A road map to saving Medicare

[CatholicGerman]

Sorry, but the deficit and federal debt are peanuts. It’s “only” $14.3 trillion. Not a big deal. But the unfunded liabilities total $60 trillion. And those are only the federal liabilities. Really.

Social Security only makes up $6.8 trillion. Also no big deal, and it could probably be tweaked to bring it back into the black, at least short-term. But Medicare can only be fixed for the elderly. It is too broke to ever be fixed for everyone, no matter what you did. Even if you took all of the dollars in the world (M3 at $13.9 trillion), and threw them at Medicare, it would still be unfunded. Really.

You would need massive amounts of hyperinflation in order to pay any of this debt back. And that is not even counting the $3.1 trillion missing at the state level. Really.

This is reality. Young people need to simply accept the fact that in old age they will have to support themselves, or live with their children. These entitlement systems will not be there for them. Any who do not accept this and save their money now, will be paupers later, living off of food stamps and charity and watching their medical bills pile up. Really.

This is just simple arithmetic. I am not depressed about any of this, I have merely accepted that there was a good run for a good while, but I won’t be able to take part in it. Fine, I hope they enjoyed it. Life is now returning to the state it was in for most of human history, and we’ll all just have to get over it and deal.

Really.

Anybody who wants to know the truth should check out Facing Up to the Nation’s Finances.

 

[CatholicGerman]

Black Rose,

Defense is one of the very few things that the federal government is supposed to be spending money on. Complaining that there is too little money left for Medicare because the federal government is wasting money on national defense is ridiculous. 61.9% of the federal budget is going toward things they have no business messing with. The percentage of the federal budget that is devoted to defense has actually shrunk since 1982.

Defense is what they are supposed to be spending money on!

BTW, you are wrong about feudalism. What you described is what happens when a lord is corrupt and greedy, not the normal practice. Lords are responsible for the fate of their serfs, defense being only a part. What we are facing now is the democratic version of Louis XVI. And we are being told to eat cake.

 

[Good_News_1]

Hmmm? Between Social Security and Medicare, the unfunded liabilities are approaching something like $110 trillion.

The major driver of those shortfalls in medicare is the increase in medical costs. The shortfalls are very different, per the red and black lines on the graph here:

washingtonpost.com/wp-dyn/articles/A59227-2005Mar23.html

I agree that if the inflation in healthcare is not curbed, medicare is completely unsustainable.

And that is why, according to the Medicare Trustees, the outlook for medicare has improved this year:

The outlook for Medicare has improved substantially because of program changes made in the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act” or ACA). Despite lower near-term revenues resulting from the economic recession, the Hospital Insurance (HI) Trust Fund is now expected to remain solvent until 2029, 12 years longer than was projected last year,

ssa.gov/OACT/TRSUM/index.html

You can choose, like Ryan, to disbelieve this accounting; but it does highlight that the problems in medicare can be most effectively addressed by improvements in the healthcare system.

 

[Good_News_1]

This is reality.

You are entitled to your views. You are entitled to your ideology.

To say that these entitlement systems “will not be there” is a product of your ideological outlook.

If you look at the figures, you will note that shoring up social security is achievable. Even if we were unwilling to do what it takes to shore it up, the system doesn’t run out of money completely for 60 years or so. To say a reduction in benefits is a possibility is certainly legitimate. To say obviously won’t be there is either dishonest or ignorant.

As to medicare, it goes as the heathcare system goes - which is a daunting problem. But, again, what is it you think is going to happen? Suddenly, all public benefits will vanish? Nothing will replace them? That isn’t how the world works, and particularly not how markets and government works. In fact, health care costs won’t escalate forever - they are currently unsustainable. The healthcare delivery system will likely change dramatically over the next several decades, and the result may be that people have less access to care. Or perhaps, by tinkering, we will get a handle on those costs. But, seriously, a $73 trillion deficit is a fantasy, because the country literally cannot run a deficit that large: the bond market and other forces will prevent the borrowing, and adjustments will be made.

As a libertarian, you have an ideology. You don’t WANT medicare and Social Security to exist. Then you pretend you are “realistic” then you declare that they “won’t be there.” So, you promote an ideological plan like Ryans, although you can’t say a single thing good about it.

You want to believe things that support your ideology. That’s fine: just don’t tell the rest of us that your ideology is our “reality.”

 

[CatholicGerman]

You can choose, like Ryan, to disbelieve this accounting; but it does highlight that the problems in medicare can be most effectively addressed by improvements in the healthcare system.

Health insurance is the problem in the healthcare system (both private and public). Insurance leads to grossly inflated prices, which is why the things that are not covered by insurance (like laser eye surgery, or cosmetic dentistry) are quite affordable. They have to be affordable because otherwise nobody would be able to pay for them. Healthcare is expensive because of insurance.

 

[Good_News_1]

Defense is one of the very few things that the federal government is supposed to be spending money on.

Does the fact that you, personally, have an opinion on the Constitution that has been rejected by the Supreme Court for generations have any bearing on the proper amount that should be spent for national defense?

Complaining that there is too little money left for Medicare because the federal government is wasting money on national defense is ridiculous.

Is there some reason that savings in national defense couldn’t be applied to medicare shortfalls?

61.9% of the federal budget is going toward things they have no business messing with.

Again, your ideology. When you become Queen, we will all accept your proclamations regarding the proper role of government. Until then, the role of government is as defined by our three branches of government.

What we are facing now is the democratic version of Louis XVI. And we are being told to eat cake.

You say the most bizarre things. Spending government money on healthcare for the elderly may be unwise, but it isn’t analogous to spending by a profligate court. Where you do get this stuff?

 

[CatholicGerman]

To say that these entitlement systems “will not be there” is a product of your ideological outlook.

No, it’s a product of simple math.

The problem with all of your rosy calculations is that they assume constant and significant GDP growth, a growing tax base, and a rising population. Things we probably will not have. The American economy is a dead horse. You can ride a dead horse, but it will not necessarily take you anywhere.

The current meagre growth in our economy consists of government spending, additional private debt, financial services, and layoffs. An economy based off of taxing people, living on credit, finanical wizardry, and unemployment is unsustainable. That is not a sound platform for future growth.

Somebody, somewhere has to create wealth by mining something, growing something, manufacturing something, or making babies. Those are the only ways to create surplus. Everything else is parasitic and leads to economic decline. We cannot just give each other haircuts, sell each other electronics, and keep each other’s books. Somebody has to make the person whose hair will be cut, build the computer, and earn the money in the accounts.

That is not ideology. That is simple logic and arithmetic. Two things that our modern world greatly undervalues.

If you look at the figures, you will note that shoring up social security is achievable. Even if we were unwilling to do what it takes to shore it up, the system doesn’t run out of money completely for 60 years or so. To say a reduction in benefits is a possibility is certainly legitimate. To say obviously won’t be there is either dishonest or ignorant.

I myself have admitted it is achievable. Just not for someone under the age of 30. SS is a transfer system and the economy won’t hold up that long. Even if the system remained alive that long, the benefits will be so eroded in worth that they are a mere pittance. Anyone thinking that, 40 years hence, SS is going to help them fund their retirement is living in a fantasy world where money grows on trees, and offspring are produced out of thin air. Not going to happen.

As to medicare, it goes as the heathcare system goes - which is a daunting problem. But, again, what is it you think is going to happen? Suddenly, all public benefits will vanish? Nothing will replace them? That isn’t how the world works, and particularly not how markets and government works.

That is how the world works. You are assuming that our government will not have a debt crisis, or even go bankrupt. Is that because you don’t believe that bad things can happen to nice people? They do, all of the time.

Once the government ruins its credit score, it will have to cut expenditures dramatically and live off of its tax income only, like Argentinia is now. Argentina was a first-world country and fell into an emerging market. That could happen here, too.

Go ask the retirees in Argentina what happened to them. Kirchner pulled a fast one and nationalized their 401(k). But let’s not even go there, as it is a stomach-churning possibility. But if the government is broke, the money will have to come from somewhere. Won’t it?

 

[Ocean52680]

ssa.gov/OACT/TRSUM/index.html

You can choose, like Ryan, to disbelieve this accounting; but it does highlight that the problems in Medicare can be most effectively addressed by improvements in the healthcare system.

No, you are choosing to believe certain unrealistic assumptions built into PPACA that will allegedly extend Medicare solvency.

With regard to the Medicare Hospital Insurance fund, CBO has calculated that
$398 billion in savings over 10 years from PPACA is double-counted. That means, the Administration is counting the savings once to extend the life of the Hospital Insurance Trust Fund and a second time to cover the cost the new entitlement under PPACA. You can’t do both.

Second, new projections in the trustee report, assume a 54% decrease in provider payments, as compared to current law. The report notes that these projections “do not represent a reasonable expectation for actual program operations.”

Third, the physician payment rate must be cut by over 30% over the next three years. The report describes this as “an implausible result.”

Playing games with numbers will not extend Medicare.

 

[CatholicGerman]

Does the fact that you, personally, have an opinion on the Constitution that has been rejected by the Supreme Court for generations have any bearing on the proper amount that should be spent for national defense?

I was pointing out that national defense spending should account for a significant portion of federal spending because it is one of the main jobs of the federal government. Not about what the “proper amount” of overall federal spending should be, or exactly how much of it should go to defense.

Is there some reason that savings in national defense couldn’t be applied to medicare shortfalls?

No, but it shouldn’t be because Medicare isn’t the business of the federal government. It is the states’ business, and they should raise the cash themselves, rather than having the federal government run the deficits they are often forbidden to make by their own constitutions.

Again, your ideology. When you become Queen, we will all accept your proclamations regarding the proper role of government. Until then, the role of government is as defined by our three branches of government.

The role of government is defined by the constitution, not the government. If you don’t like how it is defined, then campaign to change it. That is how things work in a constitutional republican democracy.

There I go again. Being a shocking federalist who believes in the rule of law.

Spending government money on healthcare for the elderly may be unwise, but it isn’t analogous to spending by a profligate court.

The courts think their spending is important, too. But sooner or later, you run out of other people’s money. This is the way of things. Eternal compound growth is not possible in a finite environment. That is Natural Law.

 

[Good_News_1]

The American economy is a dead horse.

Serfs, indentured servants, extravagant French royalty, and now dead horses. Can’t you write a post without using overly dramatic comparisons and metaphors?

If you don’t understand that proclaiming, as fact, that the economy is a dead horse is just not justisfiable, then there isn’t much point in discussing anything. When people proclaim their predictions are fact, and particularly when they are attached to scenarios of doom, they are ideologues. I don’t take ideologues seriously (except to the extent that they are dangerous when they ascend into power).

You are assuming that our government will not have a debt crisis, or even go bankrupt.

I never said that we can’t have a debt crisis. I said that a debt crisis may lead to adjustments, perhaps painful adjustment. Currently, the United States has plenty of company. I think it is more likely that the international economy will adjust. Creditors and debtors share the problem.

like Argentinia is now. Argentina was a first-world country and fell into an emerging market. That could happen here, too.

No, it couldn’t. Other bad things can happen, but the United States and the EU are dominant players. One day, perhaps, the United States will be a marginal player, like Argentina. But until it is a more marginal player, Argentina isn’t the example of how a crisis will unfold. I don’t know how a severe debt crisis of a dominant economic actor (or likely, the entire system, if we get there) will unfold, and neither do you, and neither does any economist.

These metaphors and proclamations are tiresome. What’s next: Weinmar Germany? The invasion of the Huns? The collapse of Rome?

 

[Good_News_1]

The role of government is defined by the constitution, not the government. If you don’t like how it is defined, then campaign to change it. That is how things work in a constitutional republican democracy.

How far through the looking glass do you want to go here? You have an OPINION on the Constitution. Per the Constitution, YOU don’t get to decide the meaning of the Constitution. That is reserved to the Supreme Court. So, if you don’t like what the Supreme Court has determined, over generations, the law to be, then it is YOUR burden to amend the Constitution, or try to get a new Court.

Being a shocking federalist who believes in the rule of law.

The rule of law in your world view is that YOU decide, apparently. Then your opinion apparently inhabits the Platonic realm of forms as “truth.” Somehow this Platonic truth of yours is more real than reality as we experience it.

That is the OPPOSITE of reality, and the OPPOSITE of the rule of law.

 

[CatholicGerman]

Can’t you write a post without using overly dramatic comparisons and metaphors?

Can’t you write a post without complaining about my writing style? At any rate, desperate times call for desperate measures… and dramatic rhetoric. It is fitting.

You do not think it is fitting because you are driving around in an expensive car, eating steak, and drinking claret. You say, “Where is the desparation? Everything is fine.” The rest of us peons are driving aging Asian imports, substituting legumes for meat, and drinking tap water. As I said, you admonish us to quit complaining and eat cake, like good little serfs.

Oops… there I go again.

Interestingly, my bank just called me. They are being pro-active and calling their members to offer financial advice. The advisor was astonished to hear that we carry no short-term or revolving debt at all, only a modest mortgage, and that we have substantial cash savings. Apparently, I am the first person he has spoken to all week who has managed such a feat, and he proclaimed that I truly made his day. He regularly has people break down in tears on the phone.

Perhaps we should offer his other callers some cake. Chocolate cake, with lots of fudge icing, and little cherries on top. That might cheer them up enough so that they don’t notice that their home is being foreclosed upon.

I’m sorry. Was I stretching my metaphors again?

When people proclaim their predictions are fact, and particularly when they are attached to scenarios of doom, they are ideologues. I don’t take ideologues seriously (except to the extent that they are dangerous when they ascend into power).

And you are not an ideologue? You are a sunny-day ideologue and I am a rainy-day ideologue. Perhaps we are both wrong, and the Second Coming will interrupt all of our predictions and plans?

We will either end up with socialist totalitarianism (where we are currently headed) or with federalist libertarianism (what I am promoting). Those are the two probable results of federal bankruptcy. Be very afraid. Prepare yourself. Put on your big boy undies. Practice your best snark for the ideologues.

Stock up on cake. Just in case.

I never said that we can’t have a debt crisis. I said that a debt crisis may lead to adjustments, perhaps painful adjustment. Currently, the United States has plenty of company. I think it is more likely that the international economy will adjust. Creditors and debtors share the problem.

Yes, you are right. We are struggling in good company. Remember the last time we did that?


The bread lines are now made up of food stamps. 40 million Americans are on food stamps. That is 1 in 8!

We ended the last -]depression/-] recession of this size by ramping up for war and running massive deficits. We are already at war this time, and nobody would be so stupid as to lend us that kind of money again.

I’m sorry, am I making you uncomfortable again?

Other bad things can happen, but the United States and the EU are dominant players.

So is Germany. So was Germany. They still ended up begging for bread. They are still struggling under massive debts and unfunded liabilities. Look at Russia. The bigger they are, the harder they fall. When America falls, it will be a crash heard around the world. Again.

These metaphors and proclamations are tiresome. What’s next: Weimar Germany? The invasion of the Huns? The collapse of Rome?

We already lived through Weimer 2.0. We are now in The Great Depression 2.0. The Huns are coming and you, sir, are fiddling.

Why do you assume that because something doesn’t appeal to you, it cannot be true?

 

[CatholicGerman]

So, if you don’t like what the Supreme Court has determined, over generations, the law to be, then it is YOUR burden to amend the Constitution, or try to get a new Court.

You are right. They should be impeached for betraying the supreme law in the land. Remember that privacy clause that lets mothers murder their own children? They made that one up, too. They have a history of playing “fast and easy” with the law, which is why our republic is becoming a democracy.

The majority of the members of the Supreme Court are not legitimate and should be forcibly removed.

 

[Ocean52680]

Per the Constitution, YOU don’t get to decide the meaning of the Constitution. That is reserved to the Supreme Court. So, if you don’t like what the Supreme Court has determined, over generations, the law to be, then it is YOUR burden to amend the Constitution, or try to get a new Court.

The Supreme Court snatched the power of judicial review, it was not granted through the Constitution.

 

[Good_News_1]

The Supreme Court snatched the power of judicial review, it was not granted through the Constitution.

I’ll glady debate Marbury v. Madison, if you’d like. It’s rather off topic.

 

[Good_News_1]

Can’t you write a post without complaining about my writing style?

It’s deeper than your writing style.

desperate times call for desperate measures…

We have a recession. They come from time to time. As a nation, we have survived a civil war, two world wars, the cold war, and many economic downturns, including the Great Depression. A recession isn’t a desperate time.

You do not think it is fitting because you are driving around in an expensive car, eating steak, and drinking claret. You say, “Where is the desparation? Everything is fine.” The rest of us peons are driving aging Asian imports, substituting legumes for meat, and drinking tap water. As I said, you admonish us to quit complaining and eat cake, like good little serfs.

I don’t like claret. I stay away from red meat. Maybe I’ll buy some legumes futures, though. Thanks for the tip.

And you are not an ideologue?

No, I don’t think you could call me an ideologue. I am a disaffected Republican, a former young Reagan supporter (perhaps he was a sunny-day ideologue). I don’t particularly have a political philosophy, other than we should do what works.

I believe in solving problems realistically and cooperatively. That means, for example, if we want to resolve a problem like a deficit, we consider a package of tax increases and spending cuts. I don’t really see the point of arguing over too many things that can’t be realistically changed. I don’t have enough ego to think that I am right in most things, certainly not big picture things like the fate of the world economy. For example, some people might have a preference for the gold standard. That’s fine, but the preference is invariably stated as something it isn’t - the only way to avoid catastrophe of the sham of other monetary systems. Maybe they are right - but I’m not going to lose sleep over the prospect. The problem I have with this mentality is: if the entire world system, government, etc., is just a horrible, obvious sham, then on what basis can you expect improvement? If people are so dense, and their leaders so feckless, then in the end that same denseness and fecklessness will thwart any sensible solution, won’t they? The world isn’t going to suddenly embrace common sense, if it managed to get itself into this pickle in the first place. And revolutions and catastrophes, in particular, aren’t followed by bouts of cooperation and rationality.

I won’t seek a libertarian utopia or a socialist utopia. I will approach the world’s problems as I approach my own, and my family’s problems, by compromise, and by working within the possible, and not wasting my time with theories that can only bring frustration and anger.

We will either end up with socialist totalitarianism (where we are currently headed) or with federalist libertarianism (what I am promoting).

Here is where we differ. I have no idea what form of government we will “end up with.” I don’t even know a good phrase to describe the current world order. My guess, however, is that socialism is largely a dead philosophy, and libertarianism has always been nothing more than a college fad. I would suggest that the most likely lodestars of where our economic and political futures lie are found in the philosophies of those who are handling the international economy. But again, I’m not much for long term prognostication.

Yes, you are right. We are struggling in good company. Remember the last time we did that?

Um, we are always struggling in good company. What makes you think that has anything uniquely to do with the Depression?

I’m sorry, am I making you uncomfortable again?

It’s your paranoid fantasy, not mine. Wish I could offer you some claret.

Why do you assume that because something doesn’t appeal to you, it cannot be true?

I haven’t assumed much of anything. I’ve simply asserted that your posts are full of inapplicable metaphor, and simplistic predictions you (and I) are in no position to make, that you decide to accept, for some unspoken reason, as certainties.

 

[Good_News_1]

The majority of the members of the Supreme Court are not legitimate and should be forcibly removed.

Good luck with that.

I must go. My car has arrived, and I plan to have coffee with my broker at the Fairmont, then perhaps I’ll have a mid-morning cocktail with one of my mistresses, and take her shopping for jewelry at Bergdorf’s.

 

[CatholicGerman]

A recession isn’t a desperate time.

It feels desperate to me. Perhaps I am too young to remember living through the last depression, and did not expect to suffer through one. I used to believe in endless growth and prosperity. They have been selling me that story since I was old enough to listen. I don’t believe it anymore for one simple reason: no one can tell me where the growth is going to come from.

Maybe I’ll buy some legumes futures, though. Thanks for the tip.

Take it from Mrs. Omnipotent: there is definitely money in beans and lentils. Beans and seed catalogues. I see wheat prices rising. My crystal ball also predicts a rise in dish soap.

No, I don’t think you could call me an ideologue. I am a disaffected Republican, a former young Reagan supporter (perhaps he was a sunny-day ideologue). I don’t particularly have a political philosophy, other than we should do what works.

I also believe in doing what works and what I think is morally right, even if it doesn’t necessarily match my libertarian principles. Such as welfare, despite the fact that most of the people who receive it are never-married mothers. They still have to eat. Such as supporting Social Security and Medicare reform, even if I sincerely believe that I will never personally benefit from the largess. They still have to pay the rent, and they still get sick. Such as the public provision of education, despite the fact that my children do not attend public schools. Somebody has to educate those children, if their parents won’t or can’t. I support our military, despite the fact that I think the DoD is bleeding money unnecessarily.

You say that I am an unreasonable ideologue. That I am illogically dogmatic. Are you so certain of that? Will you not at least give me credit for supporting systems altruistically, just because I think they are of useful benefit to someone else? You criticize me for being personally pessimistic, while ignoring the fact that I promote and support efforts at sincere reform. After you criticized me for promoting such reform!

If I get a SS check, then fine. Wonderful! I can spend that money on a Thai dinner that I wouldn’t otherwise have had. But I think it would be imprudent of someone my age to expect that check. Let it be a pleasant surprise, but do not include it in your retirement calculations. Yes, I consider that being realistic, frugal, and sane. You say that that is overly pessimistic. Perhaps it is, but I cannot eat optimism.

 

[CatholicGerman]

I must go. My car has arrived, and I plan to have coffee with my broker at the Fairmont, then perhaps I’ll have a mid-morning cocktail with one of my mistresses, and take her shopping for jewelry at Bergdorf’s.

If you feel a bump in the street, you ran me over on my way to buy more cake.

If the cake thing doesn’t work out, will you take me on as an additional mistress? A girl’s gotta eat.

 

[Black_Rose]

Black Rose,

Defense is one of the very few things that the federal government is supposed to be spending money on. Complaining that there is too little money left for Medicare because the federal government is wasting money on national defense is ridiculous. 61.9% of the federal budget is going toward things they have no business messing with. The percentage of the federal budget that is devoted to defense has actually shrunk since 1982.

Defense is what they are supposed to be spending money on!

I did not criticize the concept of defense spending; merely what was some “defense spending” was being spent on. Actually, the War of Terrorism is not part of the defense budget, but funded by special appropriations.

This would lead us to another question: how would the war on communism and terrorism be in the interest of most Americans from both an *a posteriori *and *ex ante *perspective?

BTW, you are wrong about feudalism. What you described is what happens when a lord is corrupt and greedy, not the normal practice. Lords are responsible for the fate of their serfs, defense being only a part. What we are facing now is the democratic version of Louis XVI. And we are being told to eat cake.

Feudalism, where unfree serfs are needed to contribute to agricultural production, does have a negative connotation to it in the popular interpretation of history. If it didn’t, then Friedrich von Hayek would not have title his book The Road to Serfdom where he criticizes the welfare state.