Life, Death and Deficits – courtesy of Paul Krugman

America’s political landscape is infested with many zombie ideas — beliefs about policy that have been repeatedly refuted with evidence and analysis but refuse to die. The most prominent zombie is the insistence that low taxes on rich people are the key to prosperity. But there are others.

And right now the most dangerous zombie is probably the claim that rising life expectancy justifies a rise in both the Social Security retirement age and the age of eligibility for Medicare. Even some Democrats — including, according to reports, the president — have seemed susceptible to this argument. But it’s a cruel, foolish idea — cruel in the case of Social Security, foolish in the case of Medicare — and we shouldn’t let it eat our brains.

First of all, you need to understand that while life expectancy at birth has gone up a lot, that’s not relevant to this issue; what matters is life expectancy for those at or near retirement age. When, to take one example, Alan Simpson — the co-chairman of President Obama’s deficit commission — declared that Social Security was “never intended as a retirement program” because life expectancy when it was founded was only 63, he was displaying his ignorance. Even in 1940, Americans who made it to age 65 generally had many years left.

Now, life expectancy at age 65 has risen, too. But the rise has been very uneven since the 1970s, with only the relatively affluent and well-educated seeing large gains. Bear in mind, too, that the full retirement age has already gone up to 66 and is scheduled to rise to 67 under current law. With the aid of chickshit Democrats during the Reagan Reign.

This means that any further rise in the retirement age would be a harsh blow to Americans in the bottom half of the income distribution, who aren’t living much longer, and who, in many cases, have jobs requiring physical effort that’s difficult even for healthy seniors. And these are precisely the people who depend most on Social Security…

Social security is responsible for no portion of the deficit whatsoever. It has always paid for itself. Management costs are a tenth or less of comparable private insurance. The growth in costs from changing demographics a decade or so down the road can be fixed with a new regulation containing just three words. Remove the cap! Instead of capping SSA contributions at ~$105K salary, end the cap and we’re good into the 22nd Century.

Medicare, on the other hand, is a big budget problem. But raising the eligibility age, which means forcing seniors to seek private insurance, is no way to deal with that problem…

You might ask why…health reform didn’t just extend Medicare to everyone, as opposed to setting up a system that continues to rely on private insurers. The answer, of course, is political realism. Given the power of the insurance industry, the Obama administration had to keep that industry in the loop. But the fact that Medicare for all may have been politically out of reach is no reason to push millions of Americans out of a good system into a worse one.

What would happen if we raised the Medicare eligibility age? The federal government would save only a small amount of money, because younger seniors are relatively healthy and hence low-cost. Meanwhile, however, those seniors would face sharply higher out-of-pocket costs. How could this trade-off be considered good policy?

The bottom line is that raising the age of eligibility for either Social Security benefits or Medicare would be destructive, making Americans’ lives worse without contributing in any significant way to deficit reduction. Democrats, in particular, who even consider either alternative need to ask themselves what on earth they think they’re doing.

But what, ask the deficit scolds, do people like me propose doing about rising spending? The answer is to do what every other advanced country does, and make a serious effort to rein in health care costs. Give Medicare the ability to bargain over drug prices. Let the Independent Payment Advisory Board, created as part of Obamacare to help Medicare control costs, do its job instead of crying “death panels.” …We know that we have a health care system with skewed incentives and bloated costs, so why don’t we try to fix it?

Applying the essentials already used to manage medical care for our military and dependents would bring great savings. You see it in the difference between prescription costs – because the military have the right to negotiate with providers. Congress didn’t think that was fair to pharmaceutical profiteers! Yes, the congressman in charge of the original Pharma negotiations for Bush – now works as a lobbyist for the Drugs industry. Same paycheck – different hat.

The digitization and broadened data mining capacity Obamacare required of healthcare has already brought billion$ in savings just from the first round of jailing cheats and crooks. I witnessed the next round a week or so ago when I received a bulk mailer from Medicare telling me that the new section of the law requesting feedback from citizens rating care received vs dollars spent has kicked in. Just letting me know that my insurance company had gotten the lowest possible rating and suggesting I check for the ratings of all providers – led me to selecting an alternative. I did – and have changed carriers!

There are more ways we’re now capable of reducing costs – courtesy of Obamacare. As an aside, I think one of the biggest political mistakes the Republican Party made was in tagging Obama with the characterization – and now we get to thank him every time we have this discussion. Dummies!

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