Posted on 05/09/2007 5:01:08 AM PDT by Brilliant
What's going to happen when the money runs out for Medicare? A recently released report by the program's trustees found that within seven years Medicare taxes will fall short of Medicare expenses by more than 45%. What's more, Medicare and Social Security combined are on track to eat up the entire federal budget...
The projected cash flow deficits in these two programs are staggering. For Social Security, the trustees estimate the 75-year burden on general revenues at $6.7 trillion. For Medicare the comparable burden on general revenues is $24.2 trillion... Thus the total burden these programs will impose on federal finances over the next 75 years is $31.9 trillion...
Members of Congress will not have to wait long to experience the practical effects of all of this. Until a few years ago, Social Security and Medicare were taking in more than they spent... Thus they provided revenue for other federal programs. That situation is now reversed, and last year the combined deficits in the two programs claimed 5.3% of federal income tax revenues. In 15 years these two programs will require more than a fourth of income tax revenues...
Could we force the elderly to pay for future deficits with higher Medicare premiums? Monthly premiums in constant dollars would more than quadruple by 2020, and be almost 30 times their current level by 2080...
Using taxation to fund the projected Medicare shortfalls is equally unpalatable. We would need a 10% increase in all nonpayroll taxes by 2020 and a 50% increase by 2080...
So what else can be done? ...On the demand side, someone must choose between health care and other uses of money... On the supply side, the way health care is produced must fundamentally be changed, replacing cost-increasing innovations with cost-reducing ones...
(Excerpt) Read more at online.wsj.com ...
I agree with you. We have already socialized medicine for those 65 and older. And Medicaid brings in millions more for the poor and children. It is just a matter of time before everyone is covered by a single payer system.
“The foreign born account for 25.2 percent of all physicians; 17 percent of nursing, psychiatric and home health aides; 15.8 percent of clinical laboratory technicians; 14.8 percent of pharmacists; and 11.5 percent of registered nurses.”
This is further proof in my view that the US medical schools are not generating enough doctors. We must import them from overseas. The question, though, is why the healthcare profession would rather do that than produce them internally.
I think there are at least two answers to that. First, the AMA, teaching hospitals, and medical schools control the number of students who can go to US medical schools. But they don’t control US immigration policy. The second one is the explanation advanced by Milton Friedman in his book, “Capitalism and Freedom.” A lot of doctors are foreign born. Thus, they naturally take the view that foreign doctors are an important and valuable asset, and that we should continue to license them.
My point is that a fixed "retirement age" is a number that was picked out of thin air by FDR in 1933. That number is no more sacred than the amount of taxes that can be seized from those who work.
Sam Donaldson once said, only partly in jest, that the soltuion is for the government to encourage smoking. More early deaths would take the pressure of the system.
Demand erquates to money, Many small towns and rural areas don't have doctors readily available. They try to entice them with various incentives and packages.
To a lesser degree this is also true of the concentration in particular specialties, although, even in that area, there are regulatory restictions on who can practice in what area, so the market does not reign supreme.
What regulatory restrictions are you referring to? We do know that our medical schools are not producing the specialties we need, like surgeons. Although it may not be politically correct to say it, the de facto quotas in medical schools for women have changed the output in the specialties with women being more interested in pediatrics and OBGYN. Foreign-trained doctors have been filling the gaps. Our medical schools produce about 17,000 doctors a year and we have 24,000 residencys. The remaining 7,000 are filled by foreign-tgrained doctors.
My point is this: You can’t say that the market is misallocating resources geographically or by specialty. What’s happening is that there is an overall shortage, and physicians are crowding into the geographical and specialization segments that are the most rewarding
Most rewarding monetarily in many cases given the huge debts most medical students incur before entering into practice.
If there were more physicians, then there would be more physicians in all of the markets. When you have an overall shortage, certain segments of the market suffer more than others.
The shortages can be filled and are being filled by foreign-trained doctors.
You have forgotten the primary tenant of Hillarycare, which was that the high medical costs are due to an over abundance of medics. Although hillarycare did not pass, the government was able to restrict the number of people entering certain specialties to some extent by the controlling the availability of student loan money during the Clinton regime. I do not know if this situation has changed in the last 6 years, however, it is likely to be a primary leg of the coming Clinton government health care program.
It costs a lot of money to train doctors in the US. Medical schools are a costly proposition for most universities. And you have the issue of quality. Many of the foreign trained doctors are US citizens who go abroad to study. They must pass US tests to become certified. I just think you are placing too much emphasis on this alleged doctor shortage, when the real problem involving rising health costs has to do with other things like hospital costs, medical equipment, uninsured users, other medical personnel like nurses, technicians, etc. More doctors are not going to stem the health care costs.
Simple solution - print more money.
You are stuck on this "doctor shortage." Consider this: obstetricians at my hospital earn about $110,000 per year, pre-tax. They pay about $30,000 per year for malpractice, post-tax. They attended college for four years and medical school for four more years. Most of them borrowed the money for tuition and to live on for that period of time, thereby accumulating massive debt. Then they go on to residency for an additional four years. Forget for a moment that they work like dogs at all hours of the day and night for their entire careers. What American would choose that, even if the hours were better?
A doctor trained in India is often trained at government expense. That $110,000 per year is extremely attractive compared to what they earn in India. Unlike their American counterpart, they do not face crushing debt.
Why so many foreign doctors? To distort a really distorted cliche, "they are doing the work that American's won't." (only half kidding)
We raised the retirement age to 67 in 1983. Social Security taxes have been raised more than 40 times since the program began. The Social Security payroll tax rate has grown from just 2 percent in 1949 to 12.4 percent today. The maximum original Social Security tax was just $60. Today it is $11,000. Nearly 80% of Americans pay more in Social Security taxes than they do in federal income tax.
The point is that you can keep on tweaking the system, but it is structurally unsound. All you are doing is delaying the inevitable.
Even the retired auto workers use medicare - they may get supplemental insurance from private insurers as a retirement benefit, however.
There is no alternative under the law - all seniors age 65+ MUST enroll in medicare. Period.
This is why I’m saving like there was no tomorrow. There isn’t. All those hundreds of thousands I’ve paid into Medicare and Social Security since 1967 will be long gone by the time I’m ready to use them in a ten years.
Yes and no.
Medicare pays more - a lot more - in certain areas. But Medicare prices do not follow demand, in fact, they are almost opposite to demand.
For example, Medicare pays doctors very high prices in South Florida. I don't know if you've noticed, but they almost have MRI scanners in gas stations there.
In places where there are few specialists and long waits, Medicare prices are very low.
If supply-demand was working, fees would be higher where supply is low, and doctors in South Florida would be washing cars on the side.
Another victory for central planning.
There is no golden “retirement age” for all. Remember, the SS scam started in the 30s with a retirement age of 65 - 3 years more than the average lifespan.
If you played the same charade now, SS retirement age would need to be bumped to 76 or higher.
Let’s be even more realistic - is that politically feasible ?
OK. I can buy it, if you say that. Thus my initial point: Irresistable force meets and immovable object. Which wins? Unfortunately, we’re probably going to find out someday.
“This is why I’m saving like there was no tomorrow. There isn’t. All those hundreds of thousands I’ve paid into Medicare and Social Security since 1967 will be long gone by the time I’m ready to use them in a ten years.”
My feelings exactly. I have a bit more to go until retirement, but I have zero faith that dime one that I’ve paid to M & SS will ever reach me later on, and less faith that any politician in my lifetime will have the cajones to actually fix things - if anything Hillary! and her ilk are doing their best NOT to fix it, so their universal healthcare scams can be shoved down our throats.
Having just done my taxes, and seen how much of my money is thrown down the sucking black hole of the Fed, and how little I can save for myself for the future...the future looks bleak.
Of course, the way things are going, Hillary! or her ilk will get universal healthcare rammed through, and private medical care, which we’re saving for, outlawed, and private savings and 401Ks and such taxed to oblivion to pay for it.
Yes, I fully expect my 401K to be taxed as the money is added or while it’s in there within the next 5-10 years. You know the Dems look at all that money locked up in 401Ks and they can’t help but drool. Our government is addicted to money, makes no effort to save or spend widely, refuse accountability, and tell us to shut up and sit down if we complain.
I’d emigrate...but where?
My landlady came to me in March with a hard lump in her neck. She had been to see her GP, who thought it was cancer, and had gotten her an appointment in the Oncology Department where I worked...for October.
"Come with me to work tomorrow", I said, "and I'll get you in to see the consultant"
She was horrified. "Oh. no!" she gasped, "That wouldn't be right!"
I've thought of her often since then, when discussing our progress towards socialized medicine.
How may Americans with hard lumps in their necks will wait seven months to be seen, "because it's right"?
Maybe. Suppose the ratio were to be made the fixed number and not the retirement age or the tax rate. As you stated, all have changed since it's inception - tax rates, retirement age, ratio of workers/benficiaries. Had the ratio been kept at 16:1 (or whatever) since day one, the retirement age would have kept pace with the increase in lifespans. It would have worked, I think.
I'm not advocating this solution, but you understand the concept, I trust. Now I agree that it cannot go on as it is now without changes. But wholesale scrapping won't work either, from a political standpoint. It's easy for a twentysomething or a thirtysomething to say that those who are retired or are about too should just shut up and kiss goobye all the money they put into it. Ain't gonna happen. And you can be sure those who paid little into the system over their working lives will fight hammer and tong to get some of it. Witness all the bellyaching from government retirees who don't get SS because their free retirement system offsets the SS. I have to listen to my retired government employee brother-in-law whine about this all the time.
Whatever happens will be political. We're all political animals.
Let’s talk about the rest of the problem. It’s estimated that the majority of healthcare costs are incurred in the last 3 months of life. There is no dying gracefully anymore. We are all trying every medical treatment under the sun to prolong life just those last few minutes.
While that should be an individual’s choice, medicare has made it a social choice.
You have some very good comments and thoughts on Medicare and healthcare costs, but I think that you are a bit off on the idea of physician supply. Our current healthcare system is not a market based system (Oh, how I wish that it was). If it was then you would be absolutely right that increasing the supply of physicians would generally decrease the cost of healthcare. Most people do not understand that physicians in general do not get paid on a fee for service/market price type system. We get paid according to what the insurance companies/government decide our services are worth. This causes some major problems with physician supply. There is a shortage of primary care physicians (disclaimer: I’m a primary care physician) because we are reimbursed at a much lower rate than the specialists. If you are a young medical student and you are $100k+ in debt and you have a choice of Family Practice or Gastroenterology what are you going to choose? Of course, most are going to go into specialties where they are going to be paid more for their services and get rid of their debt faster.
This thread is mainly about Medicare/SS and I agree with Extremely extreme extremist (great name) that it should all be abolished. Medicare/caid/SS are all socialist programs. You are taking money by force from one group of people and giving it to another group which I believe is completely immoral.
As far as health care costs are concerned below is my diatribe that I will submit for your consideration. I know it’s lengthy.
How to reduce Healthcare costs.
As a physician this topic is near and dear to my heart. I was a family practice physician for six years and have recently changed to occupational medicine. Probably the best article I have ever read on the costs and potential solutions for health care comes from the Cato Institute at http://www.cato.org/pubs/pas/pa211.html.
The greatest cause of increased Healthcare costs is simply over utilization. This is due to a dissociation between the consumer and the product. When someone else pays your Healthcare bill whether it be your employer or the government you naturally will over utilize those services because you do not see the direct cost. Of course we all actually pay for our own Healthcare either in the form of taxes (of coarse some pay more than others aka Socialism) or decreased wages but we do not directly see this and therefore it does not influence our healthcare decisions. (See John Stossel’s excellent article at http://www.townhall.com/columnists/JohnStossel/2006/10/25/getting_medical_insurance_from_your_boss_is_a_bad_idea) The solution to this is simple. Employers should stop offering health insurance. The only reason that employers offer health care is because of antiquated tax laws. If everyone had their own individual insurance over utilization would be reduced. Think about it. Almost everyone driving has automobile insurance. You very well know what happens if you get a speeding ticket or in an accident that was your fault: you’re rate will go up. If you know that you’re rate will increase if you go to your doctor excessively or demand expensive services you naturally will become wiser when it comes to utilizing these services. Also if everyone has their own individual policies competition will increase among providers and innovation such as Healthcare savings plans will increase. What about the Medicare crowd? I see two possibilities to improve over utilization. One would be to stop paying the doctors directly. Roll the clock back to the time when the doctor simply gave the patient the bill and the patient submitted the bill to Medicare. This way the consumer actually sees the cost of the care. Since Medicare obviously would not pay the entire bill the consumer would be responsible for the deference and this alone would be reduced over utilization. The other option would be to make an average payment to each Medicare recipient in the form of a health savings account for them to spend on their health care. Talk about the sudden resurgence in frugality!
The next cause of increased Healthcare costs is technology. Here I will take to task my colleagues. We love the latest and greatest pills and tests. Many physicians enjoy pulling out the latest and greatest drug despite how much it costs or recommend the newest test without much thought to its cost. The only solution to this is better education for the physicians (I actually did get quite a bit of instruction in family practice residency on how to make the most cost-effective decisions) and making the consumer more aware of the costs. Part of the drive for the newest and best technology leads us to our next topic: risk of malpractice.
Defensive medicine significantly drives up the cost for health care. My favorite example is the headache patient. There is really no good scientific evidence that helps a physician decide when to get a CT or an MRI. A good rule of thumb is the patient’s age and neurological findings. But what most often happens? We get a CT or MRI on everyone just to make sure we don’t miss that one in a million brain tumor. I could go on and on: x-rays for minor trauma, cancer screening tests that are marginal at best, unnecessary C-sections, etc. etc. How do we improve this? First, a true loser pay legal system. Second, a government sponsored set of clinical recommendations. (I know I’m not really thrilled about the idea of the government being involved in anything in Healthcare but actually I think this would be of benefit, let me explain……) Using our above example of headache and MRIs: the government would issue a set of recommendations for this specific scenario stating that a physician should only order a CT or MRI for a headache patient if they are over 45 or have neurological signs or symptoms. If that physician follows these recommendations,(they would not really be law so they don’t have to) and they miss the one in a million brain tumor they would have protection from litigation. These evidence based very specific objective recommendations could then be used by the insurance industry to either justify or deny a given test. If a patient insists on having any of these tests they simply would be on their own to pay for them.
Another major cause of high Healthcare cost is regulation. There is entirely too much time and money spent on paperwork and regulations that have nothing to do with the care of the patient. There are many potential solutions that are beyond my meager knowledge of economics but I have one solution that I believe would go a long way to reduce costs. Physicians as a group need to stop accepting payment from insurance carriers. If you come to see me as a patient I simply gave you a bill and you pay it at the time of service. It would then be your responsibility to haggle with the insurance company over reimbursement. This would actually have several effects. It would greatly reduce the overhead for the physician. It would introduce greater competition among the physicians. If you tried to charge more than your competitors you would be expected to provide greater service. Most people do not realize that physicians must accept a certain level of pay from the insurance carrier despite the actual level of care given. And again it would reduce over utilization by making the consumer more aware of the actual cost of care.
The last major cause of high Healthcare cost (at least that I can think of) is indigent care. I hear people discuss the idea of socialized medicine all the time. We already have socialized medicine either in the form of higher taxation or cost shifting. The solution to this problem is very simple and I know will be very shocking to many people. Stop providing indigent care. Stop forcing hospitals to care for those who cannot pay. Oh! horror of horrors you say, who will care for those who cannot pay for health care? First there is an underlying philosophy to be discussed. Is Healthcare a right or a privilege? Healthcare is not a right but a privilege. You and I should not be forced to pay higher taxes or higher Healthcare costs because someone chooses not to purchase Healthcare insurance. (Yes, I believe there is a sizable portion of the populace who spend their money on beer, cigarettes and lottery tickets instead of purchasing health insurance or saving it for a rainy day.) Stopping indigent care would make those who could be responsible for their health care responsible for it. What about those who truly are in need or those who are faced with emergency our tragedy? Simple: charity. I do feel that you and I have a responsibility to help our common man who is truly in need. The big difference is that you and I should do this privately and should not be forced by the barrel of the government’s gun. Let’s bring back the charity hospital. Let’s encourage and support organizations that pay for health care of those who are truly in need. Let’s stop our current wasteful system of socialized medicine.
I know this is a lengthy post. I’ve discussed this on various forums over the years and have finally decided to put these ideas together in one post.
Eric Roth M.D.
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