Remember when Romney/Ryan and the Republicans accused the President of taking out $700 billion worth of Medicare benefits? Now they are salivating at the chance to do something much, much worse. And the “very serious people” (VSP), the David Brooks’ and Thomas Friedman’s of the world, who love to experiment with people’s lives are backing the GOP up on the idea. Have you ever seen a cat play with a mouse? They can be pretty laid back and very unconcerned about the mouse’s welfare. That’s what it is like watching the VSP’s on TV…they’re just sitting back and playing around with us, with ideas that affect us tiny people, all while mugging a serious face while spouting certain catch phrases that make them sound like genuine experts.
These “gen-u-wine” experts are weighing what to do about Entitlements and their ideas are being seconded by Congressional Republicans. The Republicans believe that to cut expenses and reduce our national deficit entitlements must be “reformed”. What’s an entitlement? Generally speaking it’s anything you have a right to receive. In the case of government benefits, it’s any monies you qualify for as a result of your circumstances. Below is a chart that summarizes (and simplifies) what entitlements there are and their differences.
|Supposed Entitlement Programs
|| Who administers?
|SSI (Supplemental Security Income)
||**> 42 million
|SSDI (Social Security Disability Insurance)
||Disabled > 6 months
||> 8 million total
|SSR (Social Security Retirement)
||Insurance via a Trust Fund
||Paid by us
||> 67 years old and retired
||> 33 million
||Paid by us
||> 65 years oldDisabled, any age
||40 million +8 million
= 48 mill total
||Fed and State
||Average > 50 million per year
||Fed and State
||Paid by both employers and by us*****
||Unemployed but looking
||Approx. 8.5 million
Note that many people qualify for multiple programs. For example, in 2008 there were 9.2 million people who qualified for both Medicare and Medicaid funds. These people tend to be among the most critically ill and vulnerable in our population. Many of the elderly in assisted living and nursing homes rely completely upon BOTH programs to make their care possible. There are other ways these programs either overlap or effect one another. If someone reaches the end of their unemployment compensation and they fall below certain poverty levels they qualify and most likely will turn to the SSI program.
The reason I bring this up is because ANY change to one program has ripple effects on the other programs. And that ripple effect is a true “multiplier effect”. For instance, a change to the eligibility age for Medicare from 65 to 67, which is what Congressional Republicans are proposing now, would on the surface save the Federal Government $5.7 billion in the first year. EXCEPT there are some ripple effects that they conveniently fail to mention. A couple hundred thousand seniors aged 65 and 66 would lose Medicare benefits. For every dollar saved by the Federal Government, it will cost those seniors and the rest of us $2. The only people who would benefit would be private health care businesses (private insurance companies, doctors, etc), who would no longer be forced to accept set wholesale rates determined by the Medicare plan and could then charge these unfortunate people anything they want.
Not only would their healthcare costs increase, they would become a greater burden to society (not that old people are a burden but if they are pushed into poverty, we will all end up paying for them, one way or another). The net result would be about $11 billion more being spent. So yeah, they want to save $5.7 billion but spend $11 billion to make that happen. Ummm, that’s a $5.3 billion loss…over a decade we’d end up in the hole for these reforms to the tune of about $60 billion.
That’s some crappy math right there and the VSP and Republicans really, really don’t like math. Because the math also points out who this kind of change hurts…again the most vulnerable among us–it would not affect the wealthy in any way, shape or form. Heck even if these supposed reforms return us to a Recession, the 1% are predicted to come out of the whole thing in good stead. After all, corporations and the 1% saw their profits increase about 38% while the rest of us were decimated in this most recent Recession.
Here’s some other things that the VSP and the Republicans don’t want you to know:
- Social Security Retirement (SSR) is NOT an entitlement and it has NOT contributed to past deficits.
- Medicare is only an entitlement IN PART.
- Medicare is already more efficient than private insurance. Spending for Medicare rose only 4.3% whereas Private Insurance rose at 6.5% per year. Only 2% of Medicare’s costs are due to operating expenditures; whereas, for private insurance, it’s more like 17%–a figure that doesn’t even include marketing costs. And this is an estimate because private insurance companies basically won’t publicly reveal with their true budgets are. In local markets, providers have monopoly power. Private Insurance companies, therefore, have no bargaining power and cannot drive down prices. Medicare has been consistently able to bargain provider costs down. Finally, we the public have more control and more transparency over what happens in the Medicare program than we have with private insurers.
- SSR is solvent and will remain so for several more decades. It might need some slight tweaks but nothing major. Once the baby boomer generation peaks out, however, the in/out will be more balanced and it should be fine. But we still need to remain vigilant in protecting this Trust Fund.******
- There are other ways, or a combination of ways, to save money in Medicare besides an across the board increase on eligibility age.
- Lower the eligibility age. We have always known that spreading risk out is what makes insurance possible–the larger and more diverse the pool the lower the risk, the better the return on investment. We also know, for a fact, that Obamacare has already started to slow the rate of increase on health care costs because of this. Expanding Medicare to everyone will increase that effect exponentially. This would lower health care costs but also force us to raise taxes. So it’s not the best solution but it is better than throwing a couple hundred thousand elderly patients to the wolves, turning around and having to help support them via less efficient programs AND increase our deficit at the same time.
- Implement a Public Option and increase the eligibility age over time. The national healthcare exchanges that are to be set up in 2014 as part of Obamacare would have the OPTION to link to Medicare and its payment rates. They wouldn’t be required but would have the OPTION to do this. Many private healthcare providers, who are less concerned with profit and more concerned with actually helping people, will jump at the chance to treat these people and set guaranteed prices. In fact, many are happy to work with Medicare and would be even happier to have more patients on it. It’s good for everyone.
- Keep what’s good about Medicare and fix what’s wrong with it. For example, there is a proposal to cut $716 billion of inefficiencies from the program. The President’s proposal is a legitimate and smart proposal that only makes Medicare a more efficient program. Congress should approve it.
- Means-Test it. There are some limited means-testing going on in Medicare right now but apparently only a tiny percentage of the wealthy pay more for their benefits. This can be phased in over longer periods of time. In fact the President has already proposed these kinds of changes in his 2013 budget proposal. Romney called for means-testing during his campaign–let’s see how many Republicans who once supported it now refuse to consider it. There are those on the left who believe it won’t save enough money and this is probably true. But it could be combined with other measures to increase savings. It should be on the table at the least.
- Provide less benefits for the wealthy. This is the opposite of means-testing. If you don’t want them to pay more, you can simply offer them fewer benefits. They certainly don’t need them and most will never use them. So this is an option where grandma doesn’t have to get kicked out of the nursing home but Warren Buffett won’t have to pay more for the free prostate exam coverage that he doesn’t need. Sounds like a fair trade to me.
Are you starting to get the picture? A portion of what we call entitlements simply aren’t entitlements–they’re trust funds. Trust funds like SSR shouldn’t be touched in a major way. So tell your representatives and senators to keep their mitts off of it. Also, these programs are large, complicated programs that affect up to 20% of the U.S. population directly and the other 80% of us indirectly. Proposing simple solutions to complicated problems looks good on a bumper sticker but it isn’t smart governance.
We need people who not only understand these government programs, but understand that sacrificing those in the middle class and the poor should not be an option in order to protect the wealthy from paying their fair share of taxes. And make no mistake about it. If they raise Medicare’s eligibility age, that’s exactly what will happen–the middle class elderly who needed Medicare to maintain that standard of living in their retirement years will no longer have that–more will fall into poverty, their health will get worse and everything will end up costing everyone more.
But the Very Serious People think that suffering and sacrifice is the only true measure of a good deficit reduction plan–but it’s the suffering of the dirty masses from whom they are so far removed. Always beware wealthy TV personalities and Politicians who talk about “sacrifice” and “austerity” through drastic across the board solutions. On the surface they sound reasonable and they’re easy to understand–only problem is they won’t solve the problem. Indeed they often only make it worse. This group of “very serious” pundits are the one’s who truly have no skin in the game and they have the rest of us right where they want us–ignorant and vulnerable and scared. We entertain them. We give them status by listening to them and allowing them to become rich and famous for airing their “ideas”. And they get to affect the national discourse–how very thrilling for them. We need to be the ones affecting the national discourse because we ARE the nation.
Call your Congresscritters now. Tell them not to accept the simplest solution but to accept one that will actually work. And stop watching and reading the David Brooks of the world….they’re just playing around with us and our lives.
* indicates whether the recipient’s income affects their qualification for the benefit. In government parlance, they call this “means-testing”, i.e., to receive Medicare it doesn’t matter how rich you are but it does matter with Medicaid, so Medicaid IS “means-tested”
**Most of the stats are from 2009. One should expect these numbers to increase over the last few years and into the future NO MATTER WHO WAS IN THE WHITE HOUSE because 1) we have an aging population of baby boomers who outnumber the rest of us and are turning 65, 2) the national population is increasing, therefore so will the number of those who are disabled—a percentage of the population will ALWAYS be disabled, and 3) we had a major Recession (that was decades in the making).
***The “Sort of” for SSR, is slightly different. Income matters but it is NOT truly means tested. One can receive benefits and still be working, so that reduces your benefits WHILE you work. One can also receive benefits early and work but again, how much you make determines how much your payment is reduced WHILE you work. Once you fully retire and/or are over the age of 65 you get your full payment. This 65 year old restriction is set by Congress.
****this is what they refer to as “matching funds”, where whatever the state gives out in Medicaid, the Federal Government must give the state that much money in return. Really what happens is the State foots the entire bill until the Fed pays out their half. So a State does have to deal with putting out the full amount in the beginning and that is a burden, particularly if a state’s economy is poorly run. Gov. Brewer, I’m looking at you!
***** I’ve worked steadily since I was 14 years old….I think it’s fair to say that I have more than paid my share into various “pay in and get it out later” funds and I have never drawn a penny of that money out (and God willing, I never will have to). There are few people that get more out of the system that they put in. Not the mythical welfare queen but the very real white male who hasn’t worked near as long as I have, who is terrified of “soshulism” without acknowledging that socialism is the only thing keeping his bloated head above water. These individuals fail to acknowledge the largesse of people like me…a liberal who has worked her ass off the majority of her life so they can get Medicaid or SSID, etc. If I see one more sign or hear one more idjit that says, “keep your government hands off my Medicare” I think my head will explode. Just shut your piehole, really just shut it.
******We can’t let Wall Street get their greedy hands on the money in that Trust Fund for private investment. I mean, the market, that they control has decimated our 401Ks (the ones lucky enough to have them) and conservatives have destroyed traditional pensions, so to let that group of vultures get a hold of Social Security Retirement funds would be national suicide.