Saturday, November 11, 2006

Problem? What Problem?

Thank goodness the election is over. I never could completely understand how this government could be run so poorly for 2 to 4 year spurts and nobody complains until a month before the election. And then it's like two kids arguing over whose fault it was. Both sides are blameless.

In the two party system, you are either a Republican or a Democrat. The irritating thing is that the other side is lying by implication. The only thing that a Congressman can't hide, are their alleged improprieties, like groping, fondling, or what ever. They still find the time to give away the candy store.

In the 1930's when Congress passed Social Security, 95% of the population never reached the age of 65. To paraphrase the law, "We're raising your taxes and we're going to spend it before you die at age 65.

Carry forward 50 years and now people are not dying on the old schedule. A while ago, the Congress decided to add Medicare. Now, you open up the paper and see the headline, "77 Million Baby Boomer's to retire in the next 20 years." The largess of Congress has boosted our retirement benefits from non existent to substantial.

Notice in the real world, how many retirement plans have dropped dead. Just pick an airline. General Motors could be next, but I get the feeling that they may have to wait in line.

You really have to marvel at the way our government can accomplish Social Security and Medicare together. Private medical insurance, if you are over 60, can really crimp your life style.

Everybody worries about Social Security going broke and that's a good thing. It keeps your mind off the bigger problem, Medicare and Medicaid. We've finally figured out how to make our children fund our retirement package and that's a good thing. Otherwise, the kids would probably spend their money foolishly, just as we did.

In a book review I was reading, they mention a humorous rhyme written on a bathroom wall in 1931, encountered by Andrew Mellon (Secretary of the Treasury): "Mellon pulled the whistle, Hoover rang the bell, Wall Street gave the signal, and the country went to hell."

Somehow, I get the feeling it will be different this time. Not only will we be able to read about it, we will experience it. Nothing beats a front row seat.


Anonymous said...

I think Medicare will be less of a problem than you think. One big reason health care is so expensive is because insurance pays the price. Where you have deep pockets (insurance companies) prices go sky high.

Expensive medical care has funded research so it's not all bad. However, at some point in the future, health care will just become unaffordable. Prices will have to drop to what the population can afford. You can produce something without consumers. If no one can afford your services, you have to drop the price. The government will become the insurance company for all of us and refuse to pay high prices and outrageous medical malpractice damages. If you get screwed up by a doctor, too bad. You should have picked a better doctor.

All this will occur AFTER the dollar collapses and becomes worthless and a new US currency gets created. Because inflating money to pay bills is the easiest solution available to government, it will do that until the currency becomes worthless.

Bill Woessner said...

One big reason health care is so expensive is because insurance pays the price.

This statement is not borne out by the facts. Insurance companies, in effect, have collective bargaining rights with health care providers. The insurers almost always end up negotiating lower, more realistic payments on behalf of the insured.

Medicare and Medicaid work in very much the same way. Except that Medicare and Medicaid don't have to negotiate. They just legislate. In fact, they set their prices so low that doctors lose money on Medicare and Medicaid patients. And that is a major contributor to the cost of health care in the US.

Try this mental exercise. Divide the population in to 4 groups: the poor, the uninsured, the insured and the seniors. The poor and the seniors have Medicaid and Medicare. The government pays less for their health care than it actually costs. So providers jack up rates on the uninsured and the insured to cover the difference. But the insurance companies won't have anything to do with that, so they negotiate rates back down to normal levels. In response, providers raise rates on the uninsured again.

Deep pockets aren't the problem. The problem is that the government has tinkered with health care to the point where it's out of control. Get rid of Medicare and Medicaid and maybe we'll see things relax to a more reasonable state.

Jim in San Marcos said...

Bill is right about the lower prices HMO's pay. I had a root canal a while back. My insurance paid $600 and I co-paid $100. The doctor had a price list that showed that the regular cost was $975. So if you were uninsured, your cost was $275 more.

Another thing that Anonymous touched on is competition. I think that it was a March Newsweek that had an article on people that flew to India for heart bypass surgery. It was only $20,000 vs. the $60,000 that is charge stateside.

What I was trying to illustrate, was the increase in demand for services that has no limiting factor. Age was that limiting factor in the 1930’s.

When you examine future payments for health care and Social Security, these are Transfer payments. There is no stimulation of the economy, just immediate consumption.

Medicaid and Medicare are taxes that have no defined limits. The absurdity of the implied liability is beyond comprehension. My mother died in 1974 from cancer and her health care bills were well over a million dollars—just for 6 months. What we have to realize is, you can’t withdraw more than you contribute in taxes, into the system, it won’t work.

Congress considers this a non issue, messing with it won’t get them re elected.

Don't feel that I have labled anyone right or wrong here, this is just a forum. Speak your mind and enjoy yourself.

Its not the shots you miss, its the shots you never take.

Matthew Saroff said...

99% of the population never reaching 65 is a flat out myth.

What's more, if a man made it to made it to 20, the likelihood of making it to more than 65 was VERY good, even in the the 1400s.

The increase in life expectancy is from two things:
* A decrease in deaths giving births.
* A decrease in child mortality.

Anonymous said...

This includes the chart of life expectancy since 1900...the average was well below 65. There you our social security should be recovered at an age over 80 instead looking at the chart.

Jim in San Marcos said...

Matt, you got me, lets make that two standard deviations or 95% instead of 99% percent of the population. A key thing that extended life in the 40's was the advent of penicillin and other drugs.