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An amazing admission
Posted by: McQ on Tuesday, February 07, 2006

From the editorial board of the Washington Post:
Of all the enormous budgetary problems facing the country, the most daunting is the impending explosion in the growth of Medicare, the health care program for the elderly. So President Bush deserves credit for at least proposing to take modest steps to restrain Medicare's growth in the fiscal 2007 budget released yesterday.

As part of a proposed $65 billion in cuts in entitlement programs over the next five years, Mr. Bush wants to cut $36 billion in projected Medicare spending, mostly by expanding a requirement for better-off seniors to pay higher premiums and by reining in the growth of payments to hospitals, nursing homes and home health agencies. The proposed changes would have even more effect in the second five years, amounting to a total of $105 billion in projected cuts through 2016.

Those are sensible, if limited, steps. Something's got to give in entitlement spending — or, to be more precise, someone's got to give it. We'd rather see the cuts come at the expense of seniors who can afford higher premiums than poor children who can't; hence our concerns about the Medicaid cuts just passed by Congress.

Mr. Bush's proposed cuts would take just a sliver out of Medicare spending; during the five years in which Mr. Bush wants to cut $36 billion from Medicare, total Medicare spending is set to top $2 trillion.
First, give the WaPo credit ... they didn't characterize the cuts as "spending cuts" but instead, as cuts in "projected Medicare spending". While not precisely right, it is at least an improvement. The key to the improvement may be found in the fact that they sorta, kinda agree with the cuts (they're so small as to be almost irrelevant and this gives WaPo cover as a "refomer").

And let's not forget, the cuts do target the "rich" even if, in this case, the "rich" are seniors. Naturally, means testing enables redistribution from the despised rich to, well to whomever isn't "rich", of course. Nothing objectionable to the WaPo in that scenario. If you don't believe they're thrilled with the redistributionist angle, read that last highlighted sentence again carefully.

So Bush is proposing we spend $36 billion less than we're projecting for Medicare. One of the interesting facts Senator Tom Coburn threw out on the blogger conference call last week was that the Senate has found evidence of about $40 billion a year in Medicare waste, fraud and abuse. $40 billion. And we're talking about a $36 billion cut. Seems to me, with a little oversight by Congress they'd never miss the cut.

As for the traditional (and tiresome) "for the children" lament to keep Medicaid dollars "uncut", there was a second fact which Senator Coburn mentioned. The same amount of waste fraud and abuse had been found in Medicaid. $40 billion.

That's $80 billion gone to things and purposes other than that originally intended. But then that's government (the same one so many are eager to see run all of our health care).

However, let's not lose sight of the fact that the Washington Post finally recognized the elephant in the room and even remarked that something had to be done about entitlement programs. I agree, "something's got to give in entitlement spending" (well, except for Social Security one assumes). Where we part company is with the next part of the sentence when they declare "or ... someone's got to give it". $2.7 trillion has been exacted from the taxpayers of the US. That's more than enough by anyone's measure.

The problem is the entitlement mentality which is manifested in entitlement programs. The solution is to get reid of entitlement programs. They're inherently anti-liberty in their execution.

The entire system needs to be reconsidered. If we feel an obligation to pay for health care for those who can't, through no fault of their own, afford it, then we should do it as a welfare program (because that's what it is). For the rest of us, however, we should be left to take charge of our own health care through incentives which wean us from government and back to a situation in which we again take responsibility for our health care (like through the much maligned Health Savings Accounts and catastrophic health insurance).

So while I congratulate the Post for finally owning up to the impending crisis in entitlements, they still have no long-term solution to offer other than liberal bromide of "tax the rich". That's not going to cut it. Just as we've discussed changing the culture of the Congress to excise the incentive for corruption, the way you "fix" the impending entitlement program problem is to get out of the entitlement business. And you do that by removing the incentive to seek out the government as the health care and retirement provider of choice. HSA's and privatizing a portion of Socal Security are steps in the right direction concerning ending the era (and exploding costs) of entitlements.

Means testing isn't.
 
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Comments
I agree about SS & medicare. Do people realize how much money they are throwing at these extremely wasteful programs?

Look at last year’s averages:
http://www.heritage.org/Press/Commentary/ed041405b.cfm

Over 7k/household on those two programs alone.

GW taking pocket change out of medicare is unfortunately not nearly enough to counter balance the huge increases in deficit and defense spending. Conservative?

 
Written By: fade
URL: http://
While I am hardly a proponent of ’waste, fraud and abuse’ in government, my experience is that these are defined as convenient and impossible to get rid of. Is there real waste? Sure. Will everyone agree on what qualifies as waste? No. Is there real fraud? Sure. Will we prosecute every allegation of fraud and win? No. Much of the supposed fraud is a disagreement on what the valid price code is for X procedure and a further part of it is an upcoding done because the government refuses to pay a fair amount. Abuse? A meaningless word, added by tradition to round out waste and fraud.

Since no one, not even Senator Coburn, as far as I can tell, is seriously proposing to spend two or three billion dollars on improved audit systems and inspectors, I don’t take the claims about waste, fraud and abuse seriously, or, at least, I don’t take the claim that we can save money by ’eliminating waste, fraud and abuse’ seriously. I also don’t take any tax enforcement rhetoric seriously when Congress refuses to fund those audit programs properly.

As for the problem of health care funding, let’s not forget that the United States has the most expensive health care system in the world. The average OECD country manages to pay for basic, comprehensive health care for all of its citizens while spending no more _per capita_ than the governments of the United States spend to cover most elderly and some children and others. As long as America’s health care system costs twice as much as those in other countries, another government program like medical savings accounts will not resolve that problem.
 
Written By: freelunch
URL: http://
Fade-

What is wasteful about Social Security and Medicare? The administrative costs of both are extremely low, lower than equivalent private programs, so I’m not certain what you are referring to.
 
Written By: freelunch
URL: http://
The administrative costs of both are extremely low, lower than equivalent private programs
That might be true, but the return on investment for Social Security is much lower than private programs, and in many cases negative. If the admin costs are so low, and the return is so low, how can you say there isn’t waste?
 
Written By: Steverino
URL: http://steverino.journalspace.com
Means testing isn’t.

Means testing is the only functional way to get out of the entitlement business. Means testing makes it clear - to those above the limit - that you are not entitiled to squat.

How can you arrive at a welfare system for those without the means to afford treatment, if you refuse to allow means testing?
 
Written By: Unaha-closp
URL: http://
SS and Medicaid are cheaper to run than if they were a private concern? Really?

Maybe we can cut the deficit by having the SSA run some private sector pension funds or offer mutual funds...obviously they are the most competitive according to the above assertion.

 
Written By: Harun
URL: http://
The problem is the entitlement mentality which is manifested in entitlement programs. The solution is to get rid of entitlement programs. They’re inherently anti-liberty in their execution. -McQ
Just for the formality of disclosure...exactly how much is McQ pulling in with his U.S.Government Pension after 30-years with the military? Including medical and PX perks...
 
Written By: taxpayer
URL: http://
"mostly by expanding a requirement for better-off seniors to pay higher premiums"

You know, I expected Social Security and Medicare to go this route. But is seems exceedingling unfair. I mean if you do the right things (save and invest for your retirement, maintain life insurance, etc.) you get less of your money back, now, than the guy next door who squandered it.

Reminds me of the modern version of the ant and grasshopper.
 
Written By: John
URL: http://
Just for the formality of disclosure...exactly how much is McQ pulling in with his U.S.Government Pension after 30-years with the military? Including medical and PX perks...
Look it up. It is all public knowledge.
 
Written By: Mark A. Flacy
URL: http://
But is seems exceedingling unfair. I mean if you do the right things (save and invest for your retirement, maintain life insurance, etc.) you get less of your money back, now, than the guy next door who squandered it.
Well, that’s because you are looking at them as entitlements rather than insurance. Insurance that you cannot opt out of buying, of course.
 
Written By: Mark A. Flacy
URL: http://
freelunch,
Wasteful maybe wasn’t the right word there. I didn’t mean waste as in corruption or admin costs, etc. I am talking how much "bang for your buck" do you get. As Steverino said, the ROI for SS is about as low as it gets. Any private investment has performed better. So you are basically forced to invest your money in something that is guaranteed to be poor investment.

Also, HSAs are not very helpful right now as you have to have insurance anyway to get an HSA. They should make HSAs available to anyone. I should be able to completely opt out of insurance and setup an HSA account.
 
Written By: fade
URL: http://
Also, HSAs are not very helpful right now as you have to have insurance anyway to get an HSA. They should make HSAs available to anyone. I should be able to completely opt out of insurance and setup an HSA account.
I don’t have any disagreement at all with this ... however, that also means that if you do have a catastrophic illness, you pay ... with whatever assets you have until they’re gone.
 
Written By: McQ
URL: http://qando.net
fade, I agree that the ROI on Social Security isn’t particularly high, after all, there is the real insurance portion of it and it is limited to lending money to the government — money that has kept the real cost of the deficits lower than it would be otherwise.

Harun, there are many companies that made promises to their employees that they are no longer able to keep who are giving the job to the government, which is why the PBGC is on the verge of bankruptcy. Businesses should not be allowed to control their pension funds. There have been too many problems with them. While many people object to defined contribution funds, they can be set up to be run completely outside the control of the business that is funding it. The defined benefits ones have not been.

McQ, HSAs are a silly gimmick to let fund managers have more money to play with. And, as you point out, they are not insurance.
 
Written By: freelunch
URL: http://
McQ, HSAs are a silly gimmick to let fund managers have more money to play with. And, as you point out, they are not insurance.
Uh, no, they’re not. And since your assertion about them being a "silly gimmick" provides no support as such, I’ll just leave my reply as it is.
 
Written By: McQ
URL: http://qando.net
I called them a silly gimmick because they are just another in a long series of customized tax-breaks for special kinds of savings plans. The people who are able to take advantage of the plans, whether HSAs, 401(k)s or other such plans have to have the income to save and tend to be people who are redirecting their savings from one area to another. Where is the benefit to the economy or to individuals in providing tax benefits to some forms of savings, but not to others?

HSAs have a further problem in that they do not have a private alternative — if you cannot get a 401(k) at work, at least you can do something similar with IRAs. If you cannot get an HSA at work, you’re out of luck.

Finally, HSAs reinforce the trend away from community rating in health care payments. They pull low cost users out of the pool and increase the cost for those who are still in the pool, making it unaffordable for a few more. We may call it health care insurance, but it isn’t insurance in any meaningful fashion, particularly for those with chronic illnesses.

Health care funding is a problem, primarily because health care spending is a problem in the US. As long as the governments in the US spend as much per capita on health care as any other OECD country, yet cover far fewer citizens with this tax burden, we will continue to have a problem. Adding another tax break won’t solve a thing.
 
Written By: freelunch
URL: http://
Freelunch,

TANSTAAFL :), you see, since someone must pay for it (corollary of the three laws of thermodynamics). The *government* may claim that the administrative costs are low by the way that the government defines them, but let me tell you that they most certainly are not low.

Medicaid and Medicare are administered by third parties like EDS, Blue Cross and Blue Shield plans, etc. These contractors don’t count under the usual government rules as administrative costs, they count as program expenditures from which the doctors, hospitals, et. al. get paid. Administrative costs are also out sourced by the volume of regulations onto the above named contractors and the service providers.

In case you didn’t realize it, the CFR’s for Social Security, Medicare, and Medicaid are all similar in volume to the CFR’s for the IRS. These programs are so large and convoluted that NO ONE truly understands the regulations; AND CMS GETS TO DEFINE FRAUD AFTER THE FACT. That’s right, a biller never knows whether the claim filed is truly valid even when following CMS’s rules as published and as advised by CMS and/or their contracting agents.

Remember Money magazine’s yearly tax preparer tests? Remember that advice given by the IRS can’t be relied upon nor absolve you from the consequences of relying on it? The same thing holds true for medical care providers.

The true tragedy here is that socialism...government run and/or funded medical care has so displaced what would and should be a true market. Were it not for the distortions caused by governments, no one would care that medical care represented 15% of GDP. Socialist medical care systems may "spend" less in money terms, but it pays more in "time" terms.
 
Written By: Charles D. Quarles
URL: http://spaces.msn.com/members/cdquarles/

 
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