Speaking at a Third Way event earlier this week, House Majority Leader Steny H. Hoyer (MD) had this to say about the deficit:
“On the spending side, we could and should consider a higher retirement age, or one pegged to lifespan; more progressive Social Security and Medicare benefits; and a stronger safety net for the Americans who need it most. “
On the face of it, lifting the retirement age makes sense. Americans are living longer, so they could retire later and still enjoy their golden years.
Except—only some of us are living longer.
A white female born today can expect to live 80.6 years. By contrast an African-American male born today can expect to live to be 69.7. Lift the retirement age, and he can look forward to perhaps two or three golden years—after contributing to Social Security his entire working life. Lift the age when he becomes eligible for Medicare, and he’ll probably be suffering the final stage of a chronic disease before he qualifies.
If you look at older Americans, the gap in life expectancy narrows. An African –American male who make it to 55, has a higher chance of living past 67. By surviving to 55, he has dodged many bullets .(If he lives in an unsafe neighborhood, this may be literally true.) But even later in life, a substantial difference persists. For example, the death rate from age 62 to age 65 for African-American men is over one and one-half times that of white men (8.9 percent versus 5.5 percent).
But race is only one factor that determines life expectancy. Occupation also is key. Some jobs are physically grueling. By age 65, the body is wearing out.
As David A. Smith, Director, Public Policy Department, American Federation of Labor and Congress of Industrial Organizations (AFL–CIO) testified before a 1998 hearing on the Future of Social Security before the House Ways and Means SubComitte on Social Security “it is clear that people who spend their work lives scrubbing floors in a nursing home, moving 5 liter engine blocks around a factory floor, pouring steel into a Bessemer mill, or hauling bricks around a construction site can count on a shorter life span and a shorter work life. They are more likely to experience work place injuries and to lack the continued physical endurance necessary to perform their jobs very far into their 60’s. We should not be telling them that they have to postpone retirement or make do with less.”
Yet this is exactly what we would be doing if we lift the retirement age.
Even though, these workers, just like a well-educated office worker, have contributed the same percentage of their income to Social Security and Medicare for 45 years, or more.
We also know that the poor die sooner. Poverty is stressful. And low-income families often have few safe places to exercise, and little access to nutritious foods. (Grocery stores in ghetto neighborhoods often don’t carry fresh fish, fruit and vegetables; if these perishable products are available, they are very expensive.) On average, wealthy Americans live 8 years longer than the poor. Middle-class Americans live longer, but not as long as affluent Americans.
So when policy-makers say “we” are living well past 65, most often they are referring to themselves and people in their social circle. Journalists repeat the argument—again thinking of the people they know.
I am not totally opposed to lifting the age when Americans become eligible for Social Security—though this not the time to do it. We are in the middle of a recession. As I explain here, squeezing our most popular social programs is not the way to lift consumer confidence, or strengthen the economy.
But in the future, if we decide to raise the retirement age, we should take life expectancy into account. Both workers in physically demanding occupations, and low-income workers should be able to retire earlier. Some adjustment should be made for workers coming from racial or ethnic backgrounds with a shorter life expectancy. In other words, I’m suggesting that retirement age should be “indexed” to life expectancy.
Would well-educated, more affluent Americans object if they had to wait until they were 68 –or even 70—to collect Social Security while others began collecting, as they do today, sometime between 62 and 66?
Probably some would. On the other hand, many of us will continue working until we are 68 or 70 anyway. Those of us who are lucky enough to have jobs that we love will go on working as long as we can. And I would have a very hard time begrudging someone who spent his or her life cleaning offices, working in a coal mine, or scrambling to support a family on $25,000 a year, if they began collecting Social Security before I did.
Making Medicare and Social Security More “Progressive”
When Hoyer speaks of making these programs more progressive he is suggesting either than wealthier people should pay more to support these programs, or that benefits should be “means-tested” with people of greater means receiving fewer benefits on the grounds that they don’t need public money.
Begin with how we pay for Social Security. Today Social Security taxes are levied on the first $106,800 of income. Any earnings above that amount are not taxed.
Some would say that Americans earning over $106,800 should be taxed on more of their income. But under the healthcare reform legislation that the president just signed, Congress hiked Medicare payroll taxes for individuals earning over $200,000 (over $250,000 for couples filing jointly.) This is not the time to lift Social Security tax as well. In fact, there is no need to rush to raise Social Security taxes this year or next. As I explain here, we have plenty of time to make the small fixes needed to make the program solvent over the long term.
Down the road, we may want to boost tax, but we won’t need a huge tax hike. Some observers have suggested we begin taxing income over, say, $200,000, leaving earnings between 106,800 and $200,000 untouched.
Others policy pundits suggest cutting benefits for wealthier seniors. This, I think, would be a terrible mistake. First, everyone has a different definition of “wealthier”. Some fiscal conservatives would cut benefits for seniors earning more than $50,000 or $60,000. Depending on where they live, whether they own their home outright or are still paying rent or a mortgage, and how much they must lay out for medications and medical care, some seniors in this bracket are quite comfortable, but others are not. Relatively few consider themselves “wealthy.” And all have been paying Social Security taxes throughout their working lives..
Cutting their benefits would mean undermining the solid support that Social Security has enjoyed for decades. It is not a program for the poor; it is not a program for the middle-class; it is a retirement program for all Americans. If we begin trimming benefits for the affluent, at some point “the haves” will begin to view Social Security as an “entitlement program” for “people who didn’t bother to save.” More affluent Americans will begin to resent the Social Security taxes they pay. They will lobby Congress to reduce Social Security benefits and taxes across the board. Social Security will no longer be safe.
Medicare also enjoys a solid base of support, in part because it is a program for everyone. We do need to reduce Medicare spending, but rather than using a “means test” to cap benefits for any particular group of Americans, we should target the waste in the system. As I have written in the past, years of research reveal that roughly one-third of our Medicare dollars are squandered on unnecessary or ineffective treatments, redundant tests, extended hospital stay
s caused by medical mistakes that, in some cases, lead to additional surgery, and over-priced drugs and devices that, too often, are no better than the older, less expensive products that they replace.
The reform legislation gives the Centers for Medicare and Medicaid the power to begin to change how we pay for care—providing bonuses for safer, higher quality care. Today, when we pay providers fee-for-service, we are rewarding volume, and often that means that we are rewarding inefficiency. If the rate of complications following surgery, medical errors, hospital-acquired infections and readmissions is higher at Hospital A than at Hospital B, Medicare winds up paying Hospital A more. Medicare reform will change the financial incentives so that providers are rewarded, not for “doing more”, but for “doing it right”. That means offering “the right care to the right patient at the right time.” Not surprisingly, more efficient care also tends to be less costly. If we put more emphasis on primary care, which is what the reform legislation does, fewer patients will need acute care. This is how we can cut Medicare spending, without reducing benefits for anyone.
Maggie- I agree with much of what you have said in this piece.
But my experience tells me that the “excessive entitlement party” is over for those who abuse the entitlement systems. Not those who have genuine needs.
So squeeeze out the corruption at the individual level which is small potatoes to institutions who flagrantly engage in institutional Medicare fraud
And yes- pay for quality, quality and quality
Dr. Rick Lippin
Southampton,Pa
I saw George Will speak this week and he suggested lifting the retirement age as well. Of course he can spew poorly researched and misleading arguments well into his 90s, so why should he be concerned?
Sorry–what you are not saying is that the retirement age HAS been lifted for baby boomers. That means your monthly benefits are reduced that much more for every month you retire before your full retirement age (note: they aren’t changing the earliest retirement age of 62, but they ARE adjusting benefits from age 62). I was hoping to retire at my full retirement age and depend on my IRA’s (not having any pensions from my 30+ years of working). Now there are no jobs AND everyone has lost 1/3 to 1/2 of their retirement savings. So more of us at the leading edge of the boomers are being forced to “retire” (draw down on our savings PLUS receive Social Security benefits) in order to live, even though that means living on further reduced Social Security benefits (because of the increased retirement age). By the time I must apply for Medicare, it’s not likely that I will have much left over in my Social Security check after the Part A deduction and the Part B premium (and I am solidly in the “middle class”). As a group, older single women (that’s me) are the most impoverished group in the US. That statistic will only be exacerbated under these ill-conceived “deficit reduction” policies. (http://www.americanprogress.org/issues/2008/10/women_poverty.html )
With at least 6 people vying for each job opening– optimistically–(and treating jobs as equal is a statistical artifact anyway), how many people aged 65 to 70 do you think will be hired, or be able to keep their jobs, especially as employers must pay more for their older employees’ health insurance while they worry that their older employees will have a “health event” on the job?
Let’s get real. The only reason for this “deficit reduction” frenzy is to protect the investments of the corporatized class that is writing the laws. We have known that the “trickle down theory” is a fairy tale (yet effective propaganda) for decades, not only in this country but globally.
Not surprisingly, I disagree with much of this post.
First, the formula that the Social Security Administration uses to determine what they call the Primary Insurance Amount (PIA) is highly progressive. The SSA indexes each year of covered earnings to the growth in average wages. They call this calculation Average Indexed Monthly Earnings (AIME). They add the 35 highest years of indexed earnings and divided by 420, the number of months in 35 years. To calculate the actual benefit, based on the full retirement age, for a person becoming eligible for benefits in 2010, the PIA will equal 90% of the first $761 of the AIME plus 32% of the amount between $762 and $4,586 plus 15% of anything above $4,586. So, while low wage workers may die sooner than higher wage workers as a group, they are receiving a much higher annual return on the taxes they paid during their working years. The steep progressivity in the benefit structure probably offsets much if not all of collecting benefits for fewer years due to shorter life expectancy.
With respect to people engaged in physically demanding occupations, if they reach the point where they can no longer work because their body wore out, the chances are that they will be eligible for Social Security disability benefits. Moreover, once a person receives disability benefits for two years, he/she becomes eligible for Medicare regardless of age. Due to the structural changes in our economy and other factors, like foreign competition, far fewer people as a percentage of the employed population work in physically demanding jobs today that 20, 40 or 60 years ago. A sound argument can be made for adjusting the retirement age as life expectancy increases for all segments of society.
As part of the 1983 reforms, the retirement age was raised from 65 to 67, for full benefits, but it was phased in very slowly. Indeed, the phasing did not even start until 2003, a full 20 years after the legislation passed and 67 will not become the normal retirement age for full benefits until 2027 (applies to those born during or after 1960), 17 years from now. People are still eligible to retire starting at 62 but the discount from the full retirement age benefit is larger than it was prior to 1983, when it was 20%. The very long phase in period was intended to give people time to adjust and plan for their financial future. It is unwise to suggest that we can wait until the Social Security Trust Fund is close to going broke before we finally enact additional reforms.
When Bill Clinton was President, he opposed increasing the wage base to which FICA taxes applied because he felt it amounted to confiscating another 6.2% of the income of those who earn wages above the then current ceiling (plus a matching contribution by the employer) for a benefit the employee would probably never see. Even if those wages resulted in higher benefits, they would be in the 15% bucket of the PIA formula implying a very poor return for taxes paid.
As for Medicare, high income people, starting in 2007, are now paying significantly more for Part B premiums. For those becoming eligible for Medicare this year, the normal Part B premium is $110.50 per month. Singles whose total income exceeds $85,000 and couples with more than $170,000 pay more. For couples with incomes above $428,000, their maximum Part B premium this year is $353.60 or fully 80% of its actuarial value of $442.00 per month. At the same time, high income people, along with their employers, paid much higher Medicare taxes during their working lives than lower income people though both receive exactly the same benefits package. Overall, it sounds plenty progressive to me already.
Great post Barry,
A progressive program is not progressive enough until they actually get to choose the winners and losers directly.
I say that the retirement age for Social Security should be LOWERED to 55 years of age, and this should be for FULL BENEFITS. Even before the recession, many corporations have been unwilling to hire middle aged and older workers and it’s very difficult to prove age discrimination when someone isn’t hired. To pay for lowering the retirement age, raise taxes on the wealthy and particularly corporations that fail to hire enough middle aged and older workers.
first, would be interesting to know what’s happening to retirement age. it declined for a long while, bottoming out about eight years ago, but seems to have at least stabilized since. it is possible, for better or worse, that it is already rising.
second, important to note that no one is suggesting that the minimum social security retirement age be raised beyond the current 62. if folks want and need benefits then, they can get them. question is what the “normal” age is. the 1984 reforms raised this from 65 to 67, but the fact is that there’s a continuously sliding scale. for each month beyond 62 that you don’t collect, your monthly benefit rises until you hit 70. so raising the age from 67, which is nothing more than a signal of expectations, hardly merits hysteria.
meanwhile, folks retain the option of eating their cake and having it too by taking benefits and continuing to work, offsetting lower benefits from earlier start age with higher benefits for more years of work.
finally, reality is that at start recipients got less than 2 years of benefits, now two decades is the norm. if you’re worried about bias against those who retire and die young, why not simply limit the number of years one collect benefits?
Wouldn’t making the retirement age dependent on occupation-based life-expectancy be similar to what Greece has done, which has allowed hairdressers to retire at 50, civil servants as young as 58, and other similar cases? Is it wise to do this, based on that example?
Who gets to decide the formulas for life-expectancy, the same people who work at the Minerals Management Service? Even better, it could be like the SGR, and live at the political whim of congress.
I’ve always thought that if all earnings were taxed, we could have a lower base rate and we wouldn’t be having these discussions about raising taxes/raising retirement age/reducing benefits. And, if we weren’t fighting 2 unpopular wars simultaneously, there would be billions maybe even trillions of dollars available for retiree benefits.
“…retirement age should be “indexed” to life expectancy.”
Why stop with race, class, and occupation? What about living in a location that is burdened with environmental hazards? What about other health risk factors like genetic predispositions? (none of these is a risk factor related to individual behavior or “lifestyle,” which most people would probably object to including in an “index”).
Walter and Barry,
Walter– Everything you say is true
But in this economy, Congress just isn’t going to lower the retirement age.
So I’m arguing for keeping the retirement age where it is.
Going forward, if unemployment remains at these levels, and if older emplyees continue to be
unemployed for longer periods of time (which I an afraid will happen) we need government job– programs to provide jobs for seniors in the many areas where we need more labor: nursing homes, public schools; parks; daycare;
etc. etc. etc.
In many cases, healthy seniors would enjoy workng in these areas, 8 to 20 hours a week (depending on the job and their stamina).
Barry–
You write: ” With respect to people engaged in physically demanding occupations, if they reach the point where they can no longer work because their body wore out, the chances are that they will be eligible for Social Security disability benefits.”
Barry, I’m wondering how many people you know who have spent their lives cleaning offices, farming, doing heavy contruction work, working in factories, or even waitressing 40 hours a week for 40 years?
At 65 most of these people are not “disabled” in a way that would allow them to qualify for “disability.”
On my mother’s side of my family, most of my relatives were involved in dairy-farming on small farms in upstate New York. On my father’s side, most worked in factories or cleaned office-buildings.
As they entered their 60s they could still walk, live alone and take care of themselves.
But their feet hurt, their legs and knees hurt (As anyone in this cohort will tell you: “The feet and legs go first.”)
They didn’t have the stamina they once had. It
became hard to get through the day. After dinner they would go to bed, so that they could get up the next morning and start working again.
When they woke up, their muscles ached. They felt “a thousand years old.”
To ask these people to keep working another 2 or 3 years is simply cruel.
Yes, today they could retire at 62, and take lower benefits. But since they have never earned enough to have much –if anything–in the way of personal savings, and since they have no way of knowing whether they will be one of hte “lucky ones” who live to 80 (as some people in my family did) they are terrified of taking the risk. Also, for many, if they took SS at 62, their payments would average $500 or $600 a month. How do they live on that?
You also suggest that “far fewer people as a percentage of the employed population work in physically demanding jobs today that 20, 40 or 60 years ago.”
This is not true. Yes, fewer people are working in factories or on small farms. But who do you think “services” the service economy?
The people who clean office buildings and homes (and we have many more office buildings and many more affluent famlies who hire someone to clean their home than ever before); the people working construction( as we overbuild condos, hospitals, etc.); the waitresses who work in small restaurants 40 hours a week (as more affluent Americans eat out . . .) I could go on.
Our servant class is growing.
You also suggest that when it comes to “return on investment” low-income Americans do well.
Barry, social Secruity is not about “return on investment.”
It is not an investment, it is an insurance plan.
My contributions don’t go into a little account labled “Maggie Mahar” which I can tap when I retire. And when I die, if I have received less $ than I put in, the extra money will not go to my children.
SS is an insurance pool. My contributions go into an enormous pool that covers everyone. Some of us will putin more than we take out; others will take out more than they put it.
If we all lived on a level playing field– with similar chances of living to 80 (as many Europeans and Canadians do) that would be fine.
But we don’t live on a level playing field. Some of us are born into poverty, get relatively little education, and wind up doing work that is physically gruelling.
Some are born with physical strength, but less intellecutal strength than the average person– they too are likely to wind up doing physically grueling work.
African Americans, Latinos and other groups are more likely to be born into povery, and they will die 8 years sooner than an affluent American.
The fact that African-American men pay into SS for their entire lives but, on average, even those born today are not likely to live to 68 suggests that, for them, this system is hardly progressive.
Finally on the formula that SS uses to determine benefits: how much you earned in the final years of your work-life—before applying for SS–is very important.
Affluent Americans in upscale jobs tend to earn more and more over the course of their careers. In thee final years of their careers, their salaires are higher than ever before.
This is not true for the majority of Americans. Many middle-income Americans find themselves laid off in their 50s, and then have to take jobs that pay less. Workers in physically demanding occupations often have to give up that work at some point in their 50s and take low-paying jobs that require less stamina.
As a result, their SS payments are lower.
“At 65 most of these people are not “disabled” in a way that would allow them to qualify for “disability.”
Maggie,
I have two young relatives who work for the Social Security Administration and deal with disability claims as part of their job. You would be amazed at how easy it is to qualify for disability benefits, especially for people who lose a job in their 50’s or early 60’s but can’t easily find another one. They tell me that if I were five or ten years younger, lost my job and couldn’t find another one, I could probably qualify for disability due to my heart disease even though I’m perfectly capable of working. Even those who are initially turned down for benefits often win them on appeal. Part of the reason is that Congress has put a lot of pressure on adjudicators to shorten the time it takes to process these cases. The easiest way to reduce the backlog is to just approve most of the applications. In this economy, applications are up big time and so are approvals. You are mistaken if you think disability in this context means confined to a wheelchair or unable to perform some of the routine activities of daily living. It’s just not the case, and it’s a big reason why outlays for Social Security disability benefits are growing as rapidly as they are.
Regarding the issue of whether Social Security is a pension or an insurance program, it’s true that there is no lump sum value that the beneficiary or his or her heirs is entitled to. However, the benefit that any given individual receives is a direct function of the amount of covered wages accrued over a lifetime. The more covered wages on which taxes were paid by the employee and the employer, the higher the benefit. For Social Security to continue to enjoy political support, workers who expect to live a normal lifespan or close to it need to perceive that they will receive an adequate return on their investment (taxes paid in). More and more young people today either don’t think Social Security will be there for them at all or the benefit level will be cut way back. They think they would be better off if they could opt out of Social Security in favor of a 401-K that they would own and control, stock and bond market risks notwithstanding.
Two points:
►”Our servant class is growing.”
That is an understatement.
►Discussions of Social Security typically fail to clarify the distinction between INDIVIDUAL security and SOCIAL security.
I’m so tired of making that same point repeatedly.
ACarroll,Matt,Sara,Jim,
ACarroll– Yes, you’re entirely right. If we are going to index SS to life expectancy, we would need to take many factors into account.
Who could do this? See my next reply to Matt.
Matt– You ask “Who gets to decide the formual for life-expectancy?”
Epidemiologists and acturaries who do this for a living.
Calculating life expectancy is a science; we have lots of data.
Sara– Yes, there is much to be said for taxing investment income (capital gains, etc) at the same rate that we tax “earned income” (wages that you are paid for working.)
I am pretty certain that, going forward, we will begin to tax more investment income.
And yes, the money wasted on the wars is tragic, not simply because it is hwaste of money, but because of the lives lost. If you watch the “Lehrer Report” on PBS, you will see the pictures of so many very young Americans who die ever day in these wars.
Jim– You suggest limiting the number of years that retirees collect SS benefits.
How could we possibly do that?
What would happen to the poor person who has no others savings and lives to be 95. (Maybe because he never drank, never smoked, came from a lucky gene pool, never become obese, and worked hard his entire life, giving him plenty of exercise.)
You would cut him off at a certain point becuase he lived too long??
Jim, I know you well enough to know that is not what you meant.
You also suggest that “no one is suggesting raising the minimal age when you can collect benefits beyond 62.”
That’s actually not true; Some conservatives would.
More importantly, if your income has always been low, the different between the benefits you would receive at 62 and the benefits you would receive at 67 is the difference between being able to surive, and not being able to survie.
An upper-middle class person might find that if he took benefits at 62, he would recive $1300 a month; if he waited until 67, he would receive $1800 a month.
Since he has other savings, $1300 a month would be okay.
On the other hand, for a low-income American, the differnce could be the diference between receiving $500 a month and receiving $1000 or $1200 a month. He has little or no other savings. He can’t live on $500 a month.
As for “having your cake and eating it too,”– by taking SS and continuing to work– this is not an option for workers who have been doing physically demanding jobs for their entire lives, and don’t have the skills to get an office job that is less demanding.
For people born between 1945 and 1954 the normal retirement age for full Social Security benefits is 66. Anyone in that age cohort who chooses to begin collecting benefits at 62 will receive exactly 25% less than he or she could have collected at 66. Waiting beyond the normal retirement age to collect benefits will produce a bonus of 8% per year until age 70 when benefits max out. The 8% bonus is actuarially neutral at the population level. It does not matter if the beneficiary always earned the maximum amount subject to tax or always had a low paying job. The age adjustment formula works the same for everyone. Only the primary insurance amount is based on covered wages earned and the number of years worked. For anyone with fewer than 35 years of covered wages, the SSA will still divide the beneficiary’s lifetime covered wages indexed to today’s wage levels by 420 to calculate the PIA. So, a person who turns 62 this year and would be entitled to $500 per month at that age would be entitled to $667 per month at age 66, not $1,000 or $1,200.
What is really at the crux of this? Well, I believe it is this idea that we want socialized entitlement programs in our golden years, but we want to operate in a free market economy during our productive years. Put another way, the U.S. looks like it wants to be a socialist country when it grows up, but we can never let go of our roots of independence and working hard to get ahead. Today, we find ourselves stuck in the middle. It will take someone a lot more wise than myself to figure how this transition will occur. Or will we continue to be stuck in the middle, not attaining any real reform at all. I think we’d all agree the system is broke, but nobody can come up with a solution that doesn’t put the screws to these 2-3 generations that range between 25 and 55 years of age. These people, by the way, just happen to be the primary voting demographic.
It’s a tough situation, with no real solution in sight, in my opinion.
stop somking help–
The situation is not as dire as it may seem.
First, keep in mind that the boomers will turn 65 as they were born–slowly, over 3 decades.
We’re not going to be hit with a sudden tsunami of aging boomers.
Secondly, on Social Security–take a look at this chart on Matthew Yglesias website: http://yglesias.thinkprogress.org/2010/07/the-social-security-cap/
You’ll see that as the rich have become richer over the past 15 years, more and more of their income is not taxed for SS.
Right now we only tax income up to $108,000.
Some observers have suggested that we lift the cap, NOT by taxing income over $108,000, but by taxing income over, say $200,000, leaving income between $108 and $200,000 on taxed. (IN other words, SS taxes would apply to the first $108,000 of an individual’s income, and to income over $200,000 (in today’s dollars.)
This would make SS solvent for a long time to come without putting an undue burden on younger generations–only those who could truly afford it.
On Medicare– We simply have to start spending less on healthcare– not just healthcare for seniors, but healthcare for everyone.
Right how, people over 40 undergo a great many unncessary tests and procedures, and a great many of us are overmedicated.
What we have to do in cut the growth in health care spending that has been running 5% to 7% a year. It’s that growth, compounded, that is killing us.
We need to bring the growth in health care spending growth (and medicare spending growth)down to GDP growth–maybe 3% a year–or less.
That way, health care costs would remain flat as a percent of GDP.
The way to do this, as I’ve said before, is to cut the waste. We know where much of that waste is– for instance, we know that more than half of all people who undergo anigoplasties derive no lasting benefit–and we know we they are. The same is true of bypasses.
We know that much back surgery does no good.
We know that if you give patients full information about the risks, recovery time, side effects as well as benefits of elective surgies, 20% to 30% decide not to go forward with the surgery.
The solution is to practice “evidence-based medicine”–and to share info about evidence with patients.
Other developed countires that spend half as much per person (and cover everhyone) have healthier populations, and better outcomes in many areas.
There’s no reason we can do this– except that powerful intersets, not making huge profits on our wasteful system– will fight change. But enough people understand that we need reform, and what to do, that I think, over the next 10 years, we’ll make real changes in U.S. healthcare–long before most boomers turn 65.
You are much more optimistic than I. You do list many good points, all rooted in common sense. I agree there are ways to make SS solvent, but how will the laws get passed? You’re right, Capitol Hill is way too partisan and special interests groups seem to determine law, rather than the constituencies that make up this great country.
You are also correct, evidence-based medicine is a great way to reduce costs. Moving to generics, ordering fewer tests, etc. However, it is my experience that many physicians (even the younger ones) have a hard time moving away from what they’re taught in med school or have difficulty allowing evidence-based protocols dictate their ordering practices. They also do not like to relinquish control to allied professionals who may know a little bit more than them when it comes to physical therapy rehab or mechanical ventilation weaning strategies.
In addition, many of the Medicare dollars are spent in the last year of life. Not from over-ordering, but because the patient is close to death. Add to this the problem of healthcare given to illegal immigrants (a particular challenge I am very familiar with in Texas where I work) and you can see why I get a little depressed.
So I agree there are some easy-sounding solutions, but in practice, it is extremely complicated and difficult to accomplish. I’m not sure more public debate is going to do anything but just give Americans “tired-head”. Remember the principal of entropy, “everything moves toward chaos”. – Tim
stop somking help-
First, we don’t have to fix SS right away. We have time.
Secondly, President Obama has set up a fiscal comission that will make recommendations about reducing the deficit–probably some combination of taxes and cutting spending.
Probably most of the commission’s suggestions won’t be implemented right away. But both fiscal conservatives and many Democrats would favor iifting the cap on the SS tas. We really can’t afford spending cuts in the middle of a recession—govt needs to be spending money.
Under the reform legislation, Medicare has the authority to change the way it pays for healthcare without going through Congress. If a Medicare pilot project is successful, Medicare can roll it out nationewide without getting Congressional approval. This protects Medicare from lobbyists and special interests.
Medicare will use financial carrots and sticks will encourage doctors to move to evidence-based medicine.
(Insurers will follow Medicare’s example. Insurers would also like to save money–they just want Medicare to provide political cover.)
Doctors who practice evidence-based medicine and get good outcomes will be eligible for bonuses. Those who don’t won’t.
Medicare will stop rewarding doctors for volume, and begin rewarding them for value.
Also, more and more docs will be working in large multi-speciallty groups, accountable care organizations, etc. There, docs will be looking over each others shoulder, making it difficult for individual docs to ignore medical reserach. In addition, insofar as more and more docs and hospitals are paid a lump sum for an episode of care(bundled payments), they will all lose financially if some are wasteful–ordering unnecessary tests,failing to use checklists (leading to medical errors) failing to wash hands (the cause of much of the spread of hosptital infections.)
The spread of palliative care means that patients will be able to make informed choices about whether they want to puruse treatments in the hospital, whether they want to go home with palliative care at home. . . Most patients, if given a chance, would prefer to die at home. Few want to die in an ICU (the most expensive place to die.)
Finally, the problem of health care spending on illegal immigrants is smaller than you think.
First 41 percent of illegal adult immigrants and 47 percent of illegal children have health insurance through the parents’ employer. 75% of the native-born children of illegal immigrants have insurance.
Secondly, all immigrants (legal and illegal) use much less health care ($$ spent per capita) than native born Americans
Third-Immigrants use ERs less frequently than native born Americancs.
Finally, we know that legal immigrants pay significantly more into the system (Medicare & Medicaid payroll taxes as well as insurance premiums) than they take out.
We don’t have accurate numbers on how much illegal immigrants pay in or take out, but the fact that so many of them have insurance means that they don’t receive nearly as much uncompensated care as many conservatives would suggest.
(Most people assume that illegal immigrants don’t have insurance. The truth is that the vast majority work, and if their employer gives health insurance to other employees they often get it too. The employer doesn’t know or doesn’t check to see if they are illegal. )
As I said, you’re a lot more optimistic than I. Those are a lot of moving parts. And not to make this an immigration conversation, mainly because I don’t have a lot of statistics to back my observations, but when I worked at a certain Dallas Ft. Worth hospital, I would say over 50% of the OB floor were illegal without insurance. I would also say that 10% of the ICU were illegal without insurance. Finally, I could give countless examples of patients who were brought to the US soley to be admitted to a US hospital. I’m sure I would do the same thing in their position!! But it certainly isn’t worth discounting as a factor because it is, and there should be some recognition of its impact, especially regionally, in the southwestern states.
Regarding physicians, there is already a shortfall of physicians willing to work in the less metropolitan areas because the payor-mix is so poor. If Medicare continues to makes cuts, there will be fewer and fewer specialists available to a larger and larger percentage of the population. So this is without question much more of a balancing act with very interesting and divergent parties. Each one, wanting to tell the other how to do things.
Thanks for the interesting topic!
I agree with Jenga, who agreed with Barry.