Home › Forums › Open Discussion › Fiscal Cliff Pt. 2 – the bloodletting
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January 7, 2013 at 8:01 pm #781527
wakefloodParticipantLook, let’s not even pretend that Hoop will have an epiphany. He’s locked in and that ain’t changing. But hopefully, anyone else who might be willing to consider some important facts about the deficit and how earned entitlements and healthcare impact it might catch some helpful insight from this…
Here’s some information from Robert Reich today:
“It has become accepted economic wisdom, uttered with deadpan certainty by policy pundits and budget scolds on both sides of the aisle, that the only way to get control over America’s looming deficits is to “reform entitlements.”
But the accepted wisdom is wrong.
Start with the statistics Republicans trot out at the slightest provocation — federal budget data showing a huge spike in direct payments to individuals since the start of 2009, shooting up by almost $600 billion, a 32 percent increase.
And Census data showing 49 percent of Americans living in homes where at least one person is collecting a federal benefit — food stamps, unemployment insurance, worker’s compensation, or subsidized housing — up from 44 percent in 2008.
But these expenditures aren’t driving the federal budget deficit in future years. They’re temporary. The reason for the spike is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.
If anything, America’s safety nets have been too small and shot through with holes. That’s why the number and percentage of Americans in poverty has increased dramatically, including 22 percent of our children.
What about Social Security and Medicare (along with Medicare’s poor step-child, Medicaid)?
Social Security won’t contribute to future budget deficits. By law, it can only spend money from the Social Security trust fund.
That fund has been in surplus for the better part of two decades, as boomers contributed to it during their working lives. As boomers begin to retire, those current surpluses are disappearing.
But this only means the trust fund will be collecting from the rest of the federal government the IOUs on the surpluses it lent to the rest of the government.
This still leaves a problem for the trust fund about two decades from now.
Yet the way to deal with this isn’t to raise the eligibility age for receiving Social Security benefits, as many entitlement reformers are urging. That would put an unfair burden on most laboring people, whose bodies begin wearing out about the same age they did decades ago even though they live longer.
And it’s not to reduce cost-of-living adjustments for inflation, as even the White House seemed ready to propose in recent months. Benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.
Besides, Social Security’s current inflation adjustment actually understates the true impact of inflation on elderly recipients — who spend far more than anyone else on health care, the costs of which have been rising faster than overall inflation.
That leaves two possibilities that “entitlement reformers” rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered.
What’s left to reform? Medicare and Medicaid costs are projected to soar. But here again, look closely and you’ll see neither is really the problem.
The underlying problem is the soaring costs of health care — as evidenced by soaring premiums, co-payments, and deductibles that all of us are bearing — combined with the aging of the boomer generation.
The solution isn’t to reduce Medicare benefits. It’s for the nation to contain overall healthcare costs and get more for its healthcare dollars.
We’re already spending nearly 18 percent of our entire economy on health care, compared to an average of 9.6 percent in all other rich countries.
Yet we’re no healthier than their citizens are. In fact, our life expectancy at birth (78.2 years) is shorter than theirs (averaging 79.5 years), and our infant mortality (6.5 deaths per 1000 live births) is higher (theirs is 4.4).
Why? Doctors and hospitals in the U.S. have every incentive to spend on unnecessary tests, drugs, and procedures.
For example, almost 95 percent of cases of lower back pain are best relieved by physical therapy. But American doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. There’s not much money in physical therapy.
Another example: American doctors typically hospitalize people whose diabetes, asthma, or heart conditions act up. Twenty percent of these people are hospitalized again within a month. In other rich nations nurses make home visits to ensure that people with such problems are taking their medications. Nurses don’t make home visits to Americans with acute conditions because hospitals aren’t paid for such visits.
An estimated 30 percent of all healthcare spending in the United States is pure waste, according to the Institute of Medicine.”
Again, to restate the obvious, shrinking SS benefits, however you do it, in an attempt to reduce the deficit, is the equivalent of using bloodletting to cure your diabetes.
January 7, 2013 at 11:33 pm #781528
WorldCitizenParticipantHooper:
The minimal increase in life expectancy is exactly why it is inappropriate to raise the retirement age.
You made the argument that most people never made it to 65 and now are living well beyond that. This argument is false and should be treated as such.
January 8, 2013 at 4:20 am #781529
redblackParticipantthe hoop:
i spent a summer making metal barrels
LOL. the hooper was actually a cooper.
but back to the topic:
many long term construction workers become foreman and instruct younger workers how to lay the bricks. or they could find a less taxing occupation as a second career.
no, man. you really don’t get it.
let me simplify:
no work? no pay.
it doesn’t matter how old you are, how much experience you have, how many new workers you’re training, etc., etc.
i’ve been a foreman and i’m not even 45. i’ve attained that position because i’m smart and i work hard. it has nothing to do with seniority or age.
[maybe that will change your opinion of us lazy socialist union bastards. then again, you’ll believe what you will, despite what i tell you.]
bottom line: if you don’t lay bricks/blocks and don’t add to productivity, you don’t get a paycheck.
period.
January 8, 2013 at 5:38 am #781530
hooper1961Memberwakeflood – you make some excellent points on health care cost.
“Why? Doctors and hospitals in the U.S. have every incentive to spend on unnecessary tests, drugs, and procedures.” agreed but it also due to fear of lawsuits.
I also agree with the rest of your paragraphs after the above.
Getting the costs under control is flat out imperative.
Obama-care essentially will socialize the risk and insurance cost that is not equitable with age and smoking the only factors for risking. Yet one of the largest cost items (not to be named) is a huge factor that also should be included in the risk costing factors. Also co-pays so that those that use the services have at least some cost to reduce abuse.
Redblack – please sit down you may need to call 911. Maybe the retirement age for workers who have a college degree should be raised to 67 and those that did not go to college stay at 65.
January 8, 2013 at 6:35 pm #781531
JoBParticipanthoop..
we already raised the retirement age to “compensate” for those extra years..
i won’t be collecting till i am 66
if i live that long
January 8, 2013 at 9:49 pm #781532
hooper1961MemberJoB – i too am far from retirement and am very concerned that the system will implode and those that saved will get screwed out of their SS.
i think too many people have forgotten that SS was never intended to be the sole source of retirement income. i happened to see my son’s gf’s mom’s W2 that noted she made about $48,000 and she did not save one red cent to the company 401K. this is not a huge income; but setting aside $100/month should be very doable. thus why should those that save have sympathy or provide added support for those that did not?
January 8, 2013 at 9:50 pm #781533
HMC RichParticipantWakeflood. I agree on a means testing system. I know plenty of people who do not need Medicare. Whereas, my 92 year old Grandmother does. My 70 year old Mother does not and neither does her brother.
The cap should be raised. The monetary cap.
But I showed in a previous post the average life span of Americans since Social Security came about. The life expectancy has risen. People live longer in this country. I don’t think comparing the US to other countries is as pertinent as you do. The age to get full benefits is slowly rising through bills that have already been signed many years ago.
And yes, the cost of care because of insurance and malpractice is costing everyone.
I do not have enough background to know what is truly happening in the Medical world. But it seems to me the market will in the future gear itself to ACA health care, and cash only/private health care. Kind of like Britain. But I really don’t know.
January 8, 2013 at 9:55 pm #781534
HMC RichParticipantI should clarify about Britain. There are Private Medical Practices that are there for people who want to outright pay for a procedure. Instead of waiting six months to a year, they get it done in a month. But they have to pay for it out of their own pocket.
January 8, 2013 at 9:57 pm #781535
hooper1961Membermeans testing is a very slippery slope. it could include people who lived frugal lifestyles and saved during their working years that in essence penalizes savers. this would be patently unjust. one the door is opened even a little it won’t take long to adversely impact middle income savers!
January 8, 2013 at 10:03 pm #781536
HMC RichParticipantRedblack. Please clarify for me. The laborers you speak of. Generally they are in a union? Do they get a union pension?
What is the age laborers in your union start drawing pensions?
There is a difference between the paper pusher and the brick layer. So true.
How many stay in that profession when they reach 60? All, most, some, or few?
I am curious. I have a feeling some will stay there until they can’t. I have a feeling that many leave and do something else? Can you let me know? I am genuinely curious.
January 8, 2013 at 10:13 pm #781537
HMC RichParticipantHoop, I understand what you are saying, but if they are VERY wealthy, they don’t need it. I disagree vehemently with our President what “wealthy” is.
If they lose their wealth, it would be there for them.
Am I being too simplistic?
You see, I could collect Unemployment every week if I wanted to, but I don’t need to, so I don’t.
Same with more Well Off Americans who can afford their own medical care.
Granted, for those that paid into it, they do deserve some benefit. It is not proper to be penalized for being frugal and saving a lot of money.
I believe there are limits set in place on how much a person can earn while collecting Social Security. Is it the same for Medicare?
I am only 50. I do not know the ins and outs of these Entitlements.
I wish they had saved the Social Security surplus for a rainy day, but they spent it. They set it up wrong.
January 8, 2013 at 10:23 pm #781538
hooper1961MemberHMC Rich – how is wealthy defined? I define it as having enough resources not to have to work or worry. liquid net worth (aka not including principal residence) in excess of $2,500,000 might be a value. but once the door is open watch out!
January 9, 2013 at 12:17 am #781539
WorldCitizenParticipantI would consider 2.5M the beginning of wealthy. Of course that number will change, but as of now, that seems reasonable to me.
January 9, 2013 at 12:18 am #781540
WorldCitizenParticipantOr maybe 2.5M is the beginning of rich. What was it Chris Rock said…Shaquille O’Neil is rich. The man who signs his paycheck is wealthy.
January 9, 2013 at 3:50 am #781541
redblackParticipantrich: most guys lay bricks until they can’t anymore. they have a skill, and it’s not easy to retrain once you’ve worked construction for most of your life.
but the point is that those guys pay into social security, too.
yes, they have defined benefit plans, just like most modern clerical workers have defined contribution plans.
those are separate arguments, though, and have nothing to do with the equity of asking a physical laborer to work beyond a time when his or her body is productive simply because some less-than-intelligent politicians decided it was a good idea to deficit-spend on the backs of those who pay into social security.
January 9, 2013 at 9:25 am #781542
JoBParticipantUS retirement age
http://www.socialsecurity.gov/retire2/agereduction.htm
retirement age by country
http://en.wikipedia.org/wiki/Retirement_age
regardless of retirement age, Americans remain in the workforce substantially longer than in any other country
January 9, 2013 at 5:54 pm #781543
wakefloodParticipantHey folks, quick note from an economic conference where Krugman illustrates how much Health Care costs affect our economy and what we could all be doing with reasonable savings from finally fixing it.
If we spent 11% of GDP on health care rather than the 17+% we do now. This would save $950B/yr. What could you do with that?
It’s more than the peak spending of the US Military on Iraq/Afgan wars ($724B)
If we spent it on K-12 education we could spend and extra $19K/yr. on every student.
Or we could give every person a tax break of $3K/yr.
Or put hundreds of thousands of people to work on important infrastructure projects.
That’s some indication of how important it is to fix this issue. It’s a huge drain on our economic future and possibilities.
January 9, 2013 at 6:22 pm #781544
JoBParticipantfunny… fixing that issue with some kind of nationalized healthcare plan that could even include regulated basic insurance policies would also fix medicare and medicaid..
imagine that.
January 10, 2013 at 9:20 am #781545January 10, 2013 at 4:43 pm #781546
hooper1961Memberpost 92 absolutely agreed, the US spends far too much money on health care. and JoB i agree a regulated basic insurance policies THAT INCLUDE RISK COSTING (smoking, age and other controllable factors that cannot be named) AND co-pays would make sense.
high priced low outcome procedures would not be included in the basic plans such as $100,000 year cancer drugs. people wanting these procedures/drugs would need to buy added insurance.
AND COST CONTROLS on how services are paid for, by outcomes not by # of tests et al
January 10, 2013 at 5:49 pm #781547
wakefloodParticipantYeah, I’m down with these ideas as you no doubt correctly inferred.
I did have to chuckle a bit on the pay for OUTCOMES note. I suspect more than a little resistance to that. Given that I’ve seen recent data shows that a sizable percentage of operations are performed either on the wrong body part or even on the wrong patient. Like more than a few percent.
But it’s fine to use that as leverage to get other cost controls.
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