If you want a dose of reality on the budget, politics and the cost of medical care, read the collum below. The issue is really simple. It is called a free lunch. No one wants to die. No one wants pain, discomfort, loss of function, disability. No one wants to pay to avoid these things. Somebody else - the company, the government...anybody but the individual in question. The biggest problem with redistribbution programs like this is not that they are impractical or even morally wrong. It is rather that the mix of politics and this sort of magical thinking produces bad policies. Bad in the sense of papering it over so that someone else NEXT year will have to deal with it. Folks, absent a really good Al Qaeda bio bomb my generation [the older half of the Boomers] starts to retire somewhere in the 2013 range [1946 + 67]. Some will opt for early retirement and do it a few years sooner. So we are staring at a baby elephant sliding down the gullet of the python. We are exporting jobs like mad to East and South Asia. We are taking in large numbers of unskilled folks from nations to our South. We are taking the Somali Bantus just to be nice guys. And we are not facing the fact that we have made promises that are going to be VERY expensive to keep. Now my guess is we will do the usual - close our eyes, engage in meaningless partisan bickering over triffles and wait for the train wreck. Nobody is going to touch the 3rd rail until then. However the 3rd rail is there. It will hit Japan first, then the EU and then here over the next decade. Those of you in your peak earning years should start screaming now before your interests get completely ignored as the Suits try to keep my generation and our by then frail parents happy. LOL.
A Dose of Reality from today's WP
By Robert J. Samuelson
Wednesday, June 4, 2003; Page A27
Just about every American politician, regardless of party, favors adding a prescription drug benefit to Medicare. It's a bad idea. The Senate will soon begin considering the latest proposals. We can only hope that bickering among politicians and interest groups -- retiree lobbies, drug companies, health insurers -- creates a deadlock. A Medicare drug benefit would simply worsen the country's central budget problem: the huge retirement costs of the baby-boom generation.
The typical member of Congress, now an older baby boomer, ought to wonder: What am I doing to my children (and their children)? From 2010 to 2030, the over-65 population is projected to rise by about 30 million; meanwhile, the working-age population (20-64) will increase by only 10 million. The pressures on younger families to pay for Social Security and Medicare benefits must rise. Piling new benefits atop the old -- today drugs, tomorrow nursing-home care and then who knows what -- compounds the pressures.
We cannot know the full consequences of these larger burdens. But the possibilities must include slower economic growth and smaller families -- because the economy becomes less dynamic and because young couples feel they can't afford children. The Congressional Budget Office projects that the costs of today's Social Security and Medicare benefits will nearly double by 2030 -- from 6.4 percent of national income (gross domestic product) to 11.1 percent.
Put differently, the increase equals 25 percent of today's federal budget. It implies a massive transfer from the working-age population that must occur through (a) higher taxes, (b) higher deficits, (c) cuts in other government programs -- or all three. Now, suppose Congress adds a drug benefit. Some will say that the costs aren't high, especially if compared with President Bush's tax cuts. On paper, this is true. Bush has reserved almost $400 billion for a drug benefit over the decade (2004-2013); past proposals suggest that some Democratic plans may double that. Still, both figures are under the cost of Bush's tax cuts, now roughly $2 trillion over the decade.
The trouble is that the costs of a drug benefit are dramatically understated, for three reasons.
First, costs will rise rapidly after baby boomers reach eligibility, but that starts only in 2011. Estimates for the next decade miss these increases. Second, even today's generous proposals cover half or less of the elderly's drug costs, which the CBO estimates at $1.8 trillion over the decade. If Congress enacts a drug benefit, the 41 million Medicare recipients will discover its stinginess and agitate for improvements. Covering all of retirees' drug costs would raise Medicare spending by nearly 50 percent. Finally, better Medicare drug coverage undoubtedly will encourage more drug use.
Nor would reversing the Bush tax cuts easily pay for a drug benefit. Eliminating present budget deficits -- plus providing already promised benefits -- would absorb tax increases. The same money can't be used twice. Of course, Congress could also cut spending sharply. Either way, there's no cheap way out.
Given this sobering arithmetic, the fascinating thing about a drug benefit is its respectability. It's considered the decent thing. No one dislikes grandmas and grandpas. All politicians want to allay retirees' anxiety over "exploding" drug costs. In reality, this "crisis" is exaggerated. Although drug costs are increasing, only 5 percent of Medicare recipients in 2000 had out-of-pocket drug costs exceeding $2,000, according to CBO data. Many retirees have private insurance; and Medicaid (a government insurance program) covers some poor retirees.
The crusade for a drug benefit is mostly a shameless competition for retirees' votes. It's democracy in action, because the elderly are the nation's most powerful voting bloc. In the 2000 election, almost 70 percent of those 65 and over voted; turnout was only slightly lower (64 percent) for the near-elderly (45-64). By contrast, only 35 percent of those 21 to 24 voted. Who cares about them? The elderly vote more, and their lobbies focus single-mindedly on protecting and enhancing Social Security and Medicare benefits.
The perverse paradox is this: Although Social Security and Medicare shape the long-term budget outlook, budget debates largely exclude Social Security and Medicare. Congress should have long ago tempered retirement costs by gradually raising eligibility ages and trimming benefits for wealthier retirees. Congress did slightly increase Social Security's eligibility age in the 1980s; but the subject hasn't been revisited. No one wants to upset retirees -- present or future.
Let it be said: In an ideal world, Congress would enact a Medicare drug benefit. It would be modest, aimed at those with high out-of-pocket costs and calibrated by income. It would be paid for entirely by new premiums on Medicare recipients. This would create pressures to limit costs and concentrate on the neediest. The chances of this happening are about zero. Indeed, neither Republicans nor Democrats propose paying for a new drug benefit with any new tax. It's an apparent freebie.
Nonsense. Only two groups can pay retirement costs: retirees or non-retirees. When Congress created Social Security (1935) and Medicare (1965), the common idea was to protect people against ruin. It was not to subsidize the regular and predictable expenses of retirement -- especially when most people can now anticipate and save for retirement, as was not true then. But the case for a drug benefit quietly presumes that the elderly shouldn't have to pay drug costs. Someone else should pay. Why?
Congress and the president aren't ready to ask that question, as Congress and presidents haven't asked hard questions about retirement costs for decades. Until this political taboo is broken -- a change nowhere in sight -- nothing is better than something.
© 2003 The Washington Post Company
posted by scott 10:19 PM