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 ...
Unfortunately you are right - the rubber will meet the road in our lifetime, probably in about 10 years, and I don’t think any politician will grow a spine in that amount of time either.
I think this is happening already. My 92 year old father passed last year. Lived a long, healthy, active life up until 6 months before death. They found cancer and he chose hospice care instead of trying to treat it. In his case, the attempted cure would have been worse than the alternative, I suspect. He avoided expensive and impersonal hospital care and he died surrounded by family and friends and at home. The entire family is convinced the correct decision was made.
Many hospitals are experiencing financial problems and I think it is a result of many people chosing hospice instead of the hospital. They used to make lots of money from the dying that they don't get any more.
Bravo. Lawyers have performed pro bono work for years, yet no one ever legislated that they “must” provide such services. Why should it be any different for hospitals/doctors ?
I think HSA insurance would stop socialized medicine cold if only more companies and institutions would offer it to their employees and have it become the de facto standard that now belongs to HMO/PPOs. It “forces” the policyholder to maximize their health care dollars by seeking lower prices when still in the deductible’s grip.
Now for the bad news....
There is no political will to make the kinds of changes that are necessary. Healthcare will almost certainly be demogogued to death. The only viable political solution will be to essentially create a two-tier system. The first tier will be European-style socialized medicine crafted out of the current Medicare benefits program. The benefits will be means tested, however. The second tier will be more market-oriented and open to those who can afford it. The requirement to join Medicare at 65 will be eliminated and private insurance will be able to enter the market again. This will be very expensive, but there is certainly a significant segment of the population that will opt for this choice. I also expect to see the supply side augmented by a growing offshore medical services industry including cruise ships converted for use as floating hospitals. Some Caribbean countries will become new healthcare meccas as have certain cities in India and Thailand.
I think hospital financial problems are caused by their emergency rooms’ care of the indigent, myself, and other mandates placed upon them by the state or fed gov’t. Things such as providing translators for those who don’t speak English and so forth.
I have seen both types of death - in a hospital hooked up to tubes, and at home with familiar things and people always present - and of either, I believe your father was very wise.
SS and MA ARE welfare. There is no such thing as “putting money inth SS and MA.” These are taxes, plain and simple, used to fund a welfare payment program. There is no investment or fund or benefit. No SS recipient has either a lump sum or available funds after death. This is not a retirement program by any meaningful definition. It is welfare, plain and simple.
The intrusion of government in the medical care industry increases cost as much as 75%. Get government out of health care and costs will plummet.
I agree with you that it’s not market oriented, but my aim would be to change that so it is.
I don’t think you can simply abolish medicare, and private health insurance is also here to stay. I don’t really view that as inconsistent with a market system, though. Yes, if you’re going to have health insurance (public or private) that pays the bills, then you must have a managed structure to make sure that the bills you’re paying are justifiable. The mistake we’ve made though is to assume that we can reduce the overall cost of healthcare by tinkering with that managed structure. Waste is inherent in such a structure, and tinkering with it (particularly by legislation, which is a very blunt tool) is not going to do much to eliminate the waste. More likely, by adding layer upon layer of bureaucratic oversight, you are going to end up reducing the waste to the level that is inherent in the system, and then further “gains” will be illusory because you are actually cutting out necessary or beneficial services that the insurance is supposed to cover. Also, bureaucracy has it’s own costs. We’re paying people to shuffle paper, and ultimately, their activities end up reducing the quality of care anyway.
I think we’ve already wrung out of the system all of the waste that we can reasonably expect to wring out. That’s why I say focus on supply.
Supply is something we can do something about. I am under no illusion that increasing supply is going to be a panacea. But the system is so badly out of whack that I believe very large gains could be obtained by increasing the number of doctors and other healthcare personnel. If we can do that, and let the markets adjust to those new realities, then I think the other problems with the healthcare system that we can’t do anything about will be less problematic.
You’re right, there is no “political will.” I spilled a lot of ink above but all of it boils down to a very simple idea: Americans as a whole want the government to take care of their problems. Until this changes things will only get worse.
Yes and no. It has become more "welfare-like" in recent years, but it was orginally sold as "insurance." Its offical name is OASDI - Old Age, Survivors, and Disability Insurance. Everyone was told that if you put money into it, you would receive benefits after retirement, if disabled, or your survivors would. It still works that way, for the most part.
This is not to say I think it's a good program. I wish it were never created. But it's here and I paid a small fortune into it and I want some of it back. And I'm not going to sit quietly and say to the government, "Here. Just take it all. I don't want it." My age peers are not likely to do that, either.
I like to think that my insistence that I receive benefits when I retire is my way of helping them keep their word.
If, however, you die in the first month of your eligibility and you leave no minor children and have no wife all benefits cease to exist. Even a widow will only receive half of your monthly payment iof whe is not eligible by virtue of her own employment.
It is, in sum and total, a welfare program. There is no fund and you have no accrued account.
“The greatest cause of increased Healthcare costs is simply over utilization.”
I have yet to meet someone who thought that they had too much healthcare though. True that if you’re coming out of pocket for it, you are a little more careful about whether you really need it. But the reality is that the mere fact that your health ins. co. is picking up most of the bill does not mean you’re going to use vastly more healthcare than you need. No one likes to go to the doctor. You have to take off work and sit around in a waiting room for an hour. You’re not going to do it unless you think you must.
From the perspective of a policy maker, you’ve got to assume that what the patient wants is a justifiable service, unless there is some proof otherwise. A system that emphasizes bureaucratic review of the consumer’s choice is not going to substantially improve the outcome, and is more likely to impair the outcome. In any event, managed healthcare is here to stay, so there is no point in dwelling endlessly on its faults.
So for the most part, we’ve got to take “demand” as a given, just like in every other area of economic activity, and simply focus on how to efficiently generate sufficient supply to satisfy that demand.
We spend vast amounts of effort tinkering with the demand side. Virtually nothing has been done to make more supply available. In fact, most of the tinkering on the supply side has been designed to reduce supply, not increase it. The policy-makers would have us believe that unlike every other area of economics, we can reduce costs and prices by suppressing supply.
I'm quite aware of that fact. No private property rights attach to the "fund" as per Flemming v. Nestor. However, I do have a political right to the money, just as much as any other citizen. More so, in my opinion, since I helped fund it.
What it boils down to is there will only be a political solution. And I intend to fight for my interests.
Several years ago, I read this interesting Cato Institute piece about SS and private property.
http://www.socialsecurity.org/pubs/ssps/ssp19.pdf
I agree with what it says. The problem is how to get from here to there. The solution often posited is that we Boomers who have saved on our own and don’t “need” SS should just bend over “for the common good.”
Of course that solution is merely another re-telling of Aesop’s The Grasshopper and the Ant or The Little Red Hen.
I propose the grasshopper should feel cold for a bit and the rest of the barnyard might go hungry for a day or two.
“But the reality is that the mere fact that your health ins. co. is picking up most of the bill does not mean you’re going to use vastly more healthcare than you need.”
No, that is exactly what the research shows. If someone else is picking up the bill you are going to spend more.
“No one likes to go to the doctor.”
Oh you need to spend some time as a doctor. There is a quite a percentage of the population (especially the elderly) that quite enjoy coming to the doctor. (I have the graying hair to prove it.)
“A system that emphasizes bureaucratic review….”
Did you read my post? I want much much less bureaucracy. The only area that I think that the government might and I mean might be of help is that of standardizing certain clinical recommendations and thus reduce defensive medicine.
You can increase the supply of doctors all you want but this is not going to decrease healthcare costs because we are not dealing with a supply and demand situation. The government and the insurance companies do not reimburse for services based on the number of doctors but on the complexity of the medical visit or the procedure rendered. If healthcare was pure fee for service then the supply of doctors would matter. If there were many doctors in a given area then competition would lower the cost of their services. As it is now, doctors do not set their own prices.
It's a matter of demographics. I have no idea what you mean by keeping the ratio at 16 to 1. That ratio was workers to retirees. When you start a new system with fewer people eligible to collect benefits, then it works. It is like a Ponzi scheme. The people at the top of the pyramid get much more out of it than they put in to it. We have an aging population. SS was doomed to failure the minute it was set up.
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.
We need to transition into a new system using personal accounts. We can't expect the twentysomethings or thirtysomethings [one of whom is my daughter] to be taxed to death to support those who are retired or about to be retired. They should have the choice of entering into the new system, which actually lets them own their own pensions.
The current system is really an insurance scheme, not a pension plan. A single person without dependents could pay into the system for 50 years from 17 to 67, drop dead on his 67th birthday and never receive a cent except for a small burial allowance. His estate would get no benefit from all of those contributions. We need to phase in the new system just like Chile, the UK, and 35 countries have already done. This would involve some transition costs, but it is like paying down your mortgage early. In the long term, the government's current $12.8 trillion unfunded liability would be eliminated and the individual would own his pension that would not be subject to the whims of government.
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.
As a retired USG employee with 36 years of service, that is not quite the case. First the USG system is not free. You pay 7% of your salary into the system. If you are eligible for SS, you can get both. Your SS benefit is reduced because of your federal pension. That will change as those employees who joined after 1983 were forced to join the SS system in addition to paying into CSR. Existing employees were also offered an opporutnity to join SS at that time. I am drawing both having just qualified for SS with a bare minimum of 40 quarters. I get my benefit and my wife who doesn't qualify for SS on her own, gets a spousal benefit despite paying only a few quarters into the system. Under SS, even if the spouse never paid into the system, she is still entitled to receive a benefit through her husband. Is this a great country or what?
You can get supplemental health insurance in addition to Medicare to make it your own choice.
Don’t misunderstand ... I’m getting close myself , and I think everyone should get all they can get .
The problem has been created over many years , with all this “socialism”.
We need to get over this concept that the “government” has some sort of responsibility to provide for everyone.
We are the “government”.
All these programs need to be brought to a close ... but you can’t just steal from people for years and then brake promises that have been made.
A lot of people could have done quite well for themselves if they hadn’t been forced to donate so much to the government ponzi scheme. And those folks are ENTITELED to be compensated for that.
But we have to stop this train ... it’s heading for a cliff.
And your solution is???? Eliminate health insurance? Abolish medicare?
It isn’t going to happen. You just have to deal with the payor system the way it is. There’s no sense in beating your head against the wall about the fact that some people demand more healthcare than you would like. It’s just the way it’s going to be.
You can tinker with it, but you’re not going to achieve any meaningful gain. We’ve been doing that for decades. It hasn’t worked. You’ve just got to recognize that there will be some waste, and accept it. In fact, the same is true in every industry. You do the best to eliminate waste, but restricting supply as the remedy is sort of like shooting a mosquito with a bazooka. Better to deal with a few mosquito bites.
So we’ve got no choice but to take that “unnecessary” demand as a given, and to focus on other alternatives to reduce costs. Increasing the number of doctors might increase the availability of unnecessary healthcare, but it’s also going to increase the availability of necessary healthcare, and that is what I’m concerned about.
I would be willing to bet money (and that’s what I’d be doing) that increasing the supply would reduce my healthcare expense, not increase it. In fact, if it weren’t so expensive to obtain healthcare, I suspect that more people would be willing to go it alone, without the aid of health insurance, and that in itself would reduce the impact of the disfunctional payor system.
This is no knock on the fact that you are a doctor (because the reality is that a lot of people who aren’t doctors share your view), but every time someone brings up the idea of increasing the supply of doctors, there is an immediate outpouring of negativism at the thought, in my view mostly designed to focus attention on other alternatives, leaving the idea of increasing the number of doctors as the last possible resort.
That’s why we’ve spent 40 years or so debating this issue, and devising solutions that don’t work. No one wants to adopt the solution that is offered by every basic economic textbook, i.e. a free market approach. Everyone has their own reasons for opposing it. Doctors fear that it will negatively impact their incomes. Most of the healthcare industry panders to the opinions of the physicians. Policy makers either have a vested interest in the system failing so that they can institute a socialized system, or a vested interest in not rocking the boat.
Unfortunately, this is going to end in a crisis of greater proportion than the one we have as more baby boomers approach old age. And despite what the socialist zealots think, socialism is not going to “save the day.” We might end up with socialism, but it will still be a system that is a pathetic failure.
Congress can change the rules and has so there is no social contract or rights of any kind to receive benefits. When I first paid into the system, the retirement age was 65, now it is 67. SS is a pay as you go system so whatever is paid in by you now is automatically paid out to those collecting benefits. Any "surplus" is used by the USG as part of general revenue. The SS Trust Fund receives an IOU for the "surplus" in the form of non-market T-bills. The SS Trust Fund represents an unfunded liability and is part[about 40%] of our current $9 trillion debt. It is held as "intragovernmental holdings."
great post , the best overall treatise on health care I’v seen.
Thanks for putting it together. I hope a lot of folks read it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.