proposals for fixing ss and medicare

[Ronstar]

What do you suggest a retired 75 year old do when the privatized SS funds are adversely affected by the market? Go back to work to rebuild that nest-egg?

Privatized SS funds could be mandated into an AA that would weather the storm. And yes - maybe go back to work if they fall short.

Why do you throw out this red herring? Just because it was privatized, it does not follow that a 75 YO would be forced to have an extreme level of market exposure in his portfolio.

He could also buy an annuity with his private funds. There are many options.

What's a 75 YO to do when his President says he can't guarantee that the next SS checks will go out? Some private funds would be looking pretty good.

-ERD50

Good points!

 

[chinaco]

..
Ahh . . . but not all expenditures produce equal "good" in the economy. When dollars are in the hands of a consumer, that individual spends them on whatever will bring him the most benefit (food, clothing, shelter, medical care, a car, a boat, etc). He will also shop around for that particular item to find the seller who gives him best value for the dollar. From these millions of possible choices, the individual will choose one, and both the seller and the buyer are winners at the end of the transaction. This competition for business consistently improves the quality of goods and services and lowers prices.

Ok... wait a minute.

There are multiple issues buried in the topic. It can be difficult to separate them.

Don't get hung up on whether the money was distributed by an Insurance company or Uncle Sam for a minute.. or efficiencies or, or how people ripoff the system or any of that... for a minute. Just the consumer behavior side.

For SS or a payout annuity from an insurance company either... the money goes into the hands of a consumer. They spend it on their needs. Correct?

They make a consumer choice!

When the government takes money from the public to spend for the health care for others, there's no reason to believe that this is the best use for the money--the people who the money belonged to initially certainly didn't make the choice to spend it on health care (it got taken from them in taxes). The people who receive the health care didn't choose the sellers (in some cases) and didn't/couldn't shop for a good price (hey, it was Uncle Sam paying the bill).

For health care. Another very complicated problem. Let's narrow it down for the sake of this comment. Forget the myriad private vs public debate (much of which is born out of rhetoric to not solve the problem but to yield some advantage to someone or group).

Our current health care system (the whole thing) is not fit to solve the current problems we face. The broad system for funding it to the way it is currently rationed and delivered. And there are thousands of issues buried in it. Including the way it is funded (across the board). It is a patch quilt that evolved out of many artificial barrier and problem (natural or artificially created by some group or situation).

I agree medicare should change. But it is a funding mechanism for our broader healthcare system. The whole thing has been gamed and twisted for different groups to take advantage of it. It is really a complicate mess.



I am for the most efficient and lowest cost approach. But it will require big changes to our current system (just about every aspect of the rules and how it is administrated, etc). Right now everybody thinks it should be someone elses problem... they do not want to change!

You better believe... the most powerful groups opposing it are the health insurance industry and many of the providers of drugs and services. Why? Because they make massive profits the way things are today... they do not want to change. Besides, they may wind up with less or even be obsolete. IOW - they don't want the risk their current business in an effort to evolve the system.... this is really the issue!

Be careful about the political rhetoric. All that is happening there is someone yanking your chain and telling part of the story... the part of the message that might yield your support.

Watch, this is going to be a real national crisis.... and it is not just Medicare... or Medicaid for that matter.

True, except for all the "extra" money collected from me for the last 30 years--the money that went into the "trust fund". That money didn't go to any oldsters at the time, it went immediately to be spent on whatever the government bought: Tanks, welfare payments, food stamps, aid to cities, space exploration, studies on the sex life of frogs. That money is gone and the taxpayers in general don't have money to pay the "trust fund" back. Surprise! No, not really. So, lets stop the charade and make SS a true pay-as-you-go affair that balances out every year. Make the payouts match the SS taxes, or make the taxes match the payouts, but no more shifting around of money. That game is over.

Couldn't agree more. A lot of govt waste.


And I would add to it. If the geniuses in Washington decide that there is a better way... make the changes. But be reasonable about it and don't yank the carpet out from under people that no longer have time to adjust.


On were the money went... yes SDI, and a zillion other things.

Did you understand what I meant about that money being transferred to the wealthy? Do you understand how that worked?

Because what I think what I am hearing from you is... yeah... the money was spent. Ok we got scr3wed... let's move on.

If so, that is very confusing. I don't understand. I am not that forgiving.



Look... you really need to be skeptical of the story: we really mean it this time. Heck many of them are the same people!!!

This really is about what programs will be cut.

You are going to pay no matter what. But they hope that the expenditure cut is what they owe you! And they are really hoping you will agree to it. Their best outcome... is that they convinced you that is was a great idea.


I am suspicious when they want to lump it all together move it around like a shell game where no one (of us) knows what happened.

The starting point should be: Let's cut everything else first and after that has been wrung dry.... Then let's take a look at SS and Medicare. Because it sure sounds like another round of three card monte to me!

 

[rescueme]

And yes - maybe go back to work if they fall short.

I hope you are not serious in this comment. OTOH, if you are, I hope it happens to you.

Heck - I'm in my mid-60's and can't imagine going back into the wor*force (even if there was a j*b for me). I could not imagine it being a decade (or half-generation) older...

 

[Midpack]

What do you suggest a retired 75 year old do when the privatized SS funds are adversely affected by the market? Go back to work to rebuild that nest-egg?

I don't support privatizing Soc Sec to begin with. But it's disingenuous to suggest there is no option between the status quo and uprooting the system for all ages. There are all sorts of transitions possible to change Soc Sec. "Because we've always done it that way" is not a good reason...that's largely how Federal spending has gotten out of control.

 

[Ronstar]

I hope you are not serious in this comment. OTOH, if you are, I hope it happens to you.

Heck - I'm in my mid-60's and can't imagine going back into the wor*force (even if there was a j*b for me). I could not imagine it being a decade (or half-generation) older...

Not totally serious. There has to be a system that helps those truly in need.

 

[meierlde]

What do you suggest a retired 75 year old do when the privatized SS funds are adversely affected by the market? Go back to work to rebuild that nest-egg?

At that age one should have a large fixed income percentage of ones portfolio. At the risk of argument if one worries about such things, an annuity makes sense. Of course that like all insurance (and indeed a lot of the whole market) is a gamble, you bet you will live a long time, the insurance company bets you will die soon, its the reverse bet to life insurance. So you to can express your opinion (to use the wall street term) on your life expectancy.

 

[samclem]

Don't get hung up on whether the money was distributed by an Insurance company or Uncle Sam for a minute.. or efficiencies or, or how people ripoff the system or any of that... for a minute. Just the consumer behavior side.

But this misses a major point: By removing market forces, we no longer have any assurance that the money being spent on Medicare is being put to the "highest use." The person that had the money originally was going to use it for something (his own health care, education for his kids, maybe give it to a charity) that he/she believed brings the most benefit. Instead, it was taken from him and is being spent by the government on a $200,000 knee replacement for a 95 year old leukemia patient.
But, okay, I'll go along.

For SS or a payout annuity from an insurance company either... the money goes into the hands of a consumer. They spend it on their needs. Correct?

They make a consumer choice!

But we were also talking about Medicare. Make your case about how consumers made a rational choice about their medical care and the best use of funds under Medicare. Or, under typical full-coverage private insurance.

[Discussing health care delivery in the US]I am for the most efficient and lowest cost approach.

With all due respect: No you aren't. And neither am I. The most efficient and lowest cost approach to providing health care would be complete and total privatization. Everyone pays for their own care (or buys their own private insurance to do this). No government money transfers. Health care costs would immediately plummet--families would choose palliative care for older cancer patients, poor people with easily treated diseases would likely die at higher rates than they do now, lots more pain medication and fewer new joints, and expensive imaging machines and tests would get used enough that the per-use cost would significantly decline. Waiting would increase. That's not the world I'm advocating, but that's the system in which people rationally choose where they want to spend their money, and maybe they'd decide to skip that Alaska cruise so they can afford the premiums to pay for their medical care in a few years.

Right now everybody thinks it should be someone else's problem... they do not want to change!

You better believe... the most powerful groups opposing it are the health insurance industry and many of the providers of drugs and services.

Hey, careful with that broad brush! There are lots of folks opposing change, and they come from both sides of the aisle. Congressman Ryan proposed some significant changes to make Medicare more efficient and allow it to continue to provide care to old folks, and who is opposing him? Some other special interests. Resistance to change comes from all sides.

Because what I think what I am hearing from you is... yeah... the money was spent. Ok we got scr3wed... let's move on.

If so, that is very confusing. I don't understand. I am not that forgiving.

Maybe it will help if you just think of the SS taxes you paid before, the stuff we were told was going into a "trust fund", as instead just extra FIT that you paid to support the things the government does. You like some of it, right? Aid to the poor, etc? Well, that's what it really was used for. And it is gone. There's no getting it back from the old person, poor person, government contractor, and that reptile sex researcher. That's who got it. It went to individuals and corporations, not to "the rich" or any other nameless group. The time to stop the transfer from SS was at that time, the time to object to the big spending was then. Let's do something constructive and look ahead.

I am suspicious when they want to lump it all together move it around like a shell game where no one (of us) knows what happened.

Precisely. Start by making SS truly "pay-as-you-go" with no transfers of funds to or from the general fund. Money collected for SS goes out that year. This happens to be a good time to transition, because we're close to income=outgo. We either make the tax formula constant and let the checks vary in size every year, or we make the benefit check amounts constant and let the taxes vary every year. Then everything is above board and clear. Workers paying now are supporting people who are retired now. Hopefully, the next generation will do the same for them. No paying ahead (so the government can spend it) etc. If you want to pay ahead, put it in your own savings so you'll be sure you'll get it.

The starting point should be: Let's cut everything else first and after that has been wrung dry.... Then let's take a look at SS and Medicare. Because it sure sounds like another round of three card monte to me!

Just so I understand you--the stuff the government just started doing in 1935 and 1965 is more important than everything it did before that? I mean all the courts, national defense, collecting of taxes, etc--the stuff actually mentioned in the Constitution--takes a back seat?

 

[rescueme]

At that age one should have a large fixed income percentage of ones portfolio.

Assuming they have a portfolio.

Heck, I'm "only" 63 (along with DW), but I didn't have a "portfolio" till my/her company defined benefit (e.g. pension) plans were elimated in our mid '30s.

Don't assume that everybody - especially in those in the lower income catagories, have a portfolio to count on...

 

[tjscott0]

Where might one find lists of suggested proposals (by credible sources) for fixing SS and Medicare?

Social Security | The Concord Coalition

Health Care | The Concord Coalition

 

[donheff]

Maybe it will help if you just think of the SS taxes you paid before, the stuff we were told was going into a "trust fund", as instead just extra FIT that you paid to support the things the government does. ...And it is gone. There's no getting it back from the old person, poor person, government contractor, and that reptile sex researcher...The time to stop the transfer from SS was at that time, the time to object to the big spending was then. Let's do something constructive and look ahead.

Precisely. Start by making SS truly "pay-as-you-go" with no transfers of funds to or from the general fund. Money collected for SS goes out that year. This happens to be a good time to transition,

The rest of your post was OK but ignoring history here seems flat out wrong to me. If the payroll taxes had been just more Federal Income Tax those 50% of non-payers everybody is complaining about wouldn't have paid a dime of it. It would all have come out of the hides of the more well to do. Instead, those payroll taxes were regressive, hitting low income workers to a much greater relative degree than the upper crust. To deal with that by drastically cutting SS for the boomers on the verge of retirement would seem doubly evil -- tax us extra to cover our costs, then cut us to the bone anyway. But, since no one seems to be calling for drastic cuts for the boomers we need a big infusion of more fairly balanced initial revenues to make up the trust funds. If we simply go to a pay as you go system now without a balanced infusion we will be really sticking it to today's young middle class workers with a double whammy. Pay for the missing boomers' funds with a nice, regressive payroll tax but hold off on the reduced benefits until it comes time for the kids to retire. A better approach would be to recapture the revenues lost thru the Bush cuts with a simplified tax code (both on rates and loopholes) and maybe a pay go SS system over the long term. I'm still not sure whether pay go is good. The trust fund concept seems sensible if we can learn to control our urge to blow it away on binges.

 

[samclem]

The rest of your post was OK but ignoring history here seems flat out wrong to me. If the payroll taxes had been just more Federal Income Tax those 50% of non-payers everybody is complaining about wouldn't have paid a dime of it. It would all have come out of the hides of the more well to do. Instead, those payroll taxes were regressive, hitting low income workers to a much greater relative degree than the upper crust.

Well, the only way to work out what's "fair" would be to look at each individual case, which is impractical. If we want to lump people in big groups and look at "big picture fairness" then:
1) Lower income folks are still getting a tremendous deal on the SS taxes they paid. And I'm fairly sure any cuts to SS checks will come (wait for it . . .) from the evilrichjetownerwinnersoflife'slottery folks.
2) A funny thing about those non-payers of FIT--folks with lower incomes started paying a lot less in FIT in the 80's (no time to provide sources--sorry). So, their SS taxes made up for some of that.

A better approach would be to recapture the revenues lost thru the Bush cuts with a simplified tax code (both on rates and loopholes) and maybe a pay go SS system over the long term. I'm still not sure whether pay go is good. The trust fund concept seems sensible if we can learn to control our urge to blow it away on binges.

I agree on the simplified, broader tax code. The SS trust fund money--what would the government do with it? Make the government part owner of a bunch of companies through stock ownership? Buy bonds from other countries? It sure doesn't work to have the Trust Fund buy US bonds--no one would fall for that again. Anyway, it is academic--there's no excess SS tax money to be used to set up a trust fund (again).

 

[donheff]

I agree om the simplified, broader tax code. The SS trust fund money--what would the government do with it? Make the government part owner of a bunch of companies through stock ownership? Buy bonds from other countries? It sure doesn't work to have the Trust Fund buy US bonds--no one would fall for that again. Anyway, it is academic--there's no excess SS tax money to be used to set up a trust fund (again).

I'm not far off from you on this question. I didn't have a problem with the trust fund going into general revenue (i.e. buying Treasury bonds/obligations with it) provided we were realistic with the deficit we allowed to build up. Our problem is we seem constitutionally incapable of maintaining a reasonable deficit. With the first sign of a surplus we cut taxes and frittered the advantage away. No reason to think we won't do it again. I guess the problem I have with a strict pay go concept is the problem I have with simplistic balanced budget amendment concepts. There are times we need the flexibility to run deficits (like the last few years). Any pay go or balanced budget schemes need to preserve that flexibility (I imagine there are any number of policies that could achieve that). Not fun going to hell in a hand-basket based on inflexible adherence to an ideology.

Edit: As always, I reserve the right to forget I posted this and say something completely the opposite at any time.

 

[meierlde]

On the medical care issue: 1 move to the hmo model for everyone where if your primary care person does not see a need for a specialist you pay for them yourself.
2 Change the sign on end of life treatment where aggressive care is only if requested at some point to be defined, and make absolutely clear that if a person has signed such an order it must be obeyed or you will face a wrongful life suit for the excess medical charges. Note that the request must be in writing, and will be honored even if the next of kin object.

 

[GregLee]

face a wrongful life suit

 

[meierlde]

Note that the Texas laws at least provide that if a physican does not honor an advance directive or a medical power they are subject to civil and criminal penalties. So at least in one state what would amount to a wrongful life suit would be possible. The act spells out a review process and also provides that if a physician does not agree he must work to transfer the patient to a provider that does.

 

[TromboneAl]

I wonder whether the lawmakers participate in or are exposed to intelligent discussions such as this.

 

[samclem]

I guess the problem I have with a strict pay go concept is the problem I have with simplistic balanced budget amendment concepts. There are times we need the flexibility to run deficits (like the last few years).

Yes, I understand. But, unlike the general federal budget, I can't see that a SS standalone budget would have much need for extraordinary pop-up deficit spending (no wars to fund, etc). Sure, during economic downturns the SS taxes would decline somewhat, but then the checks of recipients would also decline by the same amount (fair enough--these retirees are only being asked to put up with the same uncertainties and temporary setbacks workers are experiencing). We might not need inflation-linked COLAS for retirees (per se), as their checks would automatically be linked to the wage growth of those paying the SS taxes (and, if US wage growth isn't keeping up with inflation, then we've got significant trouble and have no business providing checks to retirees which grow at a faster rate than wages--it's unsustainable). As an added benefit, putting everyone -- workers and retirees -- in the same boat might go a long way toward reducing some of this intergenerational friction we seem to be brewing lately.

 

[Tadpole]

Reading these posts makes me muse that maybe Commissioner Ball was right. Money for the trust fund should come from diverting estate taxes on people who were advantaged by the regressive nature of the SS payroll tax.

 

[donheff]

Yes, I understand. But, unlike the general federal budget, I can't see that a SS standalone budget would have much need for extraordinary pop-up deficit spending (no wars to fund, etc). Sure, during economic downturns the SS taxes would decline somewhat, but then the checks of recipients would also decline by the same amount (fair enough--these retirees are only being asked to put up with the same uncertainties and temporary setbacks workers are experiencing). We might not need inflation-linked COLAS for retirees (per se), as their checks would automatically be linked to the wage growth of those paying the SS taxes (and, if US wage growth isn't keeping up with inflation, then we've got significant trouble and have no business providing checks to retirees which grow at a faster rate than wages--it's unsustainable). As an added benefit, putting everyone -- workers and retirees -- in the same boat might go a long way toward reducing some of this intergenerational friction we seem to be brewing lately.

I hope, if we ever go to some sort of stand alone pay go system, that we will be more balanced on payments. There are just too many grannies living on SS alone. Better that they should get a steady check with COLAs (modified to the alternate scale under consideration). That is why I like some flexibility to run deficits for a while such as during downturns. The difference could be made up from the General fund via debt which would shift the temporary difference up the income scale a bit to the FIT brackets (unless, we go to a flat tax there ).

 

[ziggy29]

IThat is why I like some flexibility to run deficits for a while such as during downturns.

Running deficits in and of itself is not a problem. It's the inability or unwillingness to run counterbalancing surpluses in good economic times that backs us into a corner.

 

[HFWR]

...surpluses...

 

[Beryl]

Assuming they have a portfolio.

Heck, I'm "only" 63 (along with DW), but I didn't have a "portfolio" till my/her company defined benefit (e.g. pension) plans were elimated in our mid '30s.

Don't assume that everybody - especially in those in the lower income catagories, have a portfolio to count on...

Exactly.