proposals for fixing ss and medicare

[FinanceDude]

Okay, I'll ask another closely related question: if Medicare is already more financially efficient than private insurance companies which are in business to make a profit, why would privatizing Medicare as proposed for those under 55 be anything except a further subsidy to big business? This is important to me because although I am over 55, my spouse is 53.

Anyone really believe Medicare is more efficient that the private insurance companies? Because I have YET TO SEE ANY govt program that is efficient............

 

[Midpack]

if Medicare is already more financially efficient than private insurance companies

That's news to me! Where did you hear that?

 

[Texas Proud]

Chinico,

Taxes alone won't do it. It is inevitable that those entitlement programs will become less generous. One way or another it is going to happen. Oh taxes will go up, you can count on that. But no matter what rate they set it won't collect enough to cover entitlements

Midpack's chart shows the trend. Beyond 2011 things just keep getting worse quickly.

By the way, this isn't new. people have known about it for decades.

It has been known that the money would have to be paid back.... but they probably thought that it could just be borrowed in the private sector and things would keep going....

But then Bush and Obama racheted up spending and unfunded obligations at a rate never seen before... and there went the ability for us to borrow our way out of the problem....

 

[Tadpole]

Can anyone rationally explain why on earth our wonderful politicians cut the SS tax by 2% this year when the system is on track to default. Holy cow, throw that drowning man a brick!

They presumably paid the 2% from the general fund. But it will be interesting if they can expire this reduction.

I think that Obama probably wanted to have another round of stimulus at the bottom but couldn't get any more stimulus through Congress so he reduced the payroll tax to advantage the bottom more than the top.

 

[chinaco]

While federal taxes as a percent of GDP are close to the postwar average now, total taxes (local, state, federal, see chart below) are already programmed to be at very high levels. Every new increment is going to reduce economic growth by taking investment money out of the private sector. And economic growth is the only way out of our mess.

I agree with most of your statement except the bolded part. I will also point out that I am not an economist... are you a professional economist?

I will explain my position... I think it is pretty sound.

By law... there are specific monies collected to pay for SS and Medicare. Dedicated money for that specific purpose!

In the case of SS and Medicare the money is collected and distributed (immediately). Then it is spent immediately by most of the recipients. When that money is spent, that puts the money in circulation buying goods and services which creates business opportunity.

In the case of SS and Medicare most people jump on it because they say it is a redistribution of wealth.

But for you and I... the middle class... it is more of a pay as you go system. You paid for your parents. Your kids pay for you.... and so on.

We are not the recipients of a transfer of wealth. If anything we have transferred our wealth to the less fortunate.... with those bend points in the payout structure!


I am sure you know my position on the FICA money that was spent in lieu of collecting taxes the last 30 years. That money was transferred to mainly wealthy people (not you or me).... but we will repay it through general taxes to service and pay back the debt. Plus, we will take a benefit haircut! The poor will not! The wealthy (not talking middle class)... while they get something... the amount means little to nothing to them.

When the 3 card monte shuffle ends... you and I (the middle class) will be the losers.

 

[MasterBlaster]

It has been known that the money would have to be paid back.... but they probably thought that it could just be borrowed in the private sector and things would keep going....

But then Bush and Obama racheted up spending and unfunded obligations at a rate never seen before... and there went the ability for us to borrow our way out of the problem....

Perhaps for SS your point may be valid.

For Medicare, it's a lost cause and there just never was or never will be enough to support it like it has been.

 

[palomalou]

Midpack, I had to do a bit of research because I had heard it on NPR several times, not read it. Here is a source:
www.cahi.org/cahi_contents/resources/.../CAHIMedicareTechnicalPaper.pd...or here:
Medicare versus insurers - NYTimes.com
or here:
Medicare vs. Non-Government (Private) Health Insurance - Health Care Reform - ProCon.org
For a contrarian view:
RealClearPolitics - Busting the Adminstrative Cost Benefit Myth
which I would refute because OF COURSE health care costs will be much higher in a solely elderly population than in the privately-covered, younger population.

 

[Texas Proud]

Perhaps for SS your point may be valid.

For Medicare, it's a lost cause and there just never was or never will be enough to support it like it has been.

Yes, I was talking about SS...

The problem with medicare is the cost are going up a lot faster than planned... and they can not do much about that... IOW, they can not borrow their way out of the problem...

 

[donheff]

Do you think he somehow did it by himself? It was part of the deal to extend the Bush tax cuts for the rich. The payroll tax holiday is gonna get extended for another year.

 

[chinaco]

Yes, I was talking about SS...

The problem with medicare is the cost are going up a lot faster than planned... and they can not do much about that... IOW, they can not borrow their way out of the problem...

The medicare situation reflect the general health care problem in the US.

While I suppose some politicians might hope to single it out.... the real issue is much deeper and broader than Medicare.

The cost of health care in this country is probably one of the singular problems that could drive us into financial ruin (as a country).

It is a real problem for companies too... and will be more and more for people that get health care from their company.

 

[samclem]

I will also point out that I am not an economist... are you a professional economist?

No, but since one can find a "professional economist" willing to back almost any fantastic assertion, I don't think this counts much against us.

In the case of SS and Medicare the money is collected and distributed (immediately). Then it is spent immediately by most of the recipients. When that money is spent, that puts the money in circulation buying goods and services which creates business opportunity.

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.

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).

But for you and I... the middle class... it is more of a pay as you go system. You paid for your parents. Your kids pay for you.... and so on.

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.

 

[samclem]

Midpack, I had to do a bit of research because I had heard it on NPR several times, not read it. Here is a source:
www.cahi.org/cahi_contents/resources/.../CAHIMedicareTechnicalPaper.pd...or here:
Medicare versus insurers - NYTimes.com
or here:
Medicare vs. Non-Government (Private) Health Insurance - Health Care Reform - ProCon.org
For a contrarian view:
RealClearPolitics - Busting the Adminstrative Cost Benefit Myth
which I would refute because OF COURSE health care costs will be much higher in a solely elderly population than in the privately-covered, younger population.

The low Medicare admin cost "fact" is not settled. It, in effect, counts only the admin costs Medicare incurs for cutting the checks to providers. Guess who those providers are? Mostly private companies. Guess what is included in their bills? All their admin costs, including the very big back-office costs of dealing with the Medicare bureaucracy. Still, the studies generally count the total amount of the checks sent by Medicare to providers as "direct cost of medical care" while, with private insurers (including Medicare Advantage) all medical back office costs are counted as "administration." See the problem? Here's a thread where this Medicare admin cost issue was discussed.

No sane person would defend our present medical care "system" as being the best approach. It's a mess. But there are good alternatives that don't involve handing everything over to a government proven to be inept at both managing money and providing services.

 

[obgyn65]

I agree with chinaco on this.

I am sure you know my position on the FICA money that was spent in lieu of collecting taxes the last 30 years. That money was transferred to mainly wealthy people (not you or me).... but we will repay it through general taxes to service and pay back the debt. Plus, we will take a benefit haircut! The poor will not! The wealthy (not talking middle class)... while they get something... the amount means little to nothing to them.

When the 3 card monte shuffle ends... you and I (the middle class) will be the losers.

 

[Ronstar]

I agree as well. The poor get checks and do not pay in. The rich don't pay on income over 102k? So a middle class family earning 100k pays as much FICA as a billionaire. The middle class is getting ripped big time.

 

[Tadpole]

Ronstar: "The poor get checks and do not pay in."

The poor pay the same percent of their income as the middle class up to the cap. No one gets SS if they didn't pay in at least 40 quarters. 35 years of payments are factored into the algorithm. So, it's the over the cap that get the tax break but they get the same as someone on the cap while working.

 

[Midpack]

I agree as well. The poor get checks and do not pay in. The rich don't pay on income over 102k? So a middle class family earning 100k pays as much FICA as a billionaire. The middle class is getting ripped big time.

You know what the rich give up along with not paying FICA on income over $102K (actually I think it's a bit higher now)? IOW do you think they should pay 6.2% on all income without their eventual Soc Sec benefits also being uncapped (as it s now)?

In your example, the middle class family earning 100k will get the same Soc Sec benefit as the rich family. Not sure anyone s getting "ripped big time."

 

[donheff]

In your example, the middle class family earning 100k will get the same Soc Sec benefit as the rich family. Not sure anyone s getting "ripped big time."

I agree. The proposals on lifting the cap envision adding a bit more wealth shifting to the wealthy on top of the shifting they alrrady do. I think that is a fair bargain. As one of those wealthy people I think I benefitted a lot more from living in the greatest country in the world than did those deadbeat poor we like to bash. And, to beat my dead horse again, the missing trust funds call for a bit more "sacrifice" from the wealthy. After all, those moneys, collected from every worker, even the poorest, got sucked into the general fund to bail out bankers among other things.

 

[Texas Proud]

I agree. The proposals on lifting the cap envision adding a bit more wealth shifting to the wealthy on top of the shifting they alrrady do. I think that is a fair bargain. As one of those wealthy people I think I benefitted a lot more from living in the greatest country in the world than did those deadbeat poor we like to bash. And, to beat my dead horse again, the missing trust funds call for a bit more "sacrifice" from the wealthy. After all, those moneys, collected from every worker, even the poorest, got sucked into the general fund to bail out bankers among other things.

Not trying to be to picky.... but almost all of the money that went to the bankers have been paid back.... and a lot of it with a good profit... not so to AIG and the car companies...

Also, even if they had not paid it back... the amount is small compared to the debt.... IOW, it is not the bailout of the banks that is the problem... it is all the other spending that has been going on for many years and will go on for many more (at hopefully a reduced amount)....

 

[Ronstar]

IOW do you think they should pay 6.2% on all income without their eventual Soc Sec benefits also being uncapped (as it s now)?

In your example, the middle class family earning 100k will get the same Soc Sec benefit as the rich family. Not sure anyone s getting "ripped big time."

No - I don't believe the rich should pay 6.2% on all income. I believe SS should be dismantled and privatized.

 

[donheff]

Not trying to be to picky.... but almost all of the money that went to the bankers have been paid back.... and a lot of it with a good profit... not so to AIG and the car companies...

Also, even if they had not paid it back... the amount is small compared to the debt.... IOW, it is not the bailout of the banks that is the problem... it is all the other spending that has been going on for many years and will go on for many more (at hopefully a reduced amount)....

I am blaming that sector for the whole collapse, or at least assigning a greater measure to them than the average working class Joe who got hit by the recession. The loans were repaid but the damage is done. They can share the sacrifice now.

 

[MasterBlaster]

I am blaming that sector for the whole collapse, or at least assigning a greater measure to them than the average working class Joe who got hit by the recession. The loans were repaid but the damage is done. They can share the sacrifice now.

Thee's plenty of blame to go around on this one. Don't forget the credit rating agencies, the government regulators (or lack of), the lack of due-diligence by pension funds and "sophisticated" traders, the gevernment forced-lending (red-line) rules, the government forced "easy terms" to poor people. And best of all, the greed of evryday people trying to cash-in on that real estate sure-thing.

 

[Beryl]

I believe SS should be dismantled and privatized.

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?

 

[GregLee]

In terms of how draconian the "solutions" to "fix" these things are concerned, SS only needs a tune-up. Medicare needs a complete overhaul.

Having said that, the recent threats to SS recipients that they "may not" receive their checks if the government defaulted shows just how illusory the "trust fund" really is.

There are 4 quoted words or phrases here, and I'm having a hard time figuring them out. I guess they are all scare quotes (Scare quotes - Wikipedia, the free encyclopedia), which are used around "a word or phrase to indicate that it does not signify its literal or conventional meaning." So, putting "solutions" in scare quotes is meant to convey that, though some might call them "solutions", they are not actually solutions. Okay so far. But what can "may not" possibly mean here? Without the scare quotes, the sentence would mean: "it's possible that (previous) SS recipients will not receive their checks." With the scare quotes it means ... what?

And more generally, what is it that makes conservative commentators pepper their comments with these scare quotes? Actually, it makes it very difficult to understand what is being said.

 

[haha]

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?

Yes, perhaps as personal trainers?

Ha

 

[ERD50]

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?

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