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Old 07-04-2010, 08:57 AM   #181
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As a practical matter if you get the spousal benefit, its welfare. if you are older than about 75 years old its welfare. If you are in the bottom third of the SS distribution It's welfare. Im not saying its bad because its welfare. But those recipients did not pay the true cost of benefits. The welfare is paid for by the people who pay and don't get the spousal benefit, and the upper income group within the limit whose rate of return is very poor. Workers younger than about 75 have also paid more for their benefits
I don't want to get into a debate about definitions. I believe we can all agree that SS provides better replacement rates for lower income people and couples with only one income. That was certainly because the designers had some notion of "social adequacy", not just "individual equity", in their minds. However, those higher benefits are paid without regard to anything else about your financial status. What you saved (or what you inherited) is irrelevant to today's benefits.

So "means testing" as (we assume) Boehner used it is a new approach in the sense that these other sources of post-retirement income come into play.

I'd say that when people start saying "It doesn't make sense for me to save while I'm working, because that will just reduce my SS benefits" we've crossed some sort of line which will weaken popular support for the program.
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Old 07-04-2010, 09:29 AM   #182
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I'd say that when people start saying "It doesn't make sense for me to save while I'm working, because that will just reduce my SS benefits" we've crossed some sort of line which will weaken popular support for the program.
Agreed. It will weaken popular support for the program and, more importantly IMO, be another step in undermining self-reliance in favor of depending on others. We're fresh out of "others." We need more individual responsibility, not less.

When there's a sense that the rules are stable and consistent, people are more likely to be motivated to plan ahead. When government changes the rules in a continuing quest to "solve" this or that problem, it discourages future planning. We don't need to give people any more reasons to avoid planning for the future.
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Old 07-04-2010, 09:35 AM   #183
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I'd say that when people start saying "It doesn't make sense for me to save while I'm working, because that will just reduce my SS benefits" we've crossed some sort of line which will weaken popular support for the program.
I agree, and yet at the same time if they structure reforms this way, I will adjust accordingly and let their "unintended consequences" kick in.

Still, even those who get a bad deal out of SS on average (younger folks and wealthier folks) have a decent amount of support for it despite being likely to lose money on the deal. But start making it so more and more people get closer and closer to zero benefit from it despite paying as much or more than ever into it, and maybe the "third rail" loses some of its charge.
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Old 07-04-2010, 10:30 AM   #184
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I'd say that when people start saying "It doesn't make sense for me to save while I'm working, because that will just reduce my SS benefits" we've crossed some sort of line which will weaken popular support for the program.
I agree in principle. but I don't think this is the critical issue.
Folks who feel that they get nothing from social security will be fundamentally unwilling to help politically to raise the money to keep the system solvent.
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Old 07-04-2010, 10:36 AM   #185
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I agree, and yet at the same time if they structure reforms this way, I will adjust accordingly and let their "unintended consequences" kick in.

Still, even those who get a bad deal out of SS on average (younger folks and wealthier folks) have a decent amount of support for it despite being likely to lose money on the deal. But start making it so more and more people get closer and closer to zero benefit from it despite paying as much or more than ever into it, and maybe the "third rail" loses some of its charge.
I agree. Means testing is simply an extremely expensive and inefficient method of balancing the costs and revenue to fix the system. It is beloved of politicians of both parties whose supporters are not playing with a full deck
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Old 07-04-2010, 10:45 AM   #186
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The CBO report on The Long Term Budget Outlook is at least somewhat relevant to this thread. The whole thing is good, but I particularly recommend reading the summary. It is short and remarkably clear and readable.

Here is what they say about Social Security:
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CBO projects that Social Security spending will increase from less than 5 percent of GDP today to about 6 percent in 2030 and then stabilize at roughly that level.
The full report contains this chart of the CBO's budget prediction based on settled law as it is. This includes expiration of the Bush tax cuts, causing the rapid rise in revenue starting next year. This also assumes that the AMT will continue unchanged, pushing the effective tax rate higher.

Since it is likely that some of the Bush tax cuts will be extended and that other measures will pass, such as increasing medicare allowances to doctors and changing the AMT, they also include an alternative scenario.

They show effect of these two scenarios on the debt on the cover of the report.
CBO.gif
To be fair, I must say that I ran across this in a blog that I do not particularly recommend
Ezra Klein - CBO: Long-term deficit depends on congressional decisions
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Old 07-04-2010, 10:58 AM   #187
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As a practical matter if you get the spousal benefit, its welfare. if you are older than about 75 years old its welfare. If you are in the bottom third of the SS distribution It's welfare. Im not saying its bad because its welfare. But those recipients did not pay the true cost of benefits. The welfare is paid for by the people who pay and don't get the spousal benefit, and the upper income group within the limit whose rate of return is very poor. Workers younger than about 75 have also paid more for their benefits

Then using your logic.... almost every college student is on welfare... every student that is in grade school is on welfare... almost everybody that goes to the library or enjoys a park... or even drives on a road is on welfare... because they are not paying the true cost of the benefit...

Just wondering


Hmmmm, that would make YOU part of the welfare system would it not
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Old 07-04-2010, 11:13 AM   #188
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T
Take a look at the assumed GDP growth rates. The last time I looked at it I thought they high.
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Old 07-04-2010, 11:23 AM   #189
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The CBO report on The Long Term Budget Outlook is at least somewhat relevant to this thread. The whole thing is good, but I particularly recommend reading the summary. It is short and remarkably clear and readable.
. . .

Thanks, the charts are useful. I think CBO did us a disservice by not including interest on the national debt in the charts, since that's a significant contributor to total government spending. The "additional info" section of the web site at your link provides that data--the net interest payment is 1.4% of GDP in 2010, growing to 3.1% by 2020, and 3.7% by 3030.
A mature industrial economy without an excess of government "drag" (social programs, etc) in "normal" years grows by about 3-5% PA. What the government figures mean is that virtually all of the growth of the entire US economy for many years hence will be used to pay off interest on debt our government has accumulated. It won't be used to improve the prosperity of the citizens of the country. And, that's if we do the most responsible thing and pay off the debt--if we go on adding more the situation becomes more bleak.
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Old 07-04-2010, 11:54 AM   #190
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Thanks, the charts are useful. I think CBO did us a disservice by not including interest on the national debt in the charts, since that's a significant contributor to total government spending.
It is odd that they did not include interest spending in the first two charts. However, I think (just eyeballing it) interest is included in the third chart.
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Old 07-04-2010, 02:37 PM   #191
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Thanks, the charts are useful. I think CBO did us a disservice by not including interest on the national debt in the charts, since that's a significant contributor to total government spending. The "additional info" section of the web site at your link provides that data--the net interest payment is 1.4% of GDP in 2010, growing to 3.1% by 2020, and 3.7% by 3030.
A mature industrial economy without an excess of government "drag" (social programs, etc) in "normal" years grows by about 3-5% PA. What the government figures mean is that virtually all of the growth of the entire US economy for many years hence will be used to pay off interest on debt our government has accumulated. It won't be used to improve the prosperity of the citizens of the country. And, that's if we do the most responsible thing and pay off the debt--if we go on adding more the situation becomes more bleak.
What I see in the chart is that gov't spending on medical care makes up almost all the growth in gov't spending. This is partially because the percent of the population that qualifies for Medicare goes up, and partially because they assume per capita health care spending goes up.

At any rate, it still comes down to the same question: what do you cut?
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Old 07-04-2010, 02:53 PM   #192
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Just to be precise: Doesn't the added bold make the observation more accurate?
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What I see in the chart is that gov't spending on medical care. This is partially because the percent of the population that qualifies for Medicare goes up, and partially because they assume per capita government health care spending goes up.
There are plenty of good free-market cost containment models for medical care. We could, of course, implement those and not increase government health care costs one iota.



But that's a debate for another day. Maybe after the election.
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Old 07-04-2010, 03:18 PM   #193
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There are plenty of good free-market cost containment models for medical care. We could, of course, implement those and not increase government health care costs one iota.
I've said this before and it bears repeating. My employer introduced an HSA option for us in January 2008, which I enrolled in. In 2009, our portion of the premiums was *down* 5%. It was up 5% for 2010, compared to 15% to 20% for the other HMO/PPO plans.

So we are paying about the same as in 2008 -- and Megacorp doubled their match into our HSA from $500 to $1000 a year.

Granted this is only one data point, but at least in our experience it is a pretty convincing data point (at least for employers with a lot of well-paying jobs where a lot of the employees can afford to self-insure the deductible and $4000 annual maximum out of pocket).
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Old 07-04-2010, 03:32 PM   #194
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Maybe this needs a new thread, but I don't know anything about HSA plans, and doubt that I am alone in my ignorance. Anybody care to 'splain?
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Old 07-04-2010, 03:36 PM   #195
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Maybe this needs a new thread, but I don't know anything about HSA plans, and doubt that I am alone in my ignorance. Anybody care to 'splain?
Here you go:

(FAQ archive) Health Savings Accounts (HSA)
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Old 07-04-2010, 04:45 PM   #196
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Then using your logic.... almost every college student is on welfare... every student that is in grade school is on welfare... almost everybody that goes to the library or enjoys a park... or even drives on a road is on welfare... because they are not paying the true cost of the benefit...

Just wondering
Hmmmm, that would make YOU part of the welfare system would it not
Of course it does. Anytime you get a private good (or money for such a good) at a below market price it's welfare. Especially in Texas where low tuition is common universities are well recognized as welfare for the middle class.
Whether a public benefit is actually welfare depends on the public goods/private goods analysis. Free public schools produce enormous public goods so are probably not welfare in the traditional sense. The same is true for highways. What I don't have to buy into is that calling something "welfare " is saying it is bad. Handicapped parking is "welfare".

Parks are very interesting because the public goods private goods analysis is so complex. I.e. do I benefit from the existence of national parks even if I don't go there?

Welfare is usually sometimes politically as "money give to people I don't like and/or don't identify with" ergo they don't "deserve" it. unlike agricultural subsidies, which farmers and politicians refuse to call welfare.
Which is the problem
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Old 07-04-2010, 04:55 PM   #197
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I've said this before and it bears repeating. My employer introduced an HSA option for us in January 2008, which I enrolled in. In 2009, our portion of the premiums was *down* 5%. It was up 5% for 2010, compared to 15% to 20% for the other HMO/PPO plans.

So we are paying about the same as in 2008 -- and Megacorp doubled their match into our HSA from $500 to $1000 a year.

Granted this is only one data point, but at least in our experience it is a pretty convincing data point (at least for employers with a lot of well-paying jobs where a lot of the employees can afford to self-insure the deductible and $4000 annual maximum out of pocket).
If its an "option", you have a pure self selection/ moral hazard problem. The sickest/highest risk people gravitate to the paln that provides the best coverage. This is always the problem at looking at a portion of the health care problem. A small portion of the population at any one time incurs the great majority of health care costs. Anyone who can select only from the "currently healthy" can run a very cheap health insurance program compared to those "other" horrible terrible expensive etc programs.
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Old 07-04-2010, 05:06 PM   #198
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If its an "option", you have a pure self selection/ moral hazard problem.
Partial? Yes, probably so. (But probably not as much as you think based on the fact that our HDHP costs $1200 a year less than the next HMO "above" it, the HSA gets a $1000 employer match for a family and the deductible is $1700 higher [$800 versus $2500]).

Pure? No. Do the math above. A sure $2200 advantage (with lower premiums plus employer HSA match) versus a "maybe" $1700 higher deductible you might not even trigger? Even if you're not in the healthiest pool, this math isn't that hard even if one's higher education isn't in math.

And note that I was referring to an employer with a specific type of demographic, not suggesting it was *the* answer in all situations; it's not. Sounds like you won't accept it might be the answer for *anyone*, perhaps because it's not for *you*? It may become moot after 2014 anyway.

The end. I'm done hijacking the thread topic. You want the last word, take it.
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Old 07-04-2010, 07:04 PM   #199
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Partial? Yes, probably so. (But probably not as much as you think based on the fact that our HDHP costs $1200 a year less than the next HMO "above" it, the HSA gets a $1000 employer match for a family and the deductible is $1700 higher [$800 versus $2500]).

Pure? No. Do the math above. A sure $2200 advantage (with lower premiums plus employer HSA match) versus a "maybe" $1700 higher deductible you might not even trigger? Even if you're not in the healthiest pool, this math isn't that hard even if one's higher education isn't in math.

And note that I was referring to an employer with a specific type of demographic, not suggesting it was *the* answer in all situations; it's not. Sounds like you won't accept it might be the answer for *anyone*, perhaps because it's not for *you*? It may become moot after 2014 anyway.

The end. I'm done hijacking the thread topic. You want the last word, take it.
Oh for us a high deductible plan with an HSA would be just fine in theory. I haven't been in hospital since I was 20 and DW has never been in one except for obstetrics. We have to stretch to spend our HSA each year. For healthy upper income folks who can handle the deductible it's a great option in theory. I also have a $2000 deductible on my car and homeowners insurance. Difference between theory and reality deals with the transparency of pricing of health care, but that's another issue

The big issue is whether you really get the same deal once you satisfy the deductible. For people with chronic conditions the evidence is mixed.
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Old 07-04-2010, 08:00 PM   #200
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Just to be precise: Doesn't the added bold make the observation more accurate?


There are plenty of good free-market cost containment models for medical care. We could, of course, implement those and not increase government health care costs one iota.



But that's a debate for another day. Maybe after the election.
I believe their assumption is that all per capita spending goes up, private and public. Government gets an extra accelerator because it insures the fastest growing segment of the population (old folks).

So you think the correct answer is to freeze total Medicare spending, which means a decrease in per capita spending? And you think we can do that by making Medicare a high deductible program. I happen to favor that idea as part of comprehensive health care reform, but I've assumed that my idea would have the gov't spending more money.

Maybe you can describe the money saving version.
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