The other day, my entry focused on where some data on tattoos in the United States had actually come from. While I heard about it on a public radio program that cited the Centers for Disease Control, I found after a little digging that the data actually came from an interactive online poll. I raised the issue because of the potential for varying levels of methodological rigor between something actually produced by the CDC and other sources.
Now, I don't usually go into political issues too much on this blog. But, yesterday, I was listening to another public radio program, that I usually trust to be relatively fair to both sides of an issue, The Diane Rehm Show. However, there was one emailed question that the host read whose presumptions went unchallenged that really surprised me. If you are interested, you can go to the website, find the August 27 program, and listed to minute 17 and 18 of the program on the preview of the Republican National Convention. The listener wanted to know why she (who described herself as just under 55) should, under the plan proposed by Vice Presidential Candidate Paul Ryan, continue to pay Medicare taxes to fund coverage for those already over 65 while she would get something different when she turned 65. The listener considered it a rip off. The guest who answered the question gave a very careful answer and described it as (I'm paraphrasing rather than transcribing) the perceived short end of the stick. But the guest who commented didn't challenge the basic assumption that it is a rip off.
I will be the first to agree that what VP Candidate Ryan's budget proposals for Medicare have included is a definite change for those of us under 65 at the moment. However, I think that calling it a rip off is (a) a bit harsh and (b) ignoring the fact that it is a viable alternative and that we need some alternative to the current system if we are going to offer any sort of health care funding for everyone in the older adult population of the future. Medicare in the future cannot possibly be the same as Medicare today without costing taxpayers much more per person than it ever has before or requiring a much higher premium payment by recipients or both. Neither of those would necessarily be affordable or politically palatable.
The listener, to her credit, did seem to understand that the taxes now, in no way, are used to save up and pay for future benefits. In other words, my taxes now don't pay my benefits of the future. This has always been the case. We refer to Medicare as a "pay as you go" system.
However, the listener who posed the emailed question may have presumed that their own taxes now were a guarantee for their benefits in the future. This is an incorrect presumption. Social contracts between generations can change over time. When Medicare was institute it was a new public social contract. We have become used to Medicare. Despite the many changes in Medicare over the past three decades there are some constants that people are used to. One, as the guest on the radio program accurately described it, is that Medicare has been a defined benefit program (like a traditional pension). The plan proposed by Paul Ryan would make it a define contribution plan--in other words each person would be given a predetermined amount that would allow that person to buy at least the two least expensive private plans. This is more like today's 401k plans. There are some risks involved. I'm not sure that the risks are any greater than what we face without some more changes in Medicare.
I want to reiterate, I say this is not necessarily a rip off because we don't really know what it compares to. We do know some things about the projected continued changes in Medicare under President Obama's reforms. There has been much debate about the exact nature of the impact. The key is that any attempt to save money is going to have some type of impact on access to care. The optimistic viewpoint is that it will not be an adverse impact and that waste will be controlled. Not everyone shares the optimistic point of view.
So ultimately, I believe it is not a question of whether we change the social contract and whether those in the future will have less generous coverage. I believe it is a question of how we change the social contract and how much coverage we can still afford to give seniors in the future. We've seen this coming for years. I know that many people in my generation have presumed nothing about what we would get from Social Security or Medicare some day. I would hope that the debate would be framed as one over how best to preserve some amount of intergenerational social contract to provide for financial access to medical care in old age with a rational discussion about the merits of different alternatives.
I've picked on the side of the argument that is generally perceived as left leaning. I have the capacity to do that because I listen to that side more. I'm certainly not saying that either side is without fault in the debate. I am simply using one example and suggesting that our news coverage should do its best to point out the facts and to make clear the choices and not to leave the presumption that we will (or even should necessarily) be able to continue with the current method of funding benefits for older adults in the future unchallenged and described as a rip off to future generations. A rip off to future generations would be the complete removal of an intergenerational social contract if there were truly no way to afford it at all.
Now, I don't usually go into political issues too much on this blog. But, yesterday, I was listening to another public radio program, that I usually trust to be relatively fair to both sides of an issue, The Diane Rehm Show. However, there was one emailed question that the host read whose presumptions went unchallenged that really surprised me. If you are interested, you can go to the website, find the August 27 program, and listed to minute 17 and 18 of the program on the preview of the Republican National Convention. The listener wanted to know why she (who described herself as just under 55) should, under the plan proposed by Vice Presidential Candidate Paul Ryan, continue to pay Medicare taxes to fund coverage for those already over 65 while she would get something different when she turned 65. The listener considered it a rip off. The guest who answered the question gave a very careful answer and described it as (I'm paraphrasing rather than transcribing) the perceived short end of the stick. But the guest who commented didn't challenge the basic assumption that it is a rip off.
I will be the first to agree that what VP Candidate Ryan's budget proposals for Medicare have included is a definite change for those of us under 65 at the moment. However, I think that calling it a rip off is (a) a bit harsh and (b) ignoring the fact that it is a viable alternative and that we need some alternative to the current system if we are going to offer any sort of health care funding for everyone in the older adult population of the future. Medicare in the future cannot possibly be the same as Medicare today without costing taxpayers much more per person than it ever has before or requiring a much higher premium payment by recipients or both. Neither of those would necessarily be affordable or politically palatable.
The listener, to her credit, did seem to understand that the taxes now, in no way, are used to save up and pay for future benefits. In other words, my taxes now don't pay my benefits of the future. This has always been the case. We refer to Medicare as a "pay as you go" system.
However, the listener who posed the emailed question may have presumed that their own taxes now were a guarantee for their benefits in the future. This is an incorrect presumption. Social contracts between generations can change over time. When Medicare was institute it was a new public social contract. We have become used to Medicare. Despite the many changes in Medicare over the past three decades there are some constants that people are used to. One, as the guest on the radio program accurately described it, is that Medicare has been a defined benefit program (like a traditional pension). The plan proposed by Paul Ryan would make it a define contribution plan--in other words each person would be given a predetermined amount that would allow that person to buy at least the two least expensive private plans. This is more like today's 401k plans. There are some risks involved. I'm not sure that the risks are any greater than what we face without some more changes in Medicare.
I want to reiterate, I say this is not necessarily a rip off because we don't really know what it compares to. We do know some things about the projected continued changes in Medicare under President Obama's reforms. There has been much debate about the exact nature of the impact. The key is that any attempt to save money is going to have some type of impact on access to care. The optimistic viewpoint is that it will not be an adverse impact and that waste will be controlled. Not everyone shares the optimistic point of view.
So ultimately, I believe it is not a question of whether we change the social contract and whether those in the future will have less generous coverage. I believe it is a question of how we change the social contract and how much coverage we can still afford to give seniors in the future. We've seen this coming for years. I know that many people in my generation have presumed nothing about what we would get from Social Security or Medicare some day. I would hope that the debate would be framed as one over how best to preserve some amount of intergenerational social contract to provide for financial access to medical care in old age with a rational discussion about the merits of different alternatives.
I've picked on the side of the argument that is generally perceived as left leaning. I have the capacity to do that because I listen to that side more. I'm certainly not saying that either side is without fault in the debate. I am simply using one example and suggesting that our news coverage should do its best to point out the facts and to make clear the choices and not to leave the presumption that we will (or even should necessarily) be able to continue with the current method of funding benefits for older adults in the future unchallenged and described as a rip off to future generations. A rip off to future generations would be the complete removal of an intergenerational social contract if there were truly no way to afford it at all.
Kevin, I agree with your analysis that the Ryan plan is akin to setting up a medical care 401-K (at least that is the case with the original Ryan plan. "Ryan Lite"---aka Ryan-Wyden---I don't know what to make of that). But the empirical record of the 401-K in encouraging savings to support retirement in incredibly poor. We have a tidal wave of baby boomers approaching retirement who were told 30 years ago to forget about a pension and save for retirement using a 401-K and the mean balance in those 401-Ks is around $50,000. So well over 1/2 of baby boomers will be relying only on Social Security for their retirement. I hate to think what will happen if we tell Gen X that they have to save for both retirement and medical care. Steve Kymes
ReplyDeleteSteve--a few things. First, I agree that the notion of simply encouraging and counseling to save does not tend to work in the US. I think that my understanding of the current version of the "Ryan plan" suggests that for people who are already 65 or over (with respect to Medicare) nothing will change. We can debate how the lack of cost saving that comes from the President's program over the next 10 years will affect Medicare in the long run, but Ryan presumes no change for people who will need Medicare soon. Second, I think that when it comes to retirement, people still misunderstand how much they will get from Social Security and there are other options like family--although those may be equally unrealistic. The issues that will arise when baby boomers find themselves with insufficient funds to retire may not be very pretty as we see more of them become 65 and older. Finally, my analogy with the the 401K was only intended to compare the notion of defined benefit and defined contribution. My understanding of the current Ryan plan does not suggest that it is like a Health Savings Account (which would be more like a 401-k) but that the government in the future would pay $15000 (in today's dollars) toward health insurance purchase for each older adult rather than being on the hook for nearly unlimited expenses each year. I'm not sure how Ryan's plan handles community versus experience rating or what insurers are allowed to charge people who have pre-existing conditions and what incentives this might create for insurers to cherry pick enrollees or how those would be limited. The main point is that instead of depending on government to be the payer for the care people would rely on the government to subsidize the purchase of insurance. To really think about whether this is viable we have to know something about how the insurance market will be regulated/incentivized.
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