in as a mandatory requirement. I don't see that as "health care" in most cases. (ie it is more like condoms or motorcycle helmets...)

My understanding is that many birth control methods involve doctors care, and prescriptions. Correcting vision doesn't seem to me to involve "health care", yet I am aware of no sustained effort to exclude eyeglass coverage from medical plans.

--Hiram

jerrye92002 said...

"If the government is paying for a portion of the policy, though, don't we have to mandate some minimum level of coverage?"

No, absolutely not. That's how we got into this mess in the first place. So long as the government subsidy goes to health insurance (or health care, they aren't the same) that the individual chooses, the government should not care exactly what or from whom the insurance or care is purchased. Competition would take care of the rest.

Anonymous said...

If the government is paying for a portion of the policy, though, don't we have to mandate some minimum level of coverage?"

No, absolutely not

It's true we don't have to. The question is what's the best policy. The problem is that there is lots of lousy insurance out there, insurance that doesn't fully take care of people's needs. If we don't mandate a certain level of coverage, we will end up paying both for that lousy insurance, while still assuming the burden those policies leave uncovered.

People often make the important distinction between health care, and health insurance. They are right to do so. We render health care independently of insurance or the ability to pay. We don't staff death panels who exclude people from health care simply because they can't pay for it. What this discussion has always been about isn't health care, it's about paying for the health care we have already decided to provide.

--Hiram

jerrye92002 said...

"If we don't mandate a certain level of coverage, we will end up paying both..."

That's a true liberal. You are perfectly capable of deciding for yourself what insurance coverage you need and what you are willing to pay for it, but the rest of us are too stupid to do so for ourselves so government has to tell us what we must buy. I think I've found the problem.

Which leads to the second problem, this decision that "we" have decided to pay whatever government tells us we must for what somebody ELSE gets in health insurance (not even health CARE). Since everybody has different needs and wants with regard to such services, just as we all have different needs and wants in food, how can some distant bureaucrat prescribe one-size-fits-all?

Food stamps aren't an ideal solution to hunger, but at least could we try "health insurance stamps" and leave the "what" to the individuals involved?

John said...

Hiram,
In my experience, often vision care is not covered under health insurance.

Though you do make a good point that birth control does require a prescription and doctor visit. Maybe I was incorrect.

Jerry,
Our society is not going to let people pay the consequences of their poor decisions. If someone scrimps on health insurance so they can have a newer car, we are not going to let him die in alley when he gets sick. That is why I believe in base requirements.

Or maybe people could opt out if their net worth was large enough to be considered self insured.

jerrye92002 said...

Or, take the food stamp or education voucher approach. Government funds and restricts the expenditure to that for which the funds are provided-- food in the case of food stamps, education in the case of vouchers, health care in the form of a government subsidy (or refundable tax credit) for insurance. Simple.
Personally, I would have government contribute, on a sliding scale, most of the deductible for an HSA. This would replace both Medicaid AND Medicare.

People don't become responsible unless you give them the opportunity to do so.

Anonymous said...

n my experience, often vision care is not covered under health insurance.

Is that because it isn't considered health care?

--Hiram

Anonymous said...

"You are perfectly capable of deciding for yourself what insurance coverage you need and what you are willing to pay for it, but the rest of us are too stupid to do so for ourselves so government has to tell us what we must buy. I think I've found the problem."

It's not a question of stupidity. People know they can under insure, knowing others will pick up any big bills. The problem with that view isn't stupidity, the problem is that taxpayers aren't getting the fiscal stability they pay for.

--Hiram

jerrye92002 said...

"People know they can under insure, knowing others will pick up any big bills."

So it IS a freeloader problem. How do you stop a freeloader from freeloading? Simple. Just stop.

My father worked in a part of town that used to be called "skid row." Often, while walking to lunch, he would be approached by a panhandler asking if he could spare 50 cents so "I can get something to eat." Dad's standard response was, "I'm going to the cafe now, come with me and I'll buy you whatever you can eat." At that point the fellow would always demur, saying something like "just give me the money and I will get it myself." The money would have never gone for food, of course, but once the free meal was offered and declined, Dad's moral obligation was fulfilled. We should do exactly the same with all of our welfare recipients, of all kinds. Give them the help they need, in the amount they need, and then expect them to show gratitude by accepting responsibility for getting themselves out of their situation. Private charities do it all the time. Government cannot, or certainly does not.

Sean said...

How is a person with cancer supposed to accept responsibility?

It's fascinating how the conservatives on this board have a total of two policies to cover anything. If we need to grow the economy, the policy is always "cut taxes". If it's about poor people, it's "stop giving them money, it's not my problem".

Anonymous said...

How do you stop a freeloader from freeloading?

Obamacare's solution is the individual mandate. Others would create death panels whose job would be to deny care to those who can't afford it. I am sure there are other solutions as well.

--Hiram

jerrye92002 said...

"How is a person with cancer supposed to accept responsibility?"

By buying health insurance before he gets it. Or by paying for it out of his own pocket. Or by appealing to charity. Or by seeking out trials for new therapies. Or by just getting their affairs in order, having given up the will to live. I would say assisted suicide but I cannot in moral conscience advocate that. The point is, neither you nor I are responsible for his cancer, and he may not be, either, but nonetheless it is not OUR responsibility before the fact, or even after the fact unless we are the rich relative or charitable soul asked to help.

jerrye92002 said...

"Others would create death panels whose job would be to deny care to those who can't afford it."

That is incorrect. The death panels are part and parcel and an inevitable aspect of Obamacare. The job of these panels is to deny care to people who CAN afford it, just as Medicare does today. That is, they decide what treatment you can have, and you aren't allowed to pay for it yourself, even if you wanted and were able to. That's to keep it "fair," of course.

Anonymous said...

The death panels are part and parcel and an inevitable aspect of Obamacare. The job of these panels is to deny care to people who CAN afford it,

My view of death panels is different. I see them simply as the entity which makes the decision to deny needed care, for whatever reason.

--Hiram

Sean said...

Death panels aren't part of Obamacare, so maybe we should just move on.

jerrye92002 said...

Oh, the "death panels" are not CALLED that, in the legislation, but that is exactly the function of the, what is it, IPAB? They will decide who can be treated for what, and how, and what doctors will be paid to do it. They will prevent doctors from accepting private payment for anything. So, if they deny payment because of what you have, what your doctor says you need, what the cost is, or for who you are, you will NOT be allowed to buy it for yourself. They are condemning you to death. Call it what it is.

Sean said...

The IPAB has no such authority. The statute says (in regards to proposals by IPAB to reduce growth in Medicare spending):

"The proposal shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary cost sharing (including deductibles, coinsurance, and co-payments), or otherwise restrict benefits or modify eligibility criteria."

John said...

For your consideration:
Wiki IPAB
Modern Healthcare IPAB Fades
Kaiser IPAB
Forbes IPAB

Sean said...

Of course, doctors groups are worried about IPAB because it could impact payment rates. That doesn't make it a death panel, though.

John said...

Kaiser More Detail

You are correct, they are not a death panel. However, what do you think when a private insurance company reduces the benefits they pay to reduce costs, or if they choose not to pay for certain procedures?

Wise compassionate business people or greedy cold hearted individuals...

And in this case older people will not be able to change insurance providers...

Sean said...

Seniors have the ability to purchase Medicare Advantage plans or supplemental insurance.

It's fascinating to me that you complain endlessly about how Democrats are not being serious about restraining spending on entitlement programs, then complain about efforts made to restrain spending on entitlement programs.

Republican alternatives aren't all sunshine and roses when it comes to health care, either. The Ryan plan limits federal spending on an ongoing basis , but also is projected to roughly double the out-of-pocket paid by the average senior. Tell me that's not going to have health impacts...

John said...

Personally I am a big supporter of physician assisted suicide. I've watched too many older relatives languish unaware too long.

However if people have money and want to keep living, then I think they should be free to spend their money to keep living.

Jerry has the perception that his relatives care was limited by medicare rules, I have never figured out exactly why the hospital refused to continue treatment for cash...

It seems odd, however if that truly is what happened, then I would say medicare has too much power to control treatment.

jerrye92002 said...

Medicare is the problem, and the IPAB is Medicare for everybody else. I hear endless complaints from the left about how our medical care is "rationed by cost," so what happens when the IPAB decides not to pay for the procedure you need? Didn't they just ration medical care?

Of course they did, and will, and it is inevitable. Apparently some of us have not figured out the common trick of leftist legislators of creating a system that must do some terrible thing, and then inserting words into the legislation that says it doesn't. They are simply putting words to their good intentions, with no consideration whatsoever for what the clear language of the law actually DOES, in reality.

John said...

The important question though is:

Can people spend their own money to buy services that are not reimbursed by the government insurance program?

If we can, then I am not sure why ACA, Medicare, IPAB, etc would be a bad thing.

If we can't then I think they would be a very bad thing.

John said...

The reality is that all insurance companies have something equivalent to an IPAB. I mean somehow they decide what will be covered and what will not. And how much is the maximum for each procedure.

I would think the public IPAB would be more accepting and generous than any private IPAB. It isn't their company's profitability or their bonuses on the line.

jerrye92002 said...

The fact is that the first rule of Medicare is that providers are NOT permitted to accept private payment for services from a Medicare patient. And the difference with private insurers is that you CAN pay for things they do not cover, and possible save money that way.

Sean said...

Congress can also override any decision made by the IPAB if they disagree with it.

jerrye92002 said...

And why would they do that? The IPAB is insulated from electoral consequences of Congress' decision to create them and give them the authority to ration care. Besides, the only way to save money on Obamacare is to ration what gets paid out, which results in rationing the care people receive, just that simple.

How about this: Let's get rid of the IPAB and let people decide what they want covered by their insurance and what they are willing to pay. Let's let insurance companies and doctors decide what they will pay and accept to deliver care (preferably WITHOUT "fee for service" constraints), and then let people and their doctors decide what care they need? Why do we need these bureaucrats interfering in all of these personal, sometimes life and death, decisions?

John said...

Sorry to say... Insurance company personnel are bureaucrats also... However they do have to satisfy most of their customers or they will go out of business.

jerrye92002 said...

And, you are not forced to buy from them as the only source. If a single private insurer held a monopoly position like that, we would break them up, wouldn't we? Why do we allow government to do it, and compel us to buy it, to boot?

John said...

For some reason Liberals think that "government" is made up of giving, caring, wise, philanthropic. etc humans that are somehow different from the rest of us selfish, foolish, self centered, etc private industry humans.

jerrye92002 said...

And if you don't believe that, just ask them!

Sean said...

Hint: The reason Social Security and Medicare exist is because selfish, foolish, self centered, etc private industry humans weren't getting the job done.

jerrye92002 said...

I hope you mean the selfish, greedy, etc. INDIVIDUAL humans who weren't saving for retirement? I have yet to see a government program makes people MORE individually responsible.