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Re: cost of living increase question
Old 06-02-2005, 08:26 PM   #41
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Re: cost of living increase question

I'm not a big fan of straight line projections, if you peel back what 165k would be in today's (a.k.a. x-38 years) dollars, it would be over 53 thousand a year! I don't see a scenario where health care is only affordable for 1% of the population, won't happen. I think as soon as health care costs reach a critical point (probably where consumer spending is curtailed due to it, causing other powerful corporate lobbies get involved) we'll see a big time change, probably something like Medicare for everyone. Will health care suck in some ways? Yes, but people will have it.
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Re: cost of living increase question
Old 06-02-2005, 09:05 PM   #42
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Re: cost of living increase question

Quote:
Originally Posted by Laurence
I'm not a big fan of straight line projections, if you peel back what 165k would be in today's (a.k.a. x-38 years) dollars, it would be over 53 thousand a year!
I'm not sure how you got $53k.
By my reckoning, $165k is derived from $3128 (today's medicare+NYS medicare supplemental) with 11% yearly inflation over 38 years.
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Re: cost of living increase question
Old 06-02-2005, 09:24 PM   #43
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Re: cost of living increase question

TH, this post is a day late and a dollar short but I don't understand
your computer example for hedonic inflation. Computers today
cost about 15% of what they did 10-15 years ago and they are
almost infinitely more powerful. A PC of today can do the work of
a room full of IBM computers 15 years ago. :

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Re: cost of living increase question
Old 06-02-2005, 09:35 PM   #44
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Re: cost of living increase question

Quote:
Originally Posted by Permanently Unemployed
I'm not sure how you got $53k.
By my reckoning, $165k is derived from $3128 (today's medicare+NYS medicare supplemental) with 11% yearly inflation over 38 years.
I was calculating present day dollar value of the 165k, given a 3% CPI/inflation rate. You already did the work on what continued 11% increases would result, I wouldn't duplicate. That's why I don't like straight line projections. Health care may have increased 11% per annum, outstripping inflation substantially, but wages aren't going up 11% per year, so your calculated future cost of health care will be more than what the vast majority of Americans gross per year. Something will give far before then.

P.S. wasn't picking on your numbers or disagreeing with your math, just randomly picked an already posted example to work with.
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Re: cost of living increase question
Old 06-02-2005, 11:19 PM   #45
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Re: cost of living increase question

Quote:
Originally Posted by charlie
TH, this post is a day late and a dollar short but I don't understand
your computer example for hedonic inflation. Computers today
cost about 15% of what they did 10-15 years ago and they are
almost infinitely more powerful. A PC of today can do the work of
a room full of IBM computers 15 years ago. :

Cheers,

Charlie
Charlie - 15% is a bit of a reach. A 'standard' top tier machine runs around 800-1000 today, and a machine of similar caliber for its time in 1993 might have run about 1500-2000. Perhaps half.

But we're looking at year on year inflation rather than decade leaps. What the cpi calculation folks are saying is that computers are cheaper this year than last, but they're going to tip them even cheaper because they're faster and therefore better, so although last years xyz machine cost $800 and its $750 for a similar or faster model this year, the price of the machine is hedonically adjusted to $700 or 650 because its 'better'.

My point is, you still have to pay the $750. IBM doesnt sell at the hedonically reduced price point that CPI says the unit is worth. Do you recoup $50 or $100 worth of 'value' from that machine annually due to its 'betterness'? Some might, some may not.

My end point is, figuring stuff like this should not be any part of an inflation calculation. It costs "X" dollars to buy the stuff in a basket of goods. The quality or 'goodness' of those items is far too squishy for some economist to try to wheedle it in.
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Re: cost of living increase question
Old 06-03-2005, 07:33 AM   #46
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Re: cost of living increase question

I picked the 12,000 per year number to start because I read somewhere that about $12,000 is the average a family in the US spends on healthcare. I could be wrong about that. Actually, on COBRA my DH and I will spend more. The premiums alone, before deductibles and copays, are more than $1000 a month.

I did the 11% inflation projection to show this trend cannot continue as people will not be able to afford insurance at that cost. The question is when and how will it break and who is going to get hurt in the process.
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Re: cost of living increase question
Old 06-03-2005, 07:48 AM   #47
 
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Re: cost of living increase question

Martha,

I think insurance companies have run these numbers also. My wife works for a Big one. Since the insurance companies have basically tapped out the consumer and businesses that offer health care, the main way for them to make money is buy other insurance companies or cut the costs they pay to hospitals and doctors. They are working big time to deny benefits and pressure health providers into accepting lower payments.
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Re: cost of living increase question
Old 06-03-2005, 09:53 AM   #48
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Re: cost of living increase question

When I worked new aircraft systems, the cost objective was to identify the largest cost components in existing systems, "...the longest poles in the tent..." and work new technologies to beat those costs down to acceptable levels.*

In our US economy, health costs and associated insurance overhead is at the 15% level of total economy and growing at 11% a year, only exceeded by the federal budget which isn't growing at as high a rate.* Thus, Health Care is the longest pole in the US tent which also doesn't seem to be getting much systemmatic attention.

We currently pay the highest per person health costs in the world and have the worst infant mortality rates in the industrialized countries.* Those of us paying for health care insurance pay for not only for our medical services but also for those who don't have ins.* Wait, it gets worse, we also pay for vast armies of people at the provider and the ins co who argue over what will be paid on your services.* *

Total health care costs are a major 'long pole' to the future of our economy, and needs more attention.

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Re: cost of living increase question
Old 06-03-2005, 10:32 AM   #49
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Re: cost of living increase question

Quote:
Originally Posted by Permanently Unemployed
Hi Martha,
Since I'm single and 57, my health insurance after my Cobra expires in 21 months will be closer to $8750 (future dollars) in NYS. NYS does not offer any high deductable insurance so I will probably move to NM or AZ where health insurance with $2000 deductable will cost under $3k. My plan will assume that Medicare with supplemental will be available (I hope). Based on my 11% inflation increase my annual Medicare health insurance in 38 years will be $165k.
P.E. -
One thing you might monitor is the feds' effort to create a national market for health insurance, doing away with the state by state B.S. I also live in NY and I think it's pretty awful that we still don't have high deductible plans here.

One thing to note, though, was in a WSJ article this week -- lots of insurers are bringing out plans that do High Deductible plans one better; roughly they offer 3 doctor visits a year with $30 copay, 1k deductible and an inexpensive pharmaceuticals reimbursement. You have to opt in (pay more) to get pregnancy coverage for a couple, but the big ticket items are all covered. Cost in Ohio for a 45 year old male is justs $68 per month (This is Anthem's plan).

The trend seems to have legs as United, Aetna and others are all readying or already selling similar plans. THe idea is to cherry pick the healthier parts of the uninsured universe of 45 million Americans. Seems they realized these were the same people they used to cover when they had jobs or their employers had plans. Early retirees were specifically mentioned in the article, albeit as part of corporate plans to take care of their early retirees, as opposed to those of us on our own.

This sort of policy combined with a national market for health ins. could keep me going for a long time -- probably until Medicare...
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Re: cost of living increase question
Old 06-03-2005, 10:46 AM   #50
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Re: cost of living increase question

Quote:
Originally Posted by Laurence
P.S. wasn't picking on your numbers or disagreeing with your math, just randomly picked an already posted example to work with.
Yes you were Laurence.

You just don't like me.
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Re: cost of living increase question
Old 06-03-2005, 10:58 AM   #51
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Re: cost of living increase question

Found in my hs yearbook from 1971:

What's it cost? (entries are mine)

Movies - $1.00-$1.50
Gas - Regular $0.349, "Ethyl" $0.379 (and they pumped the gas, checked the oil, and cleaned your windshield)
Shirt - $8.00
Shoes - $20.00
Tie - $5.00
Suit - $80.00
Burger - $0.45
Shake - $0.40
45rpm - $0.88
LP - $6.00

I pumped gas in summer of '71 for $1.25 hr; minimum wage was ~$1.65.

Too lazy to calculcate prices in today's dollars, although I note that song downloads from Walmart are $0.88...

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Re: cost of living increase question
Old 06-03-2005, 12:32 PM   #52
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Re: cost of living increase question

Quote:
Originally Posted by Permanently Unemployed
Yes you were Laurence.

You just don't like me.
None of us like you. We dont like laurence either. In fact, since the baby woke up wailing at 3am and didnt go back to sleep until 7, I defy you to find ANYONE that I like right now
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Re: cost of living increase question
Old 06-03-2005, 03:12 PM   #53
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Re: cost of living increase question

Thanks, TH. I understand your computer example now. It just seems
a little odd to me to rag on PC's when they are not contributing to
absolute inflation at all. On the contrary, the price of all electronics
has been getting cheaper since the invention of the transistor.
Can't say the same for most everything else.

Cheers,

Charlie
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Re: cost of living increase question
Old 06-03-2005, 03:18 PM   #54
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Re: cost of living increase question

Just an example in an area i'm familiar with Charlie. As I mentioned in the first instance (somewhere), I used to attempt to explain why faster pc's were worth spending more money on for a living. It was dicey. I'm not sure I can make a case now why 3GHz is better than 2 for the average joe. I sure as sh*t wouldnt try to include such a figure into a calculation that results in people getting a lower social security or ibond payment because their computer is better. Even if its just a little.

Given that I can say with some personal authority that such an adjustment to the computer is unlikely to be valid, that calls into question the other 'adjustments'.
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Re: cost of living increase question
Old 06-03-2005, 03:50 PM   #55
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Re: cost of living increase question

Quote:
Originally Posted by ESRBob
P.E. -
One thing you might monitor is the feds' effort to create a national market for health insurance, doing away with the state by state B.S. I also live in NY and I think it's pretty awful that we still don't have high deductible plans here.

My big worry is that if there is more of a national market for health insurance plans, then maybe Minnesota will drop or modify its risk pool. Right now it has the cheapest risk pool of any state and has the greatest participation. I don't want the rest of the states dragging us down.

And as the WSJ article mentioned, there is an effort by insurers to obtain business more business from the healthy. Lot of people left out, especially if as stated in the article, people are uninsurable just because they used to have sinus infections or they take an antidepressant.

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Re: cost of living increase question
Old 06-03-2005, 04:57 PM   #56
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Re: cost of living increase question

Quote:
Originally Posted by Martha
My big worry is that if there is more of a national market for health insurance plans, then maybe Minnesota will drop or modify its risk pool. Right now it has the cheapest risk pool of any state and has the greatest participation. I don't want the rest of the states dragging us down.
Martha,

I guess we could all move to Minnesota. Wink Wink
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