INTELLIGENCE SQUARED DEBATE OFFERS LITTLE IN THE WAY OF ACTUAL INTELLIGENCE2

by Dale Coberly

INTELLIGENCE SQUARED DEBATE OFFERS LITTLE IN THE WAY OF ACTUAL INTELLIGENCE

I am reading a short article on the Intelligence Squared debate I previously referred to in Social Security For the Young. It turns out they were more concerned with “insurance” than with Social Security.

But they don’t seem to understand the idea of insurance. The “for” side of the debate resolution: “Commitments made to seniors decades ago…saddle our children with unmanageable debt…” neglected to mention that Granny paid for those “commitments,” and there is no “debt,” manageable or otherwise. But granny didn’t get much help from the “against” side. Here are excerpts from the article here.

One shocking statistic is that 37 percent of those who came of age in this millennium are unemployed,” Rosenkranz said. “When consumers lack the confidence to spend, when businessmen lack the confidence to invest and to hire, it is the young that suffer most. The health insurance debate focused on the uninsured. But think for a moment about how health insurance is priced. Almost everywhere the young pay the same premium as their more illness prone elders. A massive subsidy for the old paid for by the young. Tens of millions of young people quite reasonably said no thanks to health insurance until the government mandated that they say yes.

The motion was that the young are being asked to sacrifice financially for the entitlement programs of the elderly, and the Conservative panelists argued in favor of that motion.

Arithmetic still matters,” Zuckerman began. “Medicaid now pays for both health and long term care for roughly 55 million Americans. It finances more than one third of all births in the United States, and pays the cost of almost two thirds of the people in nursing homes. The federal government underwrites 50 to 77 percent of the cost, depending on the income level of each state. Even so, Medicaid is the second biggest and fastest growing category of state spending. Costs are up more than 60 percent in the last five years and are expected to exceed $450 billion this year and to keep growing by about eight percent annually for the next decade. In the next — by the mid-2030s, the 65 and over population will nearly double, and health care costs, which have been rising far faster than worker productivity since the end of World War II, may be completely out of control, resulting in a tidal wave of federal spending.

But the Liberal camp did not see America’s entitlement programs as something that needs significant renovation.

The elderly used to be the poorest group in American until in 1926 the farm states where the Depression started began Social Security, which has then spread to a national program by Roosevelt in 1933,” Dean argued. “So this is a core program. We just need to make it work and we just need some mild tweaks. Health care needs a lot of tweaks, but the whole system needs tweaks, not simply Medicare. And we should stop victimizing Medicare for the sake of keeping our taxes absurdly low. The fact is people need to pay their fair share in America, and the Bush tax cuts need to sunset. You know, when the taxes were at Bill Clinton’s rate, the economy was a whole lot better than it is now. And I wouldn’t mind going back to those taxes and paying my fair share at all.

Beginning with the fatuous remark by Zuckerman that “Arithmetic still matters” it seems to me that neither side understands what they are talking about.

Arithmetic only matters if you understand the problem you are “solving” in the first place.

I doubt very much “the young” pay the same for private health insurance as “the old.” But in the case of Medicare, and less directly Medicaid or any government paid health insurance, the whole point is that THE YOUNG WILL BECOME THE OLD. It makes more sense for them to pay a small premium, while they are young and healthy and working, over a long period of time, so that they will have paid in advance for health care needs that will come when they are old and sick and not working. THAT IS THE WHOLE POINT OF “INSURANCE.”

And that is the whole reason that government paid insurance is “better than” private insurance. It just is not possible for a private company to pay for health care forty years after the premium was paid in. Government plans, whether explicitly “pay as you go” plans for which the insured person pays directly, as Medicare is in part, or just a general “we are all in this together” plan where “on average” younger workers are “paying for” older people out of general taxes… but will be paid for in their turn when they become older… can manage this kind of infinite “pay it forward” financing with no problem at all. No problem except for the political liars who pretend that the young are bearing the burden for the old.. as a trick to fool the young into voting for someone who promises to lift the burden… and leave them to the mercies of the free market when they get old and sick and out of work.

The fact that costs are going up is not an argument FOR cutting your insurance. In fact it would be insane to CUT your insurance because you think costs are going to go up. With pay as you go financing the increased costs will be to some extent subsidized by the “next” generation… but that generation will have its own increased costs subsidized by the following generation. Moreover each generation will be richer than the last, making it easier for them to pay the increased costs. This is not a Ponzi scheme, because each generation will get the same good deal as the last…and it can go on forever. In fact, it’s the best deal “the young” can hope for.

Unfortunately Howard Dean’s remarks, as quoted here, don’t seem to address this simple fact. Rather he offers a kind of vague “we need to pay taxes to save the program” which is true, but doesn’t really help anyone understand why. or what. or how.

Go back to what Rosenkranz said at the beginning of the excerpt: “When consumers lack the confidence to spend, when businessmen lack the confidence to invest and hire, it is the young that suffer most.”

And what does Rosenkranz think will happen to consumer confidence, and ultimately to business confidence, when young people finally notice that without Social Security and Medicare they are looking forward to an old age that is desperate,poor, nasty, brutal, and short?

I would add an entirely personal comment: The purpose of arguments like “honoring commitments to granny… impose intolerable debt on the young” is three fold.

First, encourage “the young” to continue to believe they will never get old.

Second, take the young despise the old, and everyone else: “we don’t owe them anything.” We are all proud, heroic, individuals. We don’t need “cooperation”, much less kindness.

And third, enable the young to tell themselves that “commitments” don’t matter. Not just vague promises here, but commitments to give people what they paid for.

Someone more old fashioned than we allow ourselves to be would say this is the way to a society of anxiety, pain, and misery. Pleasures, perhaps, for the “winners,” but no happiness at all, for anyone, win or lose.