From my perspective, the health care cost issue is a bit of a red herring. If you had government out of the health care financing business, you would not worry about what health care costs are doing. If my fellow citizens choose to spend more of their money on their health care, that's not my concern. It's the prospect of my fellow citizens spending more of my money on their health care that has me worried.
More broadly, as long as the government is in charge of providing healthcare to the elderly, population aging will help drive healthcare costs higher. For retirees, availability of healthcare is one of two or three major issues that they vote on. Since they pay relatively little in taxes, their desire is for unrestrained spending on healthcare, and because they are one of the nation's most powerful voting blocs (arguably, they are the most powerful voting bloc), the aging of the population, combined with government funded healthcare, will keep the rate of healthcare cost inflation high.
Not to state the obvious, but no shit. The issue is that most Americans don't see the moral problem with using government as a proxy to steal other people's money to fund things they consider important, and their rational ignorance with regards to economics means they don't understand how subsidizing something raises the cost and reduces quality. The proper response to someone talking about a "right" to "free" healthcare is first mock them, then if they continue ostracize them from civilized society. Unfortunately the lunatics get to vote to see who runs the asylum.
The problem comes when my fellow citizens can afford to pay less, not more. What happens to the bottom 20%, 10%, 5%, 1% of the population? That's why the government is involved: because as a society we've judged that we prefer, for a whole host of tangible and intangible reasons, that our destitute are at least healthy.
The early boomers are probably pretty secure with the medicare system that they and their parents foisted on their kids and grandkids. What happens though when the late boomers no longer have voting clout over the younger generations?
At some point, taxes will have to rise so high that there will be a generational revolt - and if the old folks can't pay for their old age care, then they will find themselves warehoused 10 to a room in barracks where the quality of life will be minimal. Or they can urge Congress to do something about it now. (Fat chance!)
Yeah, right on McMegan baby! If they can't afford to pay for health care, screw 'em! Old people smell funny anyways. Am I right or am I right?
I always cringe when I hear youngish retirees (60s and active) talk about how hard it is to live in retirement and how the government should increase their benefits. They inevitably seem to say this even though they live in 10-room houses, with most of the bedrooms empty, and vacation regularly in Europe. More than a few have second homes. Most of them could get jobs if money were REALLY tight, but they aren't actually short of funds. They just don't like spending their own money on things that aren't amusing, and they think they are entitled to a subsidy.
Meanwhile, a lot of us who subsidize them live much less lavishly.
The obvious solution is means testing. I want to help people who are poorer than I am. I just don't want to subsidize people who are richer than I am. And I doubt that I'm unique in this.
Creech: If you haven't read Christopher Buckley's "Boomsday" (sorry, not HTML-savvy enough to underline) I strongly recommend it. That's his premise - the generational revolt.
The sheer magnitude of the Medicare financing problem consistently amazes me, and there aren't any easy solutions short of rationing care.
The problem is going to get worse people are living longer. At some point in the future, the major cause of death will be the cessation of health care. Lack of knowledge of how to keep a person alive will no longer ration health care expenditures for us.
I don't think society as a whole is ready to discuss effectively.
MC is right. I love my in-laws (ok, maybe "like) but they retired for several years now, and have been on an extended vacation ever since. And while I'm grateful for the trips they've made to see the grandkids, and think its swell that they've been able to take that trip to Canada and the Alaskan cruise they've always wanted, and that they have 3 cars (2 of them new), live in a $700k house on the outskirts of San Diego, and bought another nice 500K house outside of California to eventually "retire" to (what are they doing now?), they seem to complain a lot about bills and the financial situation being tight. They also tell us a lot how busy they are and they just don't have any time, even though neither one has a job.
A 10-15 year vacation sure would be nice at the end of life. But so would a pony for every 12 year old :)
On the opposite side, my Dad is at least still working, buying a new sports car every 3 years for cash, and plans on retiring closer to 70.
I think these are all great/fun things, and it's your money you can spend it how you like, but it's plainly obvious if they were forced to plan for 20k in health care costs a year for the rest of their lives their spending habits would change. I don't understand why they are entitled to these benefits.
I am not. I pay a lot of taxes and then another 6k more to privately insure my family, and on top of that I've -STILL- spent another 10k cash this year in medical expenses.
I keep getting the feeling that I'm getting screwed, while people on the bottom and the top are making out. (of course the 'feeling' of getting screwed is probably there for everyone)
I have some sort of fondness for the idea of an intergenerational revolt that yanks the silver spoon away from the boomers. Somehow, it seems almost romantic.
However, the boomers are about 80 million strong. And they vote. A lot. That's a pretty massive demographic to overcome in any kind of democratic election revolt.
Thoughts?
"If my fellow citizens choose to spend more of their money on their health care"? Those of us with chronic diseases are making that "choice" with a gun to our heads, you know. Why shouldn't we spread the "gun" around?
Yes, the benefits explosion plus the political inability to responsibly control it will be the crushing of America, as I blog about here.
Long story short, the government will have to raise taxes on those who remain working, which will scarce off some of the productive, which will force taxes to go up more, which will scare off even more.
It will be impossible to cut benefits because seniors are a huge voting block. Oh, sorry, have to be cultured: a huge voting "bloc". They will make up a bigger fraction of voters as time goes on.
Eventually, they will have to face reality: there is no more blood they can squeeze out of the stone (all the productive have fled to countries without such high taxes), and they will all be screaming for benefits no one can give them.
Needless to say, you need to move your assets out BEFORE the system starts to spiral out of control, because the government will need to swipe up *everything* that moves as the productive start running away.
@Michael J.: You know, a social safety net is GREAT. But not if it takes down the whole country, as it looks like it's going to.
Can't be a revolt because the number are too small. If the numbers were big enough, there wouldn't be a problem and there wouldn't be a revolt. Or does that imply that we are dependent on boomers?
Re: If you had government out of the health care financing business, you would not worry about what health care costs are doing.
That's wrong. If we didn't have Medicare and Medicaid we would have a huge number of people unable to afford healthcare and the result would be irrestible political pressure to do something about the problem, which would result in something rather like Medicare and Medicaid. The Right seems to have this fantasy that they can just throw millions of elderly and poor people out of the healthcare system and they will go away and suffer in misery until they die. No, it just will not work that way. The Right often complains (with some justification) that the Left ignores the realities of human nature, but in this matter it's the Right which thinks human nature can be swept aside in the name of some ideological taurine byproduct.
Re: At some point, taxes will have to rise so high that there will be a generational revolt
This won’t happen for a very good reason: the younger generation will realize that without Medicare and Social Security they will be forced to pay for their parents and grandparents' upkeep directly out of pocket — and for all but the richest people those costs will be even steeper than paying taxes to support the old folks instead. So they will grumble and pay the taxes rather than risk being bankrupted by mom’s Alzheimers or dad’s emphysema.
We have written some articles on this at blogs.biproinc.com/healthcare
As a summary, I do not think we have money problem in healthcare. It is 1.7 trillion dollar industry. What is problem is uncontrolled spending, quality errors, waste, etc. Did you know for example that 30% of your insurance dollars go on administrative cost. Compare that to only 10 (about) without insurance. While administration is needed but 30% is too much.
rgds
ravi
www.biproinc.com
The problem with Medicare/Medicaid and Social Security is that these are programs that are not forward-funded. They rest on the fundamentally absurd idea that everyone can take benefits from them upon retirement without having set aside the savings to pay for them.
The payroll taxes mostly go to present beneficiaries, almost all of whom no longer work, and who are a cohort that are net consumers by a large factor. The surplus of SS is almost entirely used for present consumption by the government- it is not used for building the future apparatus of production.
As you raise the taxes to pay for present beneficiaries, the workers paying the tax have even less ability and incentive to forward fund their own retirements and future medical needs, thus creating an even greater future dependence upon future workers. The system will collapse upon itself- all Ponzi schemes have this fate.
If one were interested in building a self-sustaining system in which everyone can withdraw future benefits, then present workers would have to pay for present beneficiaries plus pay even more to forward fund their own retirement needs. These excess funds would then have to be invested in income generating activities like infrastructure building that would have attached user fees that would form the future income streams to pay future benefits. In addition, one would have to, at some point, limit the benefits paid to the actual future income streams.
At our 400+ bed hospital one of management's goals is to *only* lose 30% on an average MediCare stay. At this point they are losing 45%+ on an average MediCare stay. This means private insurers like BCBS, etc are subsidizing MediCare. Hospital expenses are a huge part of health care pie. I have a hard time imagining that anyone would like the outcome, if 50%+ of the population or so were moved to a MediCare-like, government sponsored system.