1/3 of Medicare Spending is Wasted
Urban Legend—
You write: That claim that one-third of Medicare spending is wasted sounds pretty questionable to me.”
This is your opinion. If you had spent the last 20 years working as a medical researcher investigating unnecessary treatment, your opinion would be of great interest to all of us; but, I’m assuming you have not done so.
Thus, you might be interested in some facts . . .
Dr. Donald Berwick, who headed up Medicare and Medicaid during the 1st half of the Obama administration has said, repeatedly, that at least 1/3 of Medicare dollars ware wasted on unnecessary tests, procedures and drugs that provide no benefit for the patient. He is only one of dozens of health policy experts who have made the same statement. (Google “Health Affairs” the leading medical journal that focuses on health policy and “unnecessary treatments” Over the past 30 years, researchers at Dartmouth have provided stacks of evidence documenting unnecessary care in the U.S.
You also write: “I doubt that treatment protocols in the U.S. are all that different from other countries.”
Again, this is your opinion. Unfortunately, you are wrong.
In other countries, doctors and hospitals tend to follow evidence-based guidelines. In the U.S. a great many doctors object to the idea of someone telling them how to practice medicine (Even though “someone” is “science”). They value their autonomy and prefer to do things the way they have always done them. Of course, this is not true of all doctors. But even when you look at protocols at our academic medical centers, you find that the way they treat similar patients varies widely.
Here , I’m not talking about how much they charge for a procedure (which also varies widely) but how many tests they order, how often they prescribe spine surgery for someone suffering from low-back pain, how often they tell a woman she needs a C-Section . . .
One big problem is that our doctors and hospitals are paid “fee – for service;” in other words, the more they do, the more they are paid.
As Dartmouth’s Dr. Eliot Fisher points out: “U.S. patients are not hospitalized more often than patients in other countries; but in the U.S., a lot more happens to you while you’re there.”
In addition, traditionally our medical schools have trained doctors to practice very aggressive medicine. The resident who orders a battery of tests is praised. Students are told “Don’t just sit there (and think). Do Something!”. Traditionally, our medical culture has been a very macho culture and it is just beginning to change.
Finally, Americans tend to think that “more is always better”. Larger servings in a restaurant, bigger cars, bigger homes, etc. And when it comes to healthcare, patients in the U.S. tend to think that “more care is better care.” They are wrong. Every medical product and service carries some risk. If it provides no or little benefit, the patient is exposed to risk without benefit.
When medical protocols in the U.S. are compared to how medicine is practiced in other countries, researchers have found: —- Much unnecessary spine surgery. The rate of back surgery in the U.S. is five times higher than in the UK. Studies have shown little difference in long-term outcomes for patients who undergo back surgery compared to those who select non-surgical treatment.
The U.S. does more testing than other countries. For instance, the number of MRI and CT tests for every 1,000 people in 2010 was double the average in other OECD countries. Comparatively, there were also more tonsillectomies, caesarean sections and knee replacements. Regardless of how much more nearly every procedure, scan and drug costs; it’s nothing compared to how out-of-whack the medical heroics thrown at Americans in the last stages of life The Cost of Health Care: A Country-by-Country Comparison
Colonoscopies are prescribed and performed more frequently than medical guidelines recommend and are given preference over less invasive tests that screen for colon cancer. Those less invasive tests are not only routinely performed in other countries, they’ve also been proven to be just as effective by the U.S. Preventative Services Task Force.
“We’ve defaulted to by far the most expensive option, without much if any data to support it,” said Dr. H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice.
In the U.S. many more patients die in ICU’s getting futile care. This is a painful, lonely way to die. In other countries, more patients are treated in hospices or allowed to go home where nurses and even doctors visit them.
Half of all heart surgeries (using stents) do no good. We know which half! But stent-makers and other providers have turned this into a big business.
– Our drug companies enjoy 20% profit margins.
– Our device-makers boast 16% profit margins.
We are over-medicated (particularly older people), and undergo too many surgeries that involve very expensive devices. Medicare covers virtually everything (even drugs that have been shown to be dangerous–until they are taken off the market). If it does not cover all of the newest treatments and products lobbyists would howl– and Congress makes sure that heads roll.
This is one reason why we don’t want to give everyone 40 to 65 a chance to enroll in Medicare. No one could afford it. (This idea was considered in the late 1990s. Do you have any idea how much 40-65 year olds would have to pay for our extraordinarily inefficient and wasteful Medicare system? On top of that and like people over 65, they would have to pay hefty sums for MediGap to Medicare advantage — private insurance plans that cover all of the things that Medicare doesn’t.
Medicare is now beginning to cut back, and over time it will refuse to pays for unnecessary surgeries (heart surgeries, unproven prostate cancer surgeries, and some hip and knee replacements, unless the patient has tried physical therapy first–and losing weight, if possible. (Some people just can’t lose weight, even under a doctor’s supervision.)
Medicare will also stop covering every new drug that comes on market, setting up a formulary and only paying for drugs that are effective — and cost-effective. The same will be true of devices.
Then — and only then — we might talk about letting people 40-65 sign up for Medicare, though in many cases, research on quality of care suggests that they would be better off with the best of our non-profit insurers: Kaiser, Geisinger, etc.
Medicare is a highly politicized bureaucracy and inevitably, Congress dictates what it can and can’t do. Medical guidelines should be set by medical researchers and doctors who have no financial interest in the outcome.
Maggie Mahar is the originator and author of the Health Beat Blog. Maggie wrote “Money-Driven Medicine: The Real Reason Health Care Costs So Much (Harper/Collins 2006),” and was the co-writer of the documentary, Money-Driven Medicine (2009), directed by Andrew Fredericks and produced by Alex Gibney.
So WHY is single-payer a Good Thing?
Just an anecdote, but my wife, who completed her medical residency relatively recently, was always complaining about how much pressure she was under to order additional tests and perform more procedures at the last practice she was at. She is under considerably less pressure at her new practice but it is a good example of how much pressure new doctors can be under from older doctors who seem to have had less training with regards to the ethics of medical overtreatment. I would be surprised if many newer doctors don’t run into this causing a new generation to pick up bad habits.
Regarding single payer, I think it solves a coordination problem that exists in the US system. In single payer it becomes very difficult to pass on costs and someone is clearly responsible. Medicare does have these pressures to an extent, but it is not universal not all of the electorate has direct experience. in addition, Medicare Advantage often muddies the responsibility. When it comes to payment reform, I think the key enabling element is making sure someone is clearly responsible and cannot pass the costs on to another actor in the system. Whenever I’ve looked at cross national comparisons of health spending the divergence seems to come after single payer is instituted so this factor seems to be very likely doing something to change incentives with regard to intensity of medical treatment. The systemic difference in our payment system varies with regard to all other peer countries; no other US trait is so clearly divergent from the set of all other developed nations. What else could be causing the difference?
Jack
without single payer the overcharges have no oversight at all. it’s you and buyer beware… something the average patient is in no position to do with any hope of success.
with single payer, what corruption emerged would be subject to oversight and the political processes that are supposed to limit corruption.
that, i am afraid, is the best we can hope for in this world. we the people still have the best chance when we work together… something called government IF, as Franklin said, we can keep it.
Maggie,
I’m confused. If doctors are going to order the same tests and procedures anyway — no matter who pays for them — how difference would it make if Medicare paid for patients 40 to 65?
Especially since Medicare is so stingy in what it pays. I think Medicare paid my hernia repair surgeon something like $500 and the anesthesiologist a little more than $100. Meantime a (relatively much simpler) root canal goes for $1400 these days in the dentist’s office (question about that below).
While we are on the general subject, doctors incomes after deducting office expenses make up 10% of all medical costs last I heard. Given the years of training (lifetime actually) and the tough nature of their work I don’t see cutting their incomes as a legitimate target. Might be better if we paid them straight salaries (like Canada?) which might be enough to discourage any play-for-pay extras.
Over the past 15 years I seem to to have seen dental fees double in real terms. Makes me suspect that dental professionals may have watched medical insurance double over time mostly due to expensive advances in technology — and figured if they doubled their prices too nobody would notice.
Denis:
Think about this: Part B is $104/month. Part D is ~$16/month for Tier 1 & 2 drugs. Supplemental is ~$100/month (AARP). Who pays the rest of the premium if you added the 40-65 year old crowd??? You are talking about your standard hernia. I think Maggie might talk about stents and other procedures which are questionable.
“[Without] single payer the overcharges have no oversight at all.”
Don’t be silly. People can check reviews of doctors and hospitals just as they do auto dealers and repair shops. Those that charge too much start getting less and less business.
“…the political processes that are supposed to limit corruption.”
Thanks — I need a good laugh this morning.
The reason there is so much corruption in government is that there is so much power and money in government. That is one reason the Constitution limits the U.S. government as it does.
I see you are at it again NeoJack.
Typically those hospitals which charge more today have name recognition and people flock to them due to the name and even though the care would be just as good as at a smaller hospital. My own open heart surgery was done at a small community hospital in Mansfield, Ohio in between Cleveland Clinic and Columbus hospitals and away from University of Michigan Medical center where my doctor resides. Why did we stay at the smaller community hospital? It was in the top 5% for this type of operation.
Those that charge more the same as Cleveland Clinic, University of Michigan, Hopkins, Sinai, etc. do not lose business and can do so because of name recognition in the market place and not because of evidence related results. This is not to say they are not good hospitals; but, I received the same quality care as what I could have received at the other hospitals mentioned and for lesser money (catheterization there was less than at U of M). These hospitals attract more due to their names and not because of evidenced based results in comparison and as a result they charge insurance companies more which is also passed off for you in increased premiums and deductibles.
No one is going to tell you the cost of an operation much less the treatment. Tried it and came up empty handed with zip pak, ekg, imaging, blood test, and an urine test when I had catastrophic insurance. The doctors do not know and neither do the clerks checking you out of the office. Call the billing office and see if they will tell you, nope. You are obviously young and have much to learn. Healthcare can give a damn about you.
The constitution is just a bunch of words which empowers the legislative branches to hold various parts of power over each other. Even then some parts of the government told the other power to enforce their decisions. So some times the gov can do what it damn well pleases until the next election and even then the court skates.
Keep asking questions and making comments as you keep opening doorways for us to explain.
“This is one reason why we don’t want to give everyone 40 to 65 a chance to enroll in Medicare. No one could afford it. (This idea was considered in the late 1990s. Do you have any idea how much 40-65 year olds would have to pay for our extraordinarily inefficient and wasteful Medicare system?”
What a load of crap.
The only inefficient parts are like Part D where the drug or health industry wrote the rules.
Then there is the little known agency in the government forget the name that works for the medical community, but much like the Federal Reserve is strictly not working for the majority of the Nation.
Tzimskes–
Young doctors tend to be more cost-conscious than many older doctors because they got into medicine at a time when we all began to realize that U.S. medicine was fast becoming unaffordable.
In addition, the senior doctor in a practice usually profit when younger doctors order more tests because the practice is paid fee-for-service.
I once talked to a young radiologist who worked for an older radiologist –she was under great pressure to read a certain number of x-rays per day, so that he could make more money.
This brings us to single-payer: The Single HUGE difference between U.S. healthcare and healthcare in other countries is that we are the only nation that has chosen to turn healthcare into a largely unregulated for-profit
enterprise.
In other developed countries the prices that doctors, hospitals, drug-makers, device makers, etc. are regulated directly or indirectly by the
government. In some countries the number of surgeries that a surgeon can perform in a given year is regulated. (This is a safety issue as well as a
financial issue.)
Note– very few countries actually have a single-payer system. They use private sector insurers (usually non-profits) and regulate them.
As the comments section points out there is more than a little illogical presentation in this article. I will just comment on some of the odd freestanding statements in the article (which don’t appear to be leading to the illogical flow or even to be part of it…)
1. According to the New York Times in 2011 http://www.nytimes.com/2011/12/04/health/policy/parting-shot-at-waste-by-key-obama-health-official.html?_r=0, Berwick said waste ranged from 20% to 30% — not “at least 33%” — and that overtreatment was only one of five reasons contributing to the 20% to 30% waste. Reading the Times article, I would conclude that Berwick thought the government itself caused most of the waste, not doctors. (To be fair, Berwick just completed a political campaign so maybe somewhere on the campaign trail, 2011’s 25% number inflated to 33%. Politics do that to people. Or maybe he said something different to another publication than the Times.)
2. Is there any research that says the popsicle stick on the gauze pad is a better test for colon cancer than a colonoscopy. Because if so, there’s two days a year of my life that I get back. (But are they going to remove my polyp with the popsicle stick?)
3. Aren’t “our drug companies” the same as everyone else’s drug companies? Did Bayer, Novartis, Roche, Glaxo, Sanofi, AstraZeneca, etc. stop doing business here?
4. Medicare Advantage is not a private insurance plan. It is Part C of Medicare with the coverage rules dictated by the government (and of course with the government paying most of the premium). Part C Medicare Advantage plans cover all the same things that Parts A and B cover… and usually more (always more if you consider the annual out of pocket limit always in C and never in A/B). Part C is administered by private insurance companies. But so are Parts A, B and D or Medicare
5. “Medicare is now beginning to cut back, and over time it will refuse to pays for unnecessary surgeries.” Obviously the author did not listen to the proponents of the Patient Protection and Affordable Care Act which said Medicare would just cut provider payments not patient services.
OK, I cannot resist one twisted bit of illogical thought. If you want quality , you should not get Medicare. You should get insurance from Kaiser and Geisinger and other non-profits. But Kaiser and Geisinger and other non-profits are among the biggest providers of Medicare coverage.
“This is one reason why we don’t want to give everyone 40 to 65 a chance to enroll in Medicare. No one could afford it. (This idea was considered in the late 1990s. Do you have any idea how much 40-65 year olds would have to pay for our extraordinarily inefficient and wasteful Medicare system?”
Then what is the problem with offering it? If it is too expensive, they will not purchase it.
“Aren’t “our drug companies” the same as everyone else’s drug companies? Did Bayer, Novartis, Roche, Glaxo, Sanofi, AstraZeneca, etc. stop doing business here?”–Dennis-
I’ll let the more knowledgeable in here deal with the rest of your diatribe, but this one I can handle.
Yes, those companies do business here. They just charge more money here. Legally.
I know 5 or 6 people that routinely make trips to Mexico for drugs that were prescribed by physicians.
Costs without insurance on many drugs are cheaper in Mexico that in the US with insurance. And insurance companies limit the amount per month.
My wife takes two different pills fro migraines. One if she feels one coming on, one if she is suffering a migraine. The insurance company allows only nine(total) of these two drugs a month. Despite the physician’s orders to use when a migraine comes on. After those nine(which btw cost about $5 each with insurance), the costs go up to $30 a pill. BTW, our insurance is through a Fortune 25 company and costs us a total of $19,000(company paying a 70% share) before our deductible.
Go to Mexico and you can buy these pills for less than $1. Strangely enough, same manufacturer and the packaging is exactly the same(other than the language).
Dennis–
I know Don Berwick personally, and he, (like many others) has used the 1/3 figure for years–long before he ran for office in Massachusetts. (Sometimes people say “at least 1/3” sometimes they say “about 1/3”–obviously it is not an exact measure.
Don always puts over treatment at the top of the list, and explains that “overpricing” tempts hospitals and doctors to over treat. He explains that some of the over treatment comes in the form of redundant testing– hospitals repeat tests that other doctors and hospitals have done. Some doctors overmedicate because drug companies pay them “consulting fees'” to recommend new and expensive drugs. Don appeared in a movie that I helped write that was based on my book “Money-Driven Medicine” You might want to buy the DVD and hear what he has to say (it was produced by Alex Gibney, an academy-award winning documentarian.)
You quote from a NYT article by Robert Pear. For years, Pear has resisted the idea that U.S. doctors and hospitals over treat–fighting the Dartmouth research tooth and nail. His interpretation of what Berwick says is not reliable.
On Colonoscopies, here is what the American Cancer Society says:
“Beginning at age 50, both men and women at Average Risk for developing colorectal cancer should use ONE of the screening tests below:
“Tests that find polyps and cancer
Flexible sigmoidoscopye
Colonoscopy
Double-contrast barium enema
CT colonography (virtual colonoscopy)”
If you Google Mayo Clinic and colonoscopy, you’ll find that “each test has its pros and cons.” It’s up to the individual to decide– colonoscopies are not necessarily the best choice.
The biggest problem with colonoscopies is the danger of complications, including a ruptured colon. (Try to imagine what that means.) False positives are also a risk.
Drs. Gilbert Welch and Steve Woloshin have written about the over-ruse of colonoscopies.
“Our drug companies” enjoy such huge profits because their lobbyists enjoy a huge amount of clout in Congress. Whether or not their headquarters is based in the U.S. they are “our drug companies” in the sense that, for years, their double-digit profits have been protected by Congress–and beloved by Wall Street. (I thought everyone knew this.)
We pay 3 or 4 or 5 times as much as people in other countries where the governments refuse to approve and pay for over-priced, sometimes risky drugs. Other governments set up formularies and refuse to cover drugs if they believe are not cost-effective.
Medicare and Medicare Advantage: You can purchase traditional Medicare directly from the government, and then buy a private “MediGap” police to cover what Medicare doesn’t cover. Or you can buy Medicare Advantage from a private insurers– it covers what traditional Medicare covers, plus extras that Medicare doesn’t cover.
If you get your Medicare through Kaiser Permanents, you will find that they have a drug formulary which doesn’t necessarily include all of the drugs that Medicare pays for. This is because Kasier uses its electronic medical records to compare outcomes for various patients. In this way it figures out the risk and benefit of a drug for a patient who fits a particular medical profile. About 8 years ago, Kaiser (and the Mayo Clinic and the VA) realized that a particular drug was causing heart attacks and they all took it out of their formulary.
Medicare continued to cover it– for another two years–until finally the company was forced to take the drug off the market. Because of political pressure (Congress) Medicare is not as free as a non-profit private insurer is to make these decisions. (For profit insurers didn’t take the drug off the market because they are under pressure, from Wall Street, to cover every drug that is popular. Otherwise, they might lose market-share. )
Medicare is beginning to refuse to pay for ineffective services. The folks who wrote the ACA said that Medicare would continue to pay for “needed services.” That doesn’t mean that they will pay for unnecessary services.
In other cases, Medicare is cutting fees for certain services, and has found that when the service is less lucrative, doctors are less likely to perform that service. MedPac has written numerous reports about this. (You can Google them.)
Kaiser and Geisinger provide higher quality Medicare than traditional fee-for-service Medicare. Consumer Reports published annual studies comparing Medicare Advantage HMOs and PPOs , using NCQA markers for quality. Kaiser’s Medicare Advantage plans always score very well in terms of outcomes and patient satisfaction. This is in part because Kaiser sets practice guidelines that doctors must adhere too–unless a second doc signs off on deviating from the guidelines.
Docs working in small private practices (or practicing solo) can do whatever they wish. Some are excellent. Some are not. At Kaiser, other doctors are looking over a docs shoulder. The doctors work together, in teams, giving each other advice. For instance: “Hey Don, I noticed you order a colonoscopy for Mr. Burns. Didn’t you see the study which shows that for someone at moderate risk he really shouldn’t have a colonoscopy more than once every ten years?”
e-Michael–
Thanks for explaining drug pricing to Dennis.
See my reply to him where I explain that they are “our drug companies” in that we protect their over-pricing.
In other countries, the government protects the consumer, not the corporation. But of course we think corporations are people. . .
Jack–
If we offered Medicare to everyone 40-65 we would have to provide subsidies for those who couldn’t afford it–just as we do with Obamacre.
You can’t offer a government program to some of the people–but not to low income and lower-middle income people.
So taxpayers would wind up paying for all of the waste.
Beene–
I don’t reply to comments that are both dumb and rude (“load of crap”)
Probably you can’t help being dumb, but you could avoid being rude.
Denis Drew–
Doctors don’t all order the same tests and treatments.
When a private insures is paying the bill, the doctor knows that the insurance company may ask questions about questionable tests and procedures, asking for evidence that they were needed.
Medicare asks few questions. So it’s easy to go ahead and order the extra tests. No hassle.
As for Medicare being stingy . . .WE have much evidence that hospitals and doctors that are efficient make a PROFIT on medicare payments.
Medicare payments to geriatricians and palliative care teams are stingy. And in some cases, primary care physicians are underpaid. But virtually all specialists are overpaid.
When you look at their incomes, and compare them to docs in other countries, you find that, after you adjust for differences in cost of living and the fact that our doctors leave med school with huge loans, even Medicare is overpaying for many joint replacements, heart surgery, cancer
treatments, ets.
There is much research showing this. Google “Health Affairs” and doctors’ income and other countries.
When I refer to “efficient doctors” I am referring to those who don’t overpay for over-head, and who make good use of nurse practitioners and others to handle simpler cases (refilling routine prescriptions, often over the phone) while the doctors spends more time with complex cases.
These days, any doctor trying to work solo (or in a very small practice) in an expensive U.S. city winds up paying way too much for real estate and
receptionists, folks who handle billing, etc. As a business model the small practice in a large city is outmoded. Doctors who band and together and work for large organizations or hospitals enjoy economies of scale that greatly reduce their expenses. This they can charge less and still make a good living.
I expect the people involved in your hernia operation were talking about what they made “after overhead”.
Run 75411–
You wrote “Keep asking questions and making comments as you keep opening doorways for us to explain. ”
Exactly. This is why I reply to so many comments. I know that many people read a comment thread who don’t have the time (or the inclination) to comment.
But when I explain something to a commenter, I am reaching them too.
Reply to reply to my comment from M. Maher:
1. As I said in my comment, perhaps Dr. Berwick used the higher number in some other medium than the world’s newspaper of record. And maybe the most respected healthcare journalist in the country is lying. Neither changes my point. You claimed the entire number was related to overtreatment. That is not what Berwick said according to the the Rand study he collaborated on in 2012. He and Rand said fraud could account for a much as a third of the waste. And clearly some of the waste relates to government regulation–pick the lowest number you’re comfortable with– not overtreatment
2. I was joking about the popsicle stick but I have had all of those colon procedures. As far as I know, only during a colonoscopy can you remove a polyp (two of the others do not check the whole colon; you have to have two separate procedures, which probably cost the same as one colonoscopy)
3. Re drug companies, I objected to the word “our.” I feel in no way possessive of any of them, wherever they are legally based. Almost all the leaders are non-US companies. I seriously doubt that most people follow the profit margins of any these companies but I sure do not want some one in Congress telling me I cannot use a drug I need because it is not “cost effective” (Congress does that already to guys I know who get their drugs through the VA. That’s not working out too well; “I thought everyone knew this.”)
4. Your long comment on Medicare kind of goes all over the map but basically I agree with you that Original Medicare is bad. That’s why over 95% of us on Original Medicare make some kind of — mostly private — supplemental insurance arrangements. But your explanation of the difference between Medigap and Medicare Advantage is wrong. And Medicare Advantage is not one of the private choices–it’s public. You point out some of Part C’s advantages by explaining that Kaiser has a great Medicare Advantage plan. But again, I totally agree with you that Medicare is lousy insurance and I would not wish it on anyone from 45-65 or any age.
“If we offered Medicare to everyone 40-65 we would have to provide subsidies for those who couldn’t afford it.”
Why?
Dennis–
I have worked at the NYT as an editor. I know how the sausage is made.
You might consider how the NYT supported the notion that Iraq had “weapons of mass destruction.”
At the time, I (and many others) knew that this was not true. There was no proof. International investigators made this clear.And Colin Powell looked extremely uncomfortable as he tried to make Bush’s argument to the U.N.
My experience at the Times taught me that it does not publish “all of the news that is fit to print” (the Times’ motto) but “all of the news that fits.”
When I edited an excellent (but negative) story about tobacco maker Philip Morris, I received a message from the very top saying “We can’t publish this. Philip Morris is an advertiser” (At the time, the prize-winning editor who I reported to–and who had been at the Times for many years– agreed.)
On what constitutes waste: “Fraud” is part of over-treatment. Docs and hospitals who defraud Medicare pretend that a patient needed a procedure that he didn’t need. (See my book “Money-Driven Medicine” for the story of the biggest Medicare fraud ever.)
As for the most respected health care journalists in the U.S.— Jon Cohn, Sarah Kliff and Ezra Klein come to mind.
I have never talked to a health policy expert (or a doctor) who quoted Robert Pear.
Dennis, how you feel about drug companies is really not important–unless you have a great deal of power in Congress or on Wall Street. Given your naiveté, I doubt that you do.
(I served as senior editor at Barron’s for 11 years–that is how I learned how Congress and Wall Street protect drug company profits.)
At the VA, at the Mayo Clinic, and at Kaiser, “someone in Congress” does not tell you what drug you can or cannot get.
That’s my point. AT the VA, the Mayo Clinic and Kaiser, Doctors use evidence-based research (from medical records which show which patients benefit from which drugs. )
As I explained the Affordable Care Act takes power away from Congress. (Congress itself approved the language in the ACA– enlightened Congresspeople understand that they are are not medical researchers and realized that they should not be making these decisions.)
Dennis–
Correction:
I did not mean to suggest that the editor who I reported to at the Times agreed that we shouldn’t publish the Philip Morris story because PM was an advertiser.
My top editor agreed that the NYT editor-in-chief (at the time that was Abe Rosenthal) was very worried about stepping on advertisers’ toes.
That was more important that telling the truth.
Anyone who read this post–or the commends–I would urge
you to read this outstanding story about over-treatment and end-of-life
treatment.
Just click here : http://www.wnyc.org/story/death-beds-why-people-here-die-differently-other-americans/
Maggie
thanks for taking the time to write this for us.
“Beene– I don’t reply to comments that are both dumb and rude (“load of crap”) Probably you can’t help being dumb, but you could avoid being rude.” Maggie Mahar
Maggie, usual response from babbling shill, is name calling.
Beene:
That is not going to win the discussion or make a point.
run, your right should have taken the time to re-quote what I objected and defended my position with more than a descriptive. Or at least ask for figures that supported the stated position.
beene:
You really have a chance to get to the nitty-gritty with someone who writes books on the topic while I read a lot and write about healthcare. It does no good to anger a person due to poorly said comments. I know you are smarter than this and “NeoJack” for that matter. And no, I am not a Libertarian; but, I read a lot.
Maggie,
Thanks for explaining your reasoning to the resident kitchen tables, and also for the added links.
Yes, Maggie, thanks.
This has run long enough for me to add my non-economist anecdote.
I went from Cadillac (actually semi-) to Medicare gapped by the Cadillac. The second the transition occurred, I started getting into arguments with my primary care doctor and his staff. The argument was a conflict between their needs to fill appointment slots and my need to be left alone. It appeared to me that they send Medicare patients to a lab with orders for a reasonable battery of tests. Then, instead of sharing the results, they data mine these tests for the least little reason to fill an empty slot in the appointment book. Yes, they want to go over the tests one at a time with multiple appointments in which they retake blood pressure, weight, heartbeat, prescription lists, etc. and listen to heartbeat, lungs, stomach, etc. You don’t dare mention that you experienced being out of breath, etc. for fear of a useless EKG (useless because you also get a referral to a specialist who ignores the recent EKG and does his own).
Medicare pays and I go because even if you think you are being used to fill the schedule and meet pay, you are the expert and you may be getting the care you actually need. How do you know the difference? My advice to Medicare patients is to do as they are told to help their doctor gather those fees for those services. Right now my doctor’s staff seems to be cold shouldering me during appointments (my imagination?) because I told them to bundle things and call only once per lab report. The doctor thinks I was being “mean to his staff” because they only follow orders. My proof of unnecessary appointments – they suddenly get worried about a measurement that was 1% high this time. This worry comes several months after the lab result and is now an emergency. (Cancelled appointment back fill?)
I don’t know but I do know that this is very different from my treatment before Medicare. Maybe they just care more about really, really, old people that have crossed the line into the Medicare stage of life.
Everyone I know that is on Medicare, though, loves it. That would seem to make me just a monster. I hope if we do go to universal care something is fixed about both the doctor’s problems and needs for his practice and the FFS problems.
Maggie,
>>> I expect the people involved in your hernia operation were talking about what they made “after overhead” <<<
No those ridiculously low prices for opening me up and fixing my insides and putting my outsides back together again were on the Medicare bill copy. I'd still like to hear what you have to say about dental bills possibly doubling in real terms over the past 15 years.
I think it is a bit rash to simply state without working up to the big why that we cannot afford whatever — on an economics blog. For my part, just as there is no free lunch, but, you have to pay for lunch anyway one way or another — ditto for Medicare covering everybody. I would say at significantly higher prices — but I am not studied at all in that; just my impression from comparison of what Medicare pays compared to what providers want to charge — be a while before I can sort any of that out. Don't want American orthopedic surgeons for one example to earn what Germans earn: something like $75,000 a year.
Beginning to see that any medical field that can be non-profit should be non-profit (not talking about personal incomes). Only 20% of hospitals are for profit — used to zero. My recent readings of private equity convinced me that when hospitals go for-profit their prices rise and their services drop (what would we expect?). There is a current story in Business Week about just that in Massachusetts: "Cutting Waste — Or Creating Monopolies." Ditto for drug research — the companies spend more on advertising than on research, much (most?) of which research may be just developing copy-cat drugs.
And you as a medical researcher have not much sense (are naive? 🙂 ) of how much things (so called "inequality" — I call it the "Great Wage Depression") can going to change and how fast — how much more the average person may be able to be able to pay or be able to soak to the top 1% in the not too distant future (my version of the nearer than you may think: legally mandated, centralized bargaining).
Some of the numbers you and Run come up with are a bit too easy: $250 deductible (presumably including out-of-pocket) for ACA, $100/mo for AARP supplemental (more like $500 these days I imagine).
Denis:
How much do you think healthcare insurance costs today? Medicare has not been turned loose to negotiate better costs due to Congress.
The numbers I quoted you for Medicare are my own. Part B = $104.00, Plan N Supplemental is ~$100.00. Part D through Wellcare is ~$16.00/month for Tier 1 and Tier 2 drugs. $20 co-pay and $50 for ER.
I am also VA qualified with no service related injuries other than being poisoned at Camp Lejeune. VA is $15 copay and $50 for a specialist. Drugs are $9 for 30 days under VA. The rest of the VA costs are too numerous to go on here. The VA is more stringent on controlling costs.
Maggie cited how deductibles are reduced for those <250% FPL and I gave a Kaiser citation for the same CSR. Premiums are subsidized or locked to a max 9.5% at 400% or less FPL.
How much do you believe those in the upper 3% are paying today to help pay for the PPACA?
Anna Lee
thank you for the expert observation. experience not data.
after reading the comments i am not sure we are any further along than before Maggie wrote her post. not her fault. people keep believing what they want to believe, even if it is incoherent.
note, absolutely no irony is intended by my first sentence. too much we rely on “experts” and “data” and refuse to listen to the people upon whom the policies fall.
Anna Lee–
Thanks much for you comment
The contrast between your experience pre Medicare and post Medicare is
very interesting.
I doubt that your PCP and his staff care more about you now that you’ve crossed the line to 65.
And I’m pretty sure that if they were trying to bill a private sector insurer to have you come in to have tests explained one by one, the insurer would, at the very least, ask questions . Medicare, by contrast, just pays, no
questions asked.
My doctors usually call me with test results and only have me come in if
something really needs to be done. (For example, I have a tiny bit of skin cancer on one hand. My dermatologist tested it, determined it was cancer, and had me come in so that she could burn it off. She also advised me to come in once a year for a check up. This seems entirely reasonable.)
My husband’s doctor also calls him with test results.
Many older people (like your friends) are delighted to be over-treated.
They are retired, have the time to sit in a doctors’ waiting room, and
like feeling that someone cares about them.
I really would urge you to find a new doctor. Not everyone would make you
come in multiple times to hear about test results.
I agree that you’re not an M.D. and so not in a position to judge which
tests you do or don’t need. But this does sound excessive.
And at this point, you’re not comfortable with his staff. (They sound like bullies.)
The good news is that under Obamacare we are moving away from fee-for-service. You’ll see the difference over the next year or two.
Coberly–
You’re absolutely right: many people do continue to believe what they want to believe.
This is especially true of those who have very strong opinions that are colored by their politics.
But there are also a great many people who read posts, read the comments, and learn something along the way.
They may or may not comment. (Of course, I like it when they do, but I know that they are out there whether or not they comment. Sometimes they e-mail me to see “I’ve been reading your blog for three years, and I have a question.. . “
Maggie
I believe that your observations, if put into practice would go a long way to “fixing” Medicare and show the way and why of “single payer.”
Medicare is a necessary program. Whatever the private sector does is, of course, its own business. But a Medicare put into direct competition with the private sector might be good for both of them.
The issue of Medicare being “subsidized by the government” could be addressed by the extent to which that subsidy was by a direct and transparent tax so that people knew what they were paying for what they were getting.
The big advantage of Medicare is that it “forces” people to pay for their lifetime expected medical needs over a lifetime of earnings… that is while they can afford it, with lower monthly payments, that they would have to pay later “when they need it” with much higher monthly payments.
Without the “force” most people don’t have the foresight to to take the installment plan. That probably includes me, though I have gotten through the last seventy years without doctors, and hope to get through the next seventy the same way, I can’t promise what i’ll do if and when the time comes.
Maggie, let me explain my terse response to Medicare is a poor program and that single payer is too expensive. When professional say the above I assume they know facts that are not in evidence of their posting.
Will first say that Obama care is trying to change scheduled insurance to comprehensive and that it also according to run (one of our hosts on this blog) is also trying to make positive changes to Part D in Medicare. I do applaud Obama’s efforts.
Medicare is self-funding.
Medicare for all or single payer is too expensive. Medicare presently takes care of 60+% of medical expenses in the USA. The American public presently pays 50% more than any other nation. The American system ranks 36th in overall health care, and 10th in positive out comes in health care.
Someone really needs a writing course.
EMIcheal
“needs a writing course”
or thinking.
what people don’t quite seem to realize is that the human brain works on essentially random connections and logic has nothing to do with what we “think” except to the extent that the real world forces “random” connections to be somewhat “logical.” “science” is another way of forcing us to attend to “real world” connections and therby force our brains to be somewhat “logical” but is no guarantee.
so when we are dealing with … some people… we are dealing with a brain that has never been forced to deal with reality, or some part of it.. in a careful way. but feeds itself on the connections made for them by others with agendas.
and of course, we ourselves are subject to the same kind of errors… and complete self deception.
maybe this is a message of “no hope” or maybe it suggests a way to proceed. i, of course, wouldn’t know.
Everyone–
Medicare does NOT “pay for itself”
The pay roll taxes that you pay for Medicare only cover what Medicare pays for hospitalization.
It does not cover doctors’ visits (Part B ) and prescriptions (Part D)
But as the AARP explains: ” The premiums people pay for parts B and D covers about 25 percent of what Medicare spends on these services”
The rest is covered by deficit spending.
This is something that people who want “Medicare for all” need to think about.
“(Parts B and D of Medicare are) covered by deficit spending.”
That depends on how you look at it. The Parts of Medicare that are theoretically funded by a beneficiary’s 40-50 years of income taxes are no more (or less) actually “covered by deficit spending” than the Defense Department budget or the National Part Service or Medicaid or the insurance subsidies provided by the Patient Protection and Affordable Care Act of 2010 as amended.
Medicare needs to be looked at in cohorts.
— People born before 1940 — especially people born before 1900 — intentionally got much more out of the Medicare system than they would/could ever pay in when the law was passed in 1965. This was a conscious decision of the 1965 Congress (unlike with FDR’s 1936 SS, they did not wait until the pool built up before doling out benefits).
— People born between 1940 and 1980 pay their own way as a group adding in their lifetime of payroll taxes, a proportionate amount of their lifetime of income taxes, the pooling effect of the people who paid in but didn’t use the money (they died or moved back to their homeland), and the fact that the payroll tax income limit was removed in the 1990s.
— People born after 1980: you will never get your money back
Dennis:
“People born after 1980: you will never get your money back.”
Which would make sense for an increase in Medicare withholding tax and to allow Medicare to negotiate with the healthcare industry.
All
I didn’t follow the string that led to Run75441 writing “The numbers I quoted you for Medicare are my own. Part B = $104.00, Plan N Supplemental is ~$100.00. Part D through Wellcare is ~$16.00/month for Tier 1 and Tier 2 drugs… I am also VA qualified with no service related injuries… ” so I am not sure what point he was debating.
But thank you, Run75441, for making my earlier point that Medicare is not single payer. Counting you, your Medicare involves five payers. You are the extreme (most of us only have two or three) but not that unusual.
Dennis:
Of course Dennis, I also paid into Medicare and SS and have done so for a long time. My paying into it is a given for most of the people on this site as we all know it and wonder whether incremental increases make sense and should be done. When people here are talking about single payer, they do not necessarily mean Medicare although they associate Medicare with single payer. They are looking for the Gov to take control of healthcare and slow the increase in healthcare costs. What many of the writers here do not realize is the amount of cost backing up what I pay into Medicare taxes, Part B, Plan N, and Part D. It is probably not much different then ESI. Single payer is undefined although Ezra Klein has written on it several times.
As I (and some others see it) see it, the issue behind a true and defined single payer is who controls it, Congress or an independent board making decisions as to what can be paid. The same as the courts not understanding (and not caring to understand) true “mens rea” which should be left to a Medical Board, Congress could care less about the rising cost of healthcare and are much adept at cutting services to constituents rather than controlling a “service for fees” commercial healthcare industry and its excessive costs. Turning Medicare loose to negotiate costs would go a long way towards reining in costs. This is something most on the right could care less about and something those on the left speak to and perhaps in a foolish way at times.
We have one of the more active boards on healthcare.
Maggie
I hope I have thought about “medicare does not pay for itself” and what that means for “single payer,” but I have no idea what you mean by it.
About half of Medicare is paid by general taxes, and about half paid by a dedicated transparent tax, and the third half is paid by post-retirement premiums.
I think the post retirement premiums are stupid… that should be rolled into the dedicated transparent tax and paid for “as we go” when we can afford it and not imposed on (ourselves) when we can least afford it.
Similarly, I think it would be better to just pay the half that general taxes now pay by rolling it into the dedicated transparent (payroll) tax… then we could see what we are paying for what we get. I do not think it necessary or wise to impose extra taxes on “the rich” to pay for what we could and should pay for ourselves… with the hedge that the payroll tax should be, as it is, a percent of income, which would mean that the “richer” would be paying more per capita than the “poorer”. i think they could justify that to themselves as an extra premium to insure themselves against the chances of themselves becoming one of the poorer.
I am fairly sure a similar rationalization could be applied to making it all paid by general taxes with “the rich” paying the lions share. It is a matter of politics in America that I don’t think that’s a good idea, plus a kind of peasant (working class) pride in “paying for it myself” if it’s for me and i can afford it… but that may just be another way of saying “politics in America.”
This would about triple the Medicare tax, but save on general taxes and post retirement “premiums.” If the people would freak out at paying about a 10% Medicare tax, perhaps they could be talked to carefully and asked if paying 10% of their income to provide for the medical care that will prolong their lives… out of a higher income than their grandparents could dream of…. is worth it to them.
Or if they are such children that the next toy is worth more to them than providing for their old age.
Health Expenditure per capita (in PPP-adjusted US$) among several OECD member nations. Data source: OECD’s iLibrary[5]
The Commonwealth Fund, in its annual survey, “Mirror, Mirror on the Wall”, compares the performance of the health care systems in Australia, New Zealand, the United Kingdom, Germany, Canada and the U.S. Its 2007 study found that, although the U.S. system is the most expensive, it consistently under-performs compared to the other countries.[6] One difference between the U.S. and the other countries in the study is that the U.S. is the only country without universal health insurance coverage.
Life Expectancy of the total population at birth from 2000 until 2011 among several OECD member nations. Data source: OECD’s iLibrary[7]
The Commonwealth Fund completed its thirteenth annual health policy survey in 2010.[8] A study of the survey “found significant differences in access, cost burdens, and problems with health insurance that are associated with insurance design”.[8] Of the countries surveyed, the results indicated that people in the United States had more out-of-pocket expenses, more disputes with insurance companies than other countries, and more insurance payments denied; paperwork was also higher although Germany had similarly high levels of paperwork.[8]
More:http://en.wikipedia.org/wiki/Health_insurance#Background
It’s fairly well accepted that the U.S. is the most expensive healthcare system in the world, but many continue to falsely assume that we pay more for healthcare because we get better health (or better health outcomes). The evidence, however, clearly doesn’t support that view.
more:http://www.forbes.com/sites/danmunro/2014/06/16/u-s-healthcare-ranked-dead-last-compared-to-10-other-countries/
12 years ago, the World Health Organization released the World Health Report 2000. Inside the report there was an ambitious task — to rank the world’s best healthcare systems.
The results became notorious — the US healthcare system came in 15th in overall performance, and first in overall expenditure per capita. That result meant that its overall ranking was 37th.
Read more: http://www.businessinsider.com/best-healthcare-systems-in-the-world-2012-6?op=1#ixzz3DbhpYv00
Beene–
Thanks for the excellent information!
I would add just one thing: one reason we score so poorly is that
we have many more poor people in the U.S. than in other developed countries. We actually have the highest percentage of children living in poverty of any wealthy country.
Poor people are sicker than wealthier people, and don’t live as long.
(This is largely because they have poorer diets, less time to exercise, and in their neighborhoods children don’t have safe places to play. (Even
their public schools often don’t have gyms or playgrounds).
And of course, many of our poor don’t have access to healthcare.
This will change only when all states expand Medicaid–and when we
get more lower-income people enrolled in the Exchanges.
The Independent Payment Advisory Board (IPAB), which the Affordable Care Act or “ACA” created, will use this measure to determine whether it must recommend to Congress proposals to reduce Medicare costs.
more:http://en.wikipedia.org/wiki/Medicare_(United_States)#Financing
Maggie, I just do not see this happening with private insurance. As it was private insurance is the reason the these countries moved too single payer.
Germany does have private and single payer, 82% in Germany take single payer.
Maggie, I do believe that your heart must be in the right place, as Bill Moyer recommended your book.
Not just her heart.
It is also the brain.
She doesn’t deal with ideologies and/or wishes and hopes, but what is.
Not many of those out there.
EMichael
nevertheless I wish Maggie had explained what she meant by “Medicare is not self funding…. those who favor single payer need to think about this.”
The implications are not obvious to me.
coberly, she may have meant that the trust funds will deficit spend after 2024.
Run75441,
I said:
“People born after 1980: you will never get your money back.” (see NOTE)
You said:
“Which would make sense for an increase in Medicare withholding tax and to allow Medicare to negotiate with the healthcare industry.”
1. I agree that those born after 1980 will have to eat a payroll tax increase just as we born between 1940 and 1980 took a big increase back in the 1990s IF they want Medicare to work like it currently works. They could also have a debate about possible better ways for it to work but that’s up to them. Each generation needs to do what’s best for them
2. But I do not understand what you mean about Medicare “negotiating with the healthcare industry.” It does not have to negotiate with the healthcare industry; the Medicare bureaucracy currently dictates to the industry what it will pay for inpatient and outpatient hospitalization, doctor’s fees, durable medical equipment, and many other things… Medicare dictates that it will pay well below market rates (people not on Medicare make up the difference with higher rates). So why negotiate (again unless the next generation would prefer to totally change the system.)
NOTE: To be more accurate, I should have said “Those born after 1980 would have had more than enough deducted from their paychecks and income tax to cover their future medical costs if we had had a lock-box system but instead the money is being used for other purposes (per another series of comments about deficit spending)
Dennis:
What is your opinion of RUC?
Beene– and Everyone–
Germany does NOT have a single-payer system.
“Health insurance in Germany is characterised by the fact that two systems exist side by side: statutory health insurance and private health insurance. ”
Just Google “Germany” and “not single payer” and you will get a flood of articles.
True. The private insurance supplements the public insurance.
Coberly–and everyone
This is what I meant when I said that Medicare does NOT PAY FOR ITSELF:
“For more than a decade the federal government has borrowed to pay for the rising cost of Medicare. Debt-financing of Medicare will increase sharply as the population over 65 doubles from 2010 to 2030 and the number of beneficiaries over 85—with the greatest medical needs—triple.” This is from Washington Monthly, an excellent progressive publication: http://www.washingtonmonthly.com/ten-miles-square/2014/06/pay_as_you_go_medicare050897.php
Note using borrowed money to finance Medicare is Not something that will happen in the future. It began more than a decade ago. Yet, as the article notes: “Members of Congress are reluctant to argue with constituents who sincerely believe that they have ‘paid for’ Medicare with payroll taxes and premiums. Most find it more convenient to tiptoe around the minefield of Medicare financings.”
People who believe that they “have paid for” their Medicare with payroll taxes and premiums are terribly naïve. They don’t realize how much Medicare actually costs (Or how much Medicare for all would cost.)
The article explains:
“The portion of Medicare paid for with dedicated taxes dropped from 73 percent in 2000 to 53 percent in 2010, the year that the first of the Baby Boom generation became eligible for Medicare. Debt was used to fund that extra expense, since all incremental expenses were paid with borrowed funds. The decision to use debt to fund recurring Medicare expenses was scarcely debated, or even explicitly acknowledged. Annual reports by the Medicare Trustees chronicled the system’s increasing dependence on “general revenues,” but in fact all tax revenues had long since been exhausted. Debt filled the funding gap.
“After the election of President Obama Democrats sought to find Medicare “savings” for the purpose of expanding other medical services rather than balancing the budget for Medicare. In order to offset the cost of expanded medical services for families with low incomes, they placed restrictions on reimbursement rates, provided incentives for more efficient delivery of medical care, raised the Medicare tax paid by taxpayers with high earned incomes, and applied Medicare taxation to gains from investment.
“Republican House Budget Chairman Paul Ryan exemplifies his party’s ambivalence toward Medicare reform. He ran as the vice presidential candidate on a ticket in 2012 that attacked the Affordable Care Act’s limits on Medicare reimbursements. Yet before and after that election he incorporated those very cost-saving measures into his own budget plans.
“Federal incumbents in both parties find it awkward to even talk about the practice of borrowing to pay for Medicare. Obviously an extra layer of interest on debt simply increases the program’s long term cost. But any attempt to highlight that issue naturally invites the question of whether to cut Medicare costs or raise tax revenue dedicated to the program. No mainstream politician seeks to cut benefits by almost half, down to the level that could be paid for by revenues from premiums and payroll taxes. Democrats condemn any increase in payroll taxation as “regressive,” while most congressional Republicans have signed a pledge to oppose any tax increase.
“Members of Congress are reluctant to argue with constituents who sincerely believe that they have “paid for” Medicare with payroll taxes and premiums. Most find it more convenient to tiptoe around the minefield of Medicare financings.”
What can we do? See my next comment.
DENNIS BYRON, COBERY, RUN– AND EVERYONE:
We cannot raise Medicare payroll taxes to fully fund Medicare. Today the lower 90% of U.S. workers are struggling — they haven’t seen real increases in wages in a very long time.
And the middle class (those earning median income) are struggling, trying to raise families on joint income of around $60,000 — before Taxes. They can’t send their kids to college. Over the past 6 years, their income has fallen sharply.
Why not just raise payroll taxes on the top 10%?
The increase would have to be very high–so high that analysts say many of the rich would simply opt out of Medicare and buy their own private insurance.
This is what many wealthy people in Germany do.
The top 10% would buy good insurance for themselves. Meanwhile, they would be less and less inclined to support Medicare.
Medicare would become “a poor program for the middle-class and the poor.)”
Doctors fees would be really slashed to Medicaid levels–or lower–and a great many would refuse to take Medicare.
We would wind up with two tiers of healthcare–which is what they have in Singapore.
Wealthy people pay significantly more for govt. supported health care, and they get their choice of doctor and private rooms. The other 90% of folks in Singapore wind up 17 PEOPLE TO A HOSPITAL ROOM, and have no choice of doctors.
What Obamcare aims to do is to provide the same level of high quality comprehensive care for everyone. How do we do that? By trimming the fat out of the system, using a scalpel, not an axe.
First, we stop over-payding for drugs and devices. These companies do not need double-digit profit margins. We do what the VA (and every other government in the developed world does): We set up a formulary of drugs and devices that are effective, and cost-effective–and pay for them.
We do not pay for every new drug and device that comes to market– usually they are, at most, slightly better–and much riskier, because we know less about them.
At the same time, we begin refusing to pay for services that we know do no good: PSA testing, mammograms for very old and very young women (unless they have a history of breast cancer in the family.) Those mammograms lead to over-diagnosis and over-treatment–unnecessary mastectomies. We greatly reduce the number of CT scans and MRIs– doctors will have to provide medical evidence that this particular patient actually needs a CT scan or a MRI.
The big problem with Medicare now is that it pays for things “no questions asked.” Doctors like this. They make a fortune. But we, as a society, cannot afford it.
All patients who are very sick or suffering form chronic conditions would have a chance to talk to a palliative care specialists about what they do and do not want at end of life. Some would want to fight death to the bitter end. Others would not–especially when they learned about risks vs.
likely benefits. (Someone oncologists don’t tell most people. They don’t want to scare them, and are not trained to have “end-of-life-” discussions.
There a thousand little ways that Medicare can trim spending without reducing quality of care. This is why the Affordable Care Act is so long — it looks at those thousands of little ways. The GOOD is in the Details.
If 1/3 of Medicare dollars are wasted, surely we could cut spending by 15%–or more–and keep a lid on it by refusing to over-pay for products and services.
That’s what Run means by negotiating with the health care industry. Medicare does not negotiate–and it does not set prices for Docs. A small committee made up primarily of specialists (called the RUC) sets the prices that Medicare will pay docs for various services. The RUC meets behind closed doors. There is no public debate or discussion. Medicare almost always takes its recommendations. (If it didn’t, the specialists’ lobbies would howl, Congress would respond, and whoever at Medicare was suggesting trimming spending would lose his job.
It has happened before. You can Google the RUC.
The segment health economics of Germany was about US$368.78 billion (€287.3 billion) in 2010, equivalent to 11.6 percent of gross domestic product (GDP) this year and about US$4,505 (€3,510) per capita.[5] According to the World Health Organization, Germany’s health care system was 77% government-funded and 23% privately funded as of 2004.[6] In 2004 Germany ranked thirtieth in the world in life expectancy (78 years for men). It had a very low infant mortality rate (4.7 per 1,000 live births), and it was tied for eighth place in the number of practicing physicians, at 3.3 per 1,000 persons. In 2001 total spending on health amounted to 10.8 percent of gross domestic product.[7]
History
Germany has the world’s oldest national social health insurance system,[1] with origins dating back to Otto von Bismarck’s social legislation, which included the Health Insurance Bill of 1883, Accident Insurance Bill of 1884, and Old Age and Disability Insurance Bill of 1889. As mandatory health insurance, it originally applied only to low-income workers and certain government employees, but has gradually expanded to cover the great majority of the population.[8]
http://en.wikipedia.org/wiki/Healthcare_in_Germany
For those interested the URL leads to a book that details Germany health insurance. We can quibble over what you call anything.
http://www.goinginternational.eu/newsletter/2013/nl_03/SpecialDE_EN_Understanding_the_German.pdf
beene:
What you do not say is Germany having two insurances, one public and one private
Beene–
Your reply has nothing to do with my comment.
Germany, like most of Western Europe, has a hybrid system of universal healthcare.
it is not single payer: some people have private insurance; others have public insurance. So many people have public insurance because only
the very wealthy are allowed to buy private insurance.
This is definitely not a semantic distinction: Google “universal healthcare” vs. “single-payer.” Single-payer means what it says: the government health plan is the only game in town. Under Margaret Thatcher this became a huge problem in the UK. She “starved” the National Health Service, drastically cutting funding. People died. This is one of the biggest problems with single payer: if conservatives come to power they can take away funding. (This is what happened to the VA after George W. Bush was elected.)
Under Obamacare we have a version of a hybrid system and are moving toward making it universal. Going forward, we will need to regulate prices, as they are regulated in other hybrid systems.
Only Canada and the UK have “single-payer’– and their outcomes are , by and large, not as good as in Germany, France, Denmark, Norway, and other countries in Western Europe that use hybrid systems. . That said, in many ways, outcome are better than in the U.S. and, because prices are regulated, costs are much lower.
Maggie
thanks for the reply.
I would suggest putting ALL of medicare on the payroll tax… transparent and dedicated… would take advantage of the popularity of “I paid for it myself.”
And there is no reason why they could not. Paying for medical care is a bit like paying for food. If you want to live, you buy the essentials first and let the new car go til you can afford it.
Of course it would become a subject of more interest to cut costs if the people knew what they were paying for what they are getting.
So while I agree with you mostly, I am not at all able to understand your answer to paying for half of Medicare with “debt” by reducing costs 15%.
And calling Medicare or Social Security a “regressive tax” just shows that even highly educated liberal economists can be stupid. SS entirely, and Medicare in prospect, are worker paid insurance programs. Their value as government programs is that the government can provide the structure that protects their money from inflation, or the market losses likely to occur to at least some people desperately buying stocks in the hopes of having enough money to pay for their medical care when they get old.
Pay as you go essentially takes the inflation factor out of even medical care. You are paying today’s prices for tomorrow’s medical care. The next generation will pay then-today’s prices for their eventual medical care… but as long as wages increase more or less in step with medical costs, each generation will NOT be burdened by t “paying for” the preceding generations “as we go.”
What’s wrong here is that we have two classes of idiots each married to an old, inadequate, understanding of money. The R’s think the only way to pay for something is to win the lottery. And the D’s think the only way to pay for something is to tax the rich. FDR lived in vain.
Forgot to point out
by making SS a “flat” tax (economics professors call it regressive) the poor do not pay more than they can afford for their own medical care. The difference is made up by “the rich” paying a little more than their own costs… which they can justify to themselves… if they are smart.. as an extra premium “in case” they end up poor themselves. But this needs to be kept in balance or it becomes a cynical joke. And something to fight elections over… but never do anything about.
And while “all new spending” was paid for by debt
it is somewhat stupid to assume that that HAD to be the case.
Sometimes even ordinary people have to reduce one expense in order to afford another. Or even find a way to make more money. (It has been done). In the case of medical care and SS, if you know that your expenses are going to go up, you might consider actually paying for them.
Do you honestly think even the poor spend all of their money, or even 80% of it on “necessities”? How about the not-rich “urban professionals” who call for tax raises on the rich, “but not on me, i am not rich”?
Or that, for example, a serious minimum wage would not raise them to the level where they could afford to pay for their own retirement and medical care?
“The big problem with Medicare now is that it pays for things “no questions asked.” Doctors like this. They make a fortune. But we, as a society, cannot afford it.” Maggie
My last visit to the doctor resulted in claims of if I remember correctly of a denial of almost a grand from Medicare and also stated I could not be charged for those services. Of course the doctor may resubmit with more justifications of services performed. Medicare does ask questions about services performed.
“If 1/3 of Medicare dollars are wasted, surely we could cut spending by 15%–or more–and keep a lid on it by refusing to over-pay for products and services.” Maggie
I would add fraud to the above. But to do the above we need the end the whinnying about too many government workers; might be too many chiefs and not enough Indians.
As to taxes leave the rich alone, even the poor do not like taxes. But, we could change the tax code that permits subsidizing moving jobs out of the country or putting money in tax havens. Another source of income is an issue that Obama brought up in debate when running; then opponent said you’re doing the same thing.
Or have fair trade and add tariffs that make the only difference in import verses home produced goods the quality of the item.
Let’s say it again, in case you missed it.
Medicare is currently paid for by approx 40% payroll tax, 40% general taxes (or debt), and 20% fees and premiums paid by the “beneficiary”.
Rolling all of this into one transparent dedicated payroll tax would raise the payroll tax from 3% to 7 and a half percent…. while saving you the cost of those fees and premiums when you are old, and whatever you pay for general taxes and “debt.”
cutiing out the 33% “waste” that Maggie cites, or the 50% “Our Sacred Way” medical costs as compared to other advanced countries would bring this back down to about 5% or less “payroll tax.”
but we are too infantile to pay for our own needs in a transparent and efficient manner. we need to hide it from ourselves in “debt” and “tax the rich’ (who will pass the costs back to us in the form of lower wages and higher prices).
well, by all means. let us shout “regressive tax regressive tax” if we are D’s and “socialism, welfare, socialism” if we are R’s.
how much is medical care worth to you? how much is it going to be worth to you when you are old? where is the money going to come from?
“This is definitely not a semantic distinction: Google “universal healthcare” vs. “single-payer.” Single-payer means what it says: the government health plan is the only game in town.” Maggie
Maggie, that’s a good point.
“What you do not say is Germany having two insurances, one public and one private “ run
As an earlier post states Germany’s system is much like our own, expensive and lots of paper work. Just another example of the confusion added when using insurance companies.
run, would add to the above that Germany has been working on universal care for over a 100 years. You would have thought by now they would understand that adding insurance companies only adds cost and confusion. Like you said Obama care has five levels.
beene:
One of the most efficient sources for writing a healthcare coverage plan is an insurance company. They preceded the PPACA and Medicare (I believe) by years.
What is the RUC?
The AMA formed the RUC in 1991 to act as an expert panel in making recommendations to CMS on the relative values of Current Procedural Terminology (CPT) codes using the Resource-Based Relative Value Scale (RBRVS) that was mandated by Congress in 1989. For example, the RUC might propose that a 99214 is worth 2.53 relative value units (RVUs) while a left heart catheterization (code 93510) is worth 40.54 RVUs. RVUs are based on three components – physician work, practice expenses and professional liability; however, the RUC is primarily concerned with the first two (see “Anatomy of a Medicare payment,” and “It’s all relative”). The RUC meets three times each year (February, April and September) for the purpose of developing its recommendations, which are then accepted, rejected or modified by CMS.
More: http://www.aafp.org/fpm/2008/0200/p36.html
Article on reason to replace RUC http://www.replacetheruc.org/. The real issue is the AMA in my opinion as there lobbing and opposing re-election of certain politicians more than 40 years ago.
“One of the most efficient sources for writing a healthcare coverage plan is an insurance company. They preceded the PPACA and Medicare (I believe) by years.” Run
Yes run, originally I think they wrote fire insurance and attend fires to help out.
Healthcare coverage plan is simple. Any illness is covered, any accident that causes illness.
Run remember the only time you need complication is for hiding your intentions. Think of almost any law written by the political class, thousands of pages, always to be defined later by the court.
If the original beneficiaries had actually paid “premiums” in keeping with their expected benefits, I would agree with that characterization. But that was not the case. The original beneficiaries essentially stole the money from their children and grandchildren, who thus feel “entitled” to steal from theirs in turn.
When have wage increases been in step with medical costs? Median wages are barely keeping pace with the overall CPI (and some would say they are not even doing that), and inflation in medical care is higher than the overall CPI.
I would certainly favor that from a transparency perspective. It may not have quite the desired effect, since those paying are not the ones spending, but it would help.
“Medicare is currently paid for by approx 40% payroll tax, 40% general taxes (or debt), and 20% fees and premiums paid by the “beneficiary”.” Jack
Jack, where does one locate the above numbers? If it’s some complicated for formula, the answer would not help.
Jack, as to those who received a free ride in Medicare. We could simply have a claw back of all Medicare payments that were paid to anyone raising their fees more than the CPI of any year.
(I must be using this comments engine wrong. I do not see how to directly reply to a question)
Way back somewhere above 75441 asked me “What was my opinion of RUC?” Answer: I am against faceless government bureaucracies interfering in the marketplace anyway anyhow, whether the basis for their interference is an advisory industry committee (e.g., the thing you call RUC) or a so-called impartial consumer group (e.g., AARP)
Dennis:
You do not have the ability to directly reply like I do. Only those with the shepherd’s hook have the ability. It would be cool if the system allowed it though as you could see the conversational thread. The old Slate’s “The Fray” where I used to write had that format.
The costs for much of the Medicare pharma and hospital supplies (blood bags, etc.) could still be cheaper. As a former pill maker, blood bag maker and pilot-production – ing CD/CF dialyzers I can speak to actual costs. There is room. It is my understanding Congress blocks Medicare from driving costs downward.
To Ms. Mahar
You say “We cannot raise Medicare payroll taxes to fully fund Medicare.”
I am not sure why the next generation could not raise taxes to fund its old-age healthcare insurance system (I would urge them to give a lot of thought as to whether that should be Medicare). The U.S. Congress has raised Medicare taxes substantially over the history of the program, most substantially with the support of my generation (baby boomers) in the early 1990s, and most recently in 2003 and 2010 by means testing premiums and making the higher premiums apply to almost a third of beneficiaries not on Medicaid in 2010 (up from a few percent in 2003). In 2010 Congress also added a tax on Medicare Part C premiums. It also lowered Part B premiums somewhere along the line to cover just 25% of the program instead of 35% of the program. In other words, these sorts of changes are made all the time.
That being said, I got the impression from the person who first raised the idea on this thread that he or she meant in lieu of general income taxes (that is general income taxes would be decreased in proportion to the amount the dedicated tax was raised).
Beene wrote:
“Jack, as to those who received a free ride in Medicare. We could simply have a claw back of all Medicare payments that were paid (on their behalf)…”
That’s going to be a little hard. The only people that truly received a free ride from Medicare were born before 1900 and only a handful are left… literally Those that received an almost free ride were born before 1930 and are now in their 80s and 90s.
Plus all of this was debated at the time Medicare was passed in 1965 and a conscious decision was made to give these generations a free ride unlike the way FDR designed and sold SS with payments beginning in 1935 or 1936 but no payouts until 1940 or 1941. Those born between 1930 and 1945 got a pretty good deal but not a free ride. Those born after 1945 who worked/are working the full 45-50 years as designed are paying their own way (that is, you have to separate the later added SSDI and related Medicare expenses from any calculations)
That was Coberly — I just took his assertion at face value.
However, you can look here, Exhibit 5.
General Revenue: 41%
Payroll Taxes: 38%
Premiums: 13%
…and a few other small revenue sources.
Maggie finally made clear her point about “single payer.” It is a point that needs to be taken seriously: “government run insurance can fall prey to the politicians.”
Meanwhile insurance is already prey to the people who buy the politicians.
I have proposed a system not unlike the way highways are funded… “single payer” but that single payer invites bids from private companies to carry out the actual “construction.” This also is obviously subject to abuse… though i didn’t see any in my state.
the advantage is the government writes the specifications and the private companies compete for the business of doing the actual work. one might hope the private companies would keep the government honest while the government is keeping the private companies honest.
Maggie has had much to say that is valuable. I am not happy with her logic which seems to contemplate “we can’t raise the payroll tax because the rich wouldn’t pay it…. but we can raise general taxes on the rich to pay for it.”
Because “worker paid” with a dedicated transparent tax has worked so well for Social Security for over seventy years… in spite of intense opposition by the enemies of democracy… i prefer a similar solution for medical care. If people can see what they are paying for what they are getting there is a better chance they will provide the political oversight to keep it honest and efficient. I have no faith at all in what looks to me like mindless “tax the rich” schemes.. not because I am so fond of “the rich”, but because that in fact delivers the game TO the rich who own the politicians.
Dennis
I wouldn’t worry too much about “free ride.” Those who got grandfathered into Medicare… as into SS.. paid in their turn for other “programs” that contributed to “the general welfare.” You go to trying to tease out oo paid what for oo you get into a mare’s nest with no solution but plenty of opportunity for self deception and insane greed.
How many of those “free riders” fought for you in the country’s wars, or just gave up a couple of years of their life to the draft?
Jack
thanks. i hope readers are sophisticated enough to see that your numbers are “essentially” the same as my numbers.
Denis
I don’t thing general taxes would be cut “in proportion” to the extent that the payroll tax was raised, but it is my contention that “the same amount of money” would be paid by essentially the same people one way or the other. the advantage of the payroll tax is that it is transparent and looks more fair to most people, and certainly a more reasonable way to pay for inevitable expenses that will occur late in life when most people no longer have the income they had when they were young and “didn’t need” the care.
I am a little uneasy about “means testing.” Certainly some adjustment needs to be made for those less able to pay. But a pretty straightforward “percent of income” is easier to calculate and far less invasive and less subject to gaming than “means testing.”
For those whose income is so low that even a “percent of income” presents a serious burden, other “means tested” welfare could be used to make up the difference, but the principle of paying our own way as much as possible is too important to lose in a vague “let the rich pay” fantasy. The rich won’t pay, and if the workers can’t see how they are paying for what they will either drift into a welfare mentality (i have seen it) or into its opposite: resentment of the poor.
and with “worker paid” when workers see what the actual “cost of living” is when it accounts for eventual retirement and medical costs in old age they will not put up with a “minimum wage” that does not cover these costs.
and by keeping that part of “the workers money” in the hands of “the government” it will keep it out of the hands of their landlords.
and car dealers.
Jack
calling “pay as you go” stealing from your grandchildren who will steal from theirs just reveals an ugly mind-set.
how about “i pay in advance for my retirement” and “my grandchildren pay in advance for theirs.” their money is used directly to pay me back the money i paid in advance.
yes they pay more than i paid, but they do it out of a higher income… made possible by my investments in the productive capacity of the nation.. and they will have higher costs when they retire than they actually paid in in their turn.
this system is no different from any other “investment” or “savings with interest” except that it is guaranteed against losses by the government… at no cost to the general taxpayer.
your idea that everything has to be accounted on a specific balance sheet to a specific program and no one can be grandfathered in because the only thing that counts in life is specific money for specific “purchase” is simple minded and grossly unfair. those people who got grandfathered in had already paid for other “retirement plans” that got superseded by SS when the old ones failed through no fault of their own.
this isn’t difficult to understand except to those who are still worried about who got the biggest piece of the burfday cake when they were six.
and while those who were grandfathered in got more in benefits than they paid directly to SS or Mediare. Those who “paid for” those benefits got exactly what they paid for when their turn came.
you are complaining because you got to the store too late to take advantage of the “introductory offer” sale, and just know that the price you pay for a can of peas is subsidizing the great deal those who got the introductory price got, is being paid for by you. but you are getting that can of peas at the regular price. the folks who got the sale price take nothing away from you.
unless of course you get out your green eyeshades and calculate the “cost” of the sale to the store and reason, no doubt correctly, that that cost is paid for ultimately by you. and resent it.
dummy comment to activate “notify me” feature.
Adam Smith said much the same thing:
Then what happened to the money you paid?
It is very different. If you die early, you get nothing, and your heirs get nothing. Those are HUGE losses, especially for Blacks, who tend not to live as long as Whites. Black women also take a harder hit than White women, because Black women are less likely to be married and have a share of their husbands’ Social Security benefits.
What “retirement plan” preceded Social Security?
Then who paid for that first can of peas?
Exactly. But tell me, how is it “FAIR” for one group of people to vote themselves a “free” can of peas at the expense of others?
Jack
re Adam Smith
I don’t see how his comment says the same thing as mine. in any case Adam Smith does not really seem to understand what he is talking about here. He assumes some kind of medieval or mideastern bazar economy.
Taxes are what you pay for government services. That does not mean that all taxes are fair or well spent. But it does mean that any argument that leaves out the value of taxes is simply ignorant.
Jack
“then what happened to the money I paid?”
it paid the benefits of those who went before. but money is funny:
while your “cash” went to pay for someone else’s benefit directly, you were recorded with a “credit” that “paid for” your eventual benefits.
if you have a primitive understanding of money, or a NEED to believe that SS is theft, you won’t understand this.
Those who “paid for” their grandparents, got the full value of their payments in the form of their own benefits. And will continue to do so forever, with the proviso that there may be some years where the “interest” on your SS tax IS less than “inflation” … but that can happen to any “investment.”
Jack
“what retirement plan preceded Social Security?”
mostly bank savings. the banks failed and people lost their savings.
other than that there were “welfare” “old age” schemes, poor houses, stock markets, relying on your children..
all of these failed in the modern economy.
“relying on your children” is of course the oldest “retirement plan.” been around since the stone age. SS does exactly the same thing, somewhat reconfigured to work in a modern economy. but certainly that “theft from your grandchildren” is exactly the same. you’d have to ask the grandchildren for the last twenty thousand years if they thought of it as theft. another Bible quote: “Honor your mother and your father.” and Jesus had to remind the “modern” people of his time that yes, it was about the money.
Thing is after the “government” wiped out a generation of children it began to notice that there needed to be another way to provide for the parents, or those who had no children. pay as you go social insurance was the idea they came up with… everywhere. an idea that has been under attack for longer than SS has been the law in America… but one that only the “few and they are stupid” that Eisenhower identified have been fooled by the attack. We are reaching a point where it won’t take more than a few fooled to destroy the whole thing. And you won’t like it.
There is nothing stopping SS recipients from putting the money away for their kids. but if the money is what it takes to eat, the kids werent’ going to get it anyway. And if you are planning on dying early and being cheated out of your “savings,” well, you have worse things to worry about, but at least the kids will be taken care of… by SS. And SS does NOT rob your savings account or vast portfolio.. you can still leave that to the kids.
It is hard talking to someone who has an answer to everything to support his greed.
Everyone– Let me just try to clarify a couple of general points:
On Raising Taxes to Fund Healthcare — particularly long-term care for seniors. I don’t think that we should raise income taxes (on the rich or the middle-class) to pay for health care. We need to focus on other types of taxes. I believe that, we need to raise inheritance taxes and that, like virtually all countries in Western Europe, we need a VAT (sales) tax on luxury items.
Even if we reduce Medicare spending to cut waste–which we’re beginning to do now– we still face a serious problem. Alzheimer’s. If someone who is 65 today lives past 80 he or she stands a 1 in 2 chance of delveloping Alzheimers. And then that person is likely to live another 7 to 13 years, requiring full-time care, 24/7, for most of those years. No one likes to talk about this. And who will live past 80? You and I– upper-middle class and upper-class white Americans.
Why are so many more people developing Alzheimer’s than in the past? Because we’re living longer. Fewer people are dying of heart disease. And among the upper-class and upper-middle class, better diet and exercise means that older boomers are healthier than their parents were. Also, we have stopped smoking.
There is no cure for Alzheimer’s on the horizon. We’re looking at something like the War on Cancer. And Alzheimer’s is only one form of senile dementia. Up until now, daughters, daughters-in law, and spouses took care of many Alzheimer’s victims. But today, that is no longer feasible. (Nor is it fair.) Women work, and families are spread out all over the country. Worse, Alzheimer’s victims are often very angry, very frightened and very difficult. They hit their caretakers. Someone who is not trained to care for them easily becomes frustrated and exhausted.
IN every family, their are long-term festering resentments. The caretaker finds herself thinking “He was always like that. A mean, selfish son-of-a bitch!” This leads to violence and Elder-abuse –even by the most loving caretakers. (In her book, Katy Butler recalls her mother telling her “Sometimes I just hauled off and hit him.”) And she was an extremely kind, strong woman.
Professionals with some background in palliative care need to be caring for these people–either in their homes, or in community homes. (They don’t all need to be in skilled nursing facilities). Someone trained to care for A’s patients can “read” them. Sometmes a patient is in a rage because he needs to go to the bathroom–but can no longer communicate. Sometimes he is too hot. Sometimes he is too cold. Sometimes he has a cramp in his leg–or in his foot. Sometimes he is terribly thirsty–or hungry.
As the numbers explode full-time professional and semi-professional care will cost a great deal.
A much higher inheritance tax could go a long way toward solving the problem, and I think if you asked the children of baby-boomers: “Would you rather give up hopes of a large inheritance or have a parent move in with you, needing long-term care for 8- 13 years, most would gladly give up part of the inheritance. They don’t want to feel guilty about their parents, nor do they want to provide full-time care for them.
I envision phasing in increases to the inheritance tax, beginning as soon as possible, and continuing over 15-20 years. This would give people a chance to get used to the idea, and would give us a chance to build a new Medicare trust fund. Ultimately, we need an inheritance tax that is roughly as high add it was in the 1950s.
But won’t people find ways to dodge the tax?
In the past, many people shifted assets to their adult children in order to avoid an inheritance tax. We now have created a 5-year-“Look back period” — If they shift assets anytime in the 5 years before they die, the money has to be paid back to cover the government -funded care they received (Other than Medicare– Medicare does pay for long-term care.) I would extend the “look-back period” to 10 or 15 years.
The advantage of inheritance taxes, as Europeans realize, is two-fold:
1) They raises money needed to fund social programs and
2) They prevents extreme concentrations of wealth which are bad both for the economy, and for the society.
Today, in the U.S, the middle class is shrinking. We have a an upper class (the top 3%), an upper middle-class (those on steps 90-97 of a 100 step income ladder) and the other 90%. Among the other 90%, those who were once upper middle-class are becoming middle class,, the middle-class are becoming working class, the working class are becoming poor, and the poor have become homeless.
Increasingly people in the top 10% don’t even know those in the lower 90%–they live in different neighborhoods, shop, at different stores, and their children go to different schools. These divisions are renting the social fabric.
This was not always the case. I remember the 50s and 60s when the gaps between classes were much narrower (as long as you were white, Blacks were, of course, a separate class). At that time, many more Americans cared about the poor, the unemployed, and families who fell on hard times. But, as J.K. Galbraith junior points out “Sometime around 1982, Americans lost interest in the poor.” Reagan had a lot to do with this. And this is when the gaps between classes began to widen.
On the VAT tax: I envision a federal sales tax on expensive items (restaurant meals over a certain price per person, clothing over a certain amount per item, expensive wines and alcoholic beverages, automobiles that are less than 3 years old and cost over a certain amount, second homes, boats, first-class airfare, hotel rooms that cost over a certain amount etc. etc. Canada has a VAT. When my daughter was in college there I often shopped there and thought it was very fair.
Finally, let me stress, I think we can take care of Medicare’s current needs simply by cutting the fat.
We pay far too much for everything-for every pillow and every pill. Specialists are over-paid, and we have too many specialists–not enough primary care docs providing preventive care. (Though we are expanding the ranks of nurse-practicioners and in the future they will be providing much of our preventive care and chronic disease management.)
In addition, as I explain above, we over-treat– way too many surgeries, tests, etc. But this is changing: under Obamcare we will be paying for value, not volume. Providers will be held accountable for outcomes. We will stop paying for some useless procedures and treatments.
Increased use of palliative and hospice care will lower the cost of end-of-life care.
.
You are both saying that, if direct taxes on income increase, wages will increase accordingly.
Jack–
What retirement plan preceded Social Security?
Older people often starved to death. Read Grapes of Wrath.
Starvation was a huge problem in the U.S..
When I was a very young child (pre SS), I recall seeing elderly people in the grocery store buying cat food. My mother explained to me that they didn’t have cats. The children of the elderly cannot care for them if they are also poor.
Jack
back to the can of peas. “how is it fair for the store to give a free can of peas to some customers at the expense of others” i htought we and Adam Smith settled that issue.
As for SS, or even welfare, you may be sure that none of this is “at the expense of others.” If the only purpose of welfare was to keep the next generation of soldiers alive so when we need someone to die for our sacred way of profits, they’d be there.
And you never did explain how you profited from the welfare paid to Michael Faraday’s parents.
Try to settle in your mind that taxes are what you pay to live in a country that protects you ability to get rich. You may not like what some of the taxes are used for. I certainly don’t. And you are free to complain about that, and vote against it. But you cannot rail agains the whole idea of the government collecting taxes and spending some of them on “someone else” without sounding like an ignorant fool with an ugly heart.
There I go too far. I don’t mean to appeal to your sense of charity.. but to remind you that you elect a government that does what it can to secure YOUR welfare. It is ungracious of you to complain that some unfortunate people receive more in direct cash benefits. You get benefits that are worth much more.
And yes, I DO believe that in general people are too ignorant if not stupid to make these decisions for themselves. Most people cannot even make wise decisions for their own personal affairs. I don’t think they could run a country…. or live without one for more than a day and a half.
Jack
and while we are on Bible studies, this is from Deuteronomy:
“Lest when thous as eaten and art full and has built goodly houses and dwelt therein…
Then thine heart be lifted up
and thou say in thine heart My power an the might of mine hand hath gotten me this wealth…”
While the tax system and the religion have changed somewhat from that time, the principle remains, and sickness of heart is what it always was. Your problem is not with the Constitution, or with theft by the government, your problem is that your heart is sick and you have chosen to worship Mammon.
When you can free yourself from that, we might have some chance to improve the ways we “help the poor.” but we are not going to get anywhere as long as you and your ilk stand their shouting at the “tax the rich” ilk… and they shouting back at you, while the real criminals go about stealing your money as well as everything that makes life worth living.
Dear “tax the rich” ilk
It’s not that i object to taxing the rich. that’s where the money is.
what i object to is having no other ideas but “tax the rich.”
On Germany and health care
I urge everyone to read this very good story about German health care. As the author points out, Obamacare is going in a direction where it will become very much like Germany’s system.
Germany has also borrowed a couple of ideas from our HMOs. Germany’s system is very efficient. (Read the article.) Also, at the end of the article, see the section on Maryland’s health care system.
At one time, many states had a system like Maryland’s–then Republicans s took over state houses and governor’s mansions, and they, of course, believed that “market competition” would control costs.
In those states, health care costs have soared. Maryland has done a much better job of managing them.
Finally, a few years ago a German pediatric oncologist who had read my book came to the U.S. and wanted to meet me. He had been hear for about a year–on a fellowship–and he talked about how dismayed was by the American physicians he met here.
“All they talk about is Money, Money, Money.” he said. He was a genuinely nice man, and not nasty about American doctors–just amazed. He had hoped to have interesting conversations about medical research, oncology, caring for children. But no. He was paid much less than he would be in the U.S.– and was perfectly content.
Sadly, the fact that we are a Money-Driven society is what has made our healthcare system so expensive–and not nearly as good as it should be. Greed–pure and simple–exists, not just in the drug companies, but in our hospitals and among our doctors.
All of those fellows doing colonscopies know that many are not necessary. In many case, there are better alternatives. But colonoscopy has become a Big Business.
It will take time to move away from the notion that medicine is a business. Even if we ultimately have a public option, we will have to regulate doctors’ fees and insist that they practice evidence-based medicine. Otherwise, nothing will change.
Back on thread
what I object to is Maggie, for example, saying in one breath “we can’t raise the payroll tax because the rich won’t pay it”
and in the next “lets raise the inheritance tax to pay for it” presumably on the idea that those rich, being dead, won’t notice.
but whatever we do lets not think of finding a way so “the poor” can pay for their own medical care in a way the rich can’t screw them.
nah, that’s so old new deal.
Maggie
my comment that appeared after yours was written before i read yours.
i want you to know that in spite of my disagreements with you, i think you are making a valuable contribution and i am on the whole on your side.
Everyone– IF you’re interested, here is the URL for exc
article on German healthcare http://www.theatlantic.com/health/archive/2014/04/what-american-healthcare-can-learn-from-germany/360133/?single_page=true
Coberly–
Thank you. I don’t expect people to agree with everything I say
But I do appreciate it when they think about what I write, and perhaps learn from some of it.
On taxing the rich: I believe that income taxes are of limited value because they still leave wealth largely un-taxed.
And as concentrated wealth piles up, it can create real problems. For instance it leads to stock market bubbles and real estate bubbles.
What I like about the VAT is that it taxes some of the money that very wealthy retirees spend. (This is why I prefer a luxury VAT-.)
Most are no longer paying income taxes, and pay reduced taxes on capital gains.
On inheritance taxes–while the wealthy resist higher income taxes, they are more likely to accept inheritance taxes because the Person who Earned the Money (or won it in the casino that we call the stock market) is not paying the tax. His heirs–who didn’t earn it–are paying it.
What’s interesting is that polls show that the generation who would be losing part of their inheritance is not as opposed to inheritance taxes as older Americans are.
The whole idea of inheritances is becoming a somewhat old-fasioinied idea. Most people realize that their parents will have to spend most of their money on their own health care. And if they live too long, their adult children will wind up taking care of them. They would rather inherit less.
Their parents (older Americans) ardmore likely to resist the idea of inheritance taxes because they fear that if they don’t leave something to their children, they won’t remember them.
But gradually, people are getting over this idea.
Jack
before I leave you alone, at the risk of making some people think I am calling for a theocracy..
when Jesus said “render unto Caesar that which is Caesar’s…” he was not advising you to decide on your own authority which of Caesar’s taxes were “legitimate” under the American costitution…
nor was he talking about money when he said “render unto God that which is God’s”
he was advising you earnestly to avoid worshipping money…. which is what you do…. because it is bad for YOU.
he did recommend “charity”… that is “love” of neighbor… even the hated (worthless) Samaritans… because it would be good for YOU… without regard for your chances of “heaven… as well, of course, for your neighbor.
we… you and i… live in a time and place where personal “charity” (the donate some spare cash kind) will NOT solve either your personal need for charity (love) or the country’s need for some reliable provisions for “the poor”… note, the country’s NEED for providing for the poor. we really do need to see that they are taken care of, though of course some ways work better than others.
you are free to give alms in your own way to your own favorite “charity” (organized begging), just as you are free to invest in your own provisions for your future health care or retirement…. but you are not quite free… we won’t let you… to ignore your elected representatives demand for taxes to pay for some things you don’t understand.. including giving some of that money to people you think are lazy and too stupid to deserve to live
in any case, Jesus would advise you to just pay the taxes and forget about it, and then go do something “for god,”
just as Paul… in a much misunderstood passage… advised slaves to be good slaves. He was not endorsing slavery. He was just giving people who found themselves slaves in their time and place the best way to live… sanely…. under those conditions.
you need to shake yourself loose from your terrible fear that some underserving person is going to get some of “your” money.. and/or your undying resentment of being “forced” to give up what you love most (money) by a hated authority.
trust me, this is part of a growth process we all have to go through.
How are Ayn Rand and Michael Faraday getting along?
Maggie
I have no objection to taxing the rich… by whatever tax seems the most likely to address both budget problems, fairness issues, and ease of collection.
But I do object to “tax the rich” as a solution to retirement and health care problems to the extent that the people can and should pay for those things for themselves.
And I object to calling for “tax the rich” at a time when the political climate almost guarantees that that call plays into the hands of Peter Peterson and is more likely to deliver benefit cuts if not “means testing” which will be the death of Social Security.
FDR knew what he was doing when he insisted upon “worker paid.”
First, how ’bout you post a link about Michael Faraday’s parent’s being on welfare so we have some common frame of reference? As for Ayn Rand, I neither know nor care why she choose to take Social Security. Ask her when you see her.
———————-
So we have established that there was no retirement plan prior to Social Security that failed. Moving on….
Yes, children have taken care of their elderly parents for thousands of years. In fact, my mom is now living with my sister, and a good friend has both of his parents-in-law living with him. Is that STEALING from the children. No, because they do that of their own free will. That’s called GIVING. THAT is honoring your mother and father. Making someone else pay for your parents, so you don’t have to have them living in your house, is NOT honoring your mother and father.
Seriously?! Those poor Blacks, why should they worry about that FIFFTEEN PERCENT taken from them every paycheck? SERIOUSLY!? No, their children are NOT taken care of by Social Security when they die at age 63 — unless they had them in their fifties. Only minor children get anything. (BTW, that part actually IS insurance. Only those who paid into it were thus insured, so that part of Social Security is not really relevant to the conversation.) And yes, that fifteen percent could have been in the bank instead. (And you call ME anti-poor? You say I sound like an “ignorant fool with an ugly heart”?)
Now, Coberly, I did not ask you whether there were government expenditures you didn’t like, I asked whether there were any you thought were unconstitutional.
Care to take a second swing at that ball?
And now we reach the crux of the matter:
Wow. And you call ME anti-poor? Well tell me, Coberly, how can these people, whom you think are too ignorant and stupid to make decisions for themselves, possibly be smart enough and wise enough to elect those who will make their decisions for them?
It is far better than the organized stealing you prefer.
They essetially buy votes with that money. But at least you have gotten past calling it “ASKING”. Progress.
YOU are the one who called them STUPID, Coberly, not I.
Jack:
I do not believe anyone here is arguing for increasing the age requirements for Social Security as it does nothing going in the present (which is nothing), exposes people who do physical labor or hazardous labor, etc.
Coberly said around noon Friday September 19:
“I am a little uneasy about “means testing.” Certainly some adjustment needs to be made for those less able to pay. But a pretty straightforward “percent of income” is easier to calculate and far less invasive and less subject to gaming than “means testing.” For those whose income is so low that even a “percent of income” presents a serious burden, other “means tested” welfare could be used to make up the difference, but the principle of paying our own way as much as possible is too important to lose in a vague “let the rich pay” fantasy. The rich won’t pay, and if the workers can’t see how they are paying for what they will either drift into a welfare mentality (i have seen it) or into its opposite: resentment of the poor.”
I think you are requesting (or opposing) things that already exist. There is already very serious means testing in Medicare on both sides of the equation.
The top 10%-15% of Medicare beneficiaries by income now pay higher Part B and Part D premiums than the rest of us and under PPACA that grows to close to 25% because the threshold for paying more is not indexed. Of course that is not to mention that the Medicare payroll tax paid by someone making $500,000 a year or more is 10X higher than someone making $50,000 a year but they both get the same benefits.
On the low side, Medicare Part D is free or almost free (and drug co-pays are nominal) for anyone under 150% of FPL in retirement with a not too stringent asset test. Medicare Part B is free for anyone below FPL and the threshold is higher in some states (but the asset test is more stringent than with the Part D free premium)
Dennis:
It might be better to say it this way. The first level of means testing for Part B is at $170,000 for a couple. This would incorporate an additional charge for Part B (surcharge of $42) and Part D (surcharge of $12). For a single person the means test is at $85,000 with the same results. Filing Jointly or filing as a single person. If married and filing separately it gets trickier and a bit more expensive.
The more you make, the more you pay in a surcharge to the premiums.
Dennis
yep, i am opposing something that already exists. but “means testing” means somethng a little different than tax the rich more than the poor. means testing is when you have to go into the government proctologist and he checks your assets to be sure you qualify. a straight “your income is X so you pay Y is not means testing.
see next reply to Run
Run
yep, and that’s stupid. if you are going to tax the rich you should at least hide it in general taxation. making them pay much, much more for “your” insurance is sure to make them hate the whole idea of “medicare” or “social security” or any government mediated health care.
i am sorry that you won’t understand what i mean by this, but i put it out here in case anyone wants to think about it.
Jack
let me claim to be some kind of expert on human cognition: human beings are no where near as smart as they think they are.
but if you think that YOU are qualified to make the decisions for an empire, then you are stupid in a way that i did not mean, but do now.
you are qualified to have an opinion and to “tell where it hurts” and your opinion will be rolled up into the 300 million other opinions and taken into consideration for what it is worth.
I don’t think that the experts are always right, that’s why we have elections and an adversarial style of government.
but you are too stupid to understand what i mean. and it really is not worth my time to keep trying to explain things to you.
They are far smarter than you think they are.
And you are so qualified? You are the one who wants to take all those decisions from people because you think they are too stupid to make those decisions themselves.
Yes, elections involving those people you think are too stupid even to manage their own lives. So tell me, how is it you think these people are too stupid to make decision about their own lives, but are smart enough to decide who will make their decisions for them?
That came out of left field. But it is the poor, mostly, who do physical labor. The poor have shorter lifespans. Particularly Blacks. Social Security is patently unfair to them, particularly Blacks, for that very reason.
Perhaps we should look at paying benefits on an annuity-type basis, where one’s benefits are based on life-expectancy.
Coberly–
Let me just say that I found your September 19, 2014 6:35 pm reply to Jack hilarious.
(This is the reply that begins: Jack, before I leave you alone, at the risk of making some people think I am calling for a theocracy.
“when Jesus said “render unto Caesar that which is Caesar’s…” he was not advising you to decide on your own authority which of Caesar’s taxes were “legitimate” under the American constitution . . . “nor was he talking about money when he said “render unto God that which is God’s”
“he was advising you earnestly to avoid worshipping money…. which is what you do…. because it is bad for YOU.”
It seems to me you have hit the nail on the head: Jack’s worship of money explains his overriding fear that someone else will get something that they don’t deserve.
I haven’t tried to reply to most of Jack’s comments because as I see it, his world view is insane, and I have little hope that I could penetrate that fog of insanity. But I just wanted to know that I thoroughly enjoyed the wit of your reply.
Does not the follow seem like the Obama care?
Medicaid rely on the same bait-and-switch: They use a reform to disguise a cut. In Medicare’s case, the reform is privatization. The current Medicare program would be dissolved and the next generation of seniors would choose from Medicare-certified private plans on an exchange. But that wouldn’t save money. In fact, it would cost money. As the Congressional Budget Office has said (pdf), since Medicare is cheaper than private insurance, beneficiaries will see “higher premiums in the private market for a package of benefits similar to that currently provided by Medicare.” – Rebecca Wilder
See more at: http://angrybearblog.strategydemo.com/?s=Pace+from+The+Fray#sthash.dvq25HZQ.dpuf
Maggie, I think the greedy idea that you have the right to what others have worked for is heinous. Your Weltanschauung is based in jealosy, covetousness, and theft.
Do you, Maggie, also think as Coberly does, that most people are too stupid to make decisions about their own lives?
Jack
it’s unfair of you to ask Maggie that question since she would have no way of knowing what i meant any more than you do.
does “most” mean 51% or 99%?
and what is the difference between what I said, and what you say about the reasons poor people are poor?
hint: there is a difference.
i am not arrogant about it.
Jack
SS benefits are “based on an annuity basis.”
Thing is everyone is treated “equally,” with no false effort to guess the life expectancy of each person individually. Works out, though, because the rich get a lower percentage return on their SS “investment” on a monthly basis but live longer. The poor get a much higher percentage return on a monthly basis but don’t live as long, and are more likely to “collect” disability and survivors benefits.
Thing is, SS works very well. And your plans to make it better are based on ignorance. And that is not an insult. It’s just a fact: you dn’t know what you are talking about. It’s when you insist you know what you are talking about that ignorance turns to stupidity.
And that’s not an i,q, thing. For what its worth I have watched many people make bad decisions in their lives, even me. Some of them had high i.q.’s. “Science” has noted that outside their own fields “experts” are no better at problem solving than the average sixth grader.
Einstein made a mess of his personal life, and John Von Neuman, one of the “smartest” people who ever lived thought (it is said) that it would be a smart idea to atomic bomb Russian before the russians could get their own atomic bomb.
That’s what I mean when I say most people are “not smart enough to manage their own lives.” And you know it’s true. You just like to be shocked because I said it and saying it is bad manners.
But however good people are at managing their own affairs, none of them, certainly not you, is “smart” enough to manage the affairs of a great empire. That ‘s why we rely on “experts” and committees and, god help us, elections.
But you can’t understand that.
Jack said
“Yes, elections involving those people you think are too stupid even to manage their own lives. So tell me, how is it you think these people are too stupid to make decision about their own lives, but are smart enough to decide who will make their decisions for them?”
Actually Jefferson agreed with me. He thought it better that people did not have special “education” before they voted. Sufficient for them to tell the people they elect “where it hurts.” Far more likely to be reliable than the opinions they get from being “educated.”
I guess Maggie is also too stupid to comprehend your superior intellect.
You just think YOU should make their life choices for them, because they are too stupid to do it. But that’s not arrogant, just like your thinking you have the right to what others have worked for is not greedy, but other’s thinking that people have the right to what they worked for is greedy?
If “the rich get a lower percentage return”, how is “everyone… treated equally”?
People can now expect negative “returns” on those Socail Security “investments”. Yeah, that’s working very well.
And yet you think Emperor 0bama is smart enough to manage the Imperium and the affairs of individuals. Yes, you think people are too stupid to choose the “right” light bulb, buy the “right” cars, buy the “right” toilets, save for their retirement, take care of their elderly parents, donate to the “right” charities, etc. After all the indoctrination of the government-run schools, too. But somehow those people you think are so stupid are smart enough to vote? REALLY!?
Jack
SS is insurance. People who have the fire get the check. People who don’t don’t. And yet they are treated equally. This is what you are too stupid to understand.
Nor apparently can you understand that the implications you draw from what I say are what YOU think, not what -I- think.
“People will get a negative return on SS..” NO that is a lie circulated by the Big Liars. They get away with it because they talk about “present value” which depends critically on the phony “discount” raise they chose to produce the “result” they want. The fact is that every one will get back about three times what they paid in. That is a result of the pay as you go “effective” interest. A good bit of that is “inflation” but your ordinary investments have to crack the inflation barrier too, and they don’t always succeed. SS will ALWAYS beat inflation plus the average growth in wages for the average worker. Workers who make less than average over lifetime will get a greater than average “real” interest. And those who make significantly more than average over a lifetime will get a less than average real interest, but still more in real dollars than they paid in.
So once again, you don’t know what you are talking about, but you are very sure you know the right answer.
Please note.. I said most people are not smart enough to manage their own affairs. I did not say that -I- was smart enough to mange their affairs… or even my own. The fact is that all of us live in a kind of cocoon created by the efforts of others over many years, and manage to “live” because for the most part our means of living is handed to us… if not on a silver platter, at least with “simple directions” written in large type.
And yet you think the people who elected “Emperor Obama” are smart enough to vote? [i think they are, but I think you need to have your contradiction pointed out to you.]
Jack, with an intelligent person I might hope to explain some of this and even hope to find agreement. You are too far gone in your “ideology” to even know you are raving.
And note this:
I may think people in general are less intelligent than they think they are, but I do not propose to make people who are “less intelligent” than I am (or your are) pay for it with their lives by being forced to work for “what the market will bear” wages. Which is what Jack is calling for, though he denies it to himself.
After all the poor are really poor because they are too lazy to work. Ask Jack.
No, they are NOT, and YOU said they are not. Those who had higher incomes get a LOWER return, so they are NOT treated equally. Are you too stupid to understand what EQUAL means? Do you get that definition from the same one that defines ASK as “give us the money or we will take it right out of your bank account and sell your house to get it”?
http://business.time.com/2012/08/07/social-security-now-takes-more-than-it-gives/
Since I didn’t actually write that, YOU are a liar by putting it in quotes. (Typical straw-man-building tactic there.) (Or are you just too stupid to cut-and-paste?)
This is exactlywhat I wrote: ‘People can now expect negative “returns” on those Socail Security “investments”. – See more at: http://angrybearblog.strategydemo.com/2014/09/13-of-medicare-spending-is-wasted.html#comment-1506564‘
Obviously, those who live longer might get positive returns, but the expected total return is now negative. Unless you are saying the Associate Press is one of the “Big Liars”.
You think they are smart enough to vote, but not smart enough to live without the government’s making their decisions for them? You don’t see a contradiction there?
Sorry — missed an end-quote on that last line.
When did I say that? Never.
Jack
i don’t think this is getting us anywhere.
i fail to see any distinction between what i said you said about negative returns and what you said you said.
the fact is that everyone will receive two or three times as much as they paid in unless, of course, they die early without dependents. but of course that is one of the “risks” you take with insurance.
and the fact is that two or three times as much represents a “real” return that is in most cases more than the “two percent” of the big liars magical present value bank. but not in every case. for those who have the bad luck of not being poor all their lives, some of their “interest” is used to provide the “insurance” benefit to those lucky people who had the good luck to be poor and get something like a 10% real return on their SS “investment.” and that assumes they live the expected life expectancy. your milage may vary.
as for the AP being “big liars” I suspect they are, but in principle they merely report what the big liars are saying.
there is no contradictioni between being smart enough to vote and smart enough to take care of themselves without the government looking out for them.. that doesn’t mean the government brushing their teeth, but it might mean the government stopping bank fraud. and in some cases it means “welfare” and in many cases it would mean some interference with the free market to prevent the abuses of power that go with being rich.
My computer screen just turned green. Looks like a government check.
Jack… I don’t think you even know what YOU are saying, much less what I am saying. I need to go do something useful.
What grief do you have with the two percent figure used? Do you think it is too high or too low?
Jack
i already answered that. It’s a dishonest use of “present value.”
and now i really do have something better to do.