How Useful is the Health Care Bill Now?

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How Useful is the Health Care Bill Now?

Postby Lycur » Wed Dec 16, 2009 5:02 pm UTC

In Nate Silver's view, it's still pretty good:
http://www.fivethirtyeight.com/2009/12/ ... zy-to.html

I saw this linked in a thread on reddit filled with people bitching about how awful the bill was now. I think it's a good read.

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Re: How Useful is the Health Care Bill Now?

Postby Indon » Wed Dec 16, 2009 5:52 pm UTC

Well, it's heartening. Kinda sucks that I could well fall into the 'you guys don't really benefit' group (single, fairly well-off), but it's all cool.
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Re: How Useful is the Health Care Bill Now?

Postby Dauric » Wed Dec 16, 2009 5:59 pm UTC

Indon wrote:Well, it's heartening. Kinda sucks that I could well fall into the 'you guys don't really benefit' group (single, fairly well-off), but it's all cool.

Being part of the "You guys don't really benefit" group doesn't bother me, it's being part of the "By the way, now you're screwed" group that I worry about.
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Re: How Useful is the Health Care Bill Now?

Postby Heisenberg » Wed Dec 16, 2009 6:05 pm UTC

First, wasn't the CBO estimate based on the bill as written a few months ago? This bill is being hacked apart right now (I think they just cut a measure which would save money by buying drugs from other countries). The bill that comes out of the Senate won't be the same one the CBO rated (and it won't be the final bill post-reconciliation with the House).

Second, if this bill really cut costs by punishing those evil health insurance providers, wouldn't we see a reduction in overall cost? To me, it's alarming that we'll need $20,000 to pay for health care. Shouldn't we address the root causes of this increase? I mean, simply saying "We'll fix it by just adding it to the national debt! It's magically better now!" isn't comforting to me. If you said "food prices will triple in the next 7 years, but we'll fix it by subsidizing it with borrowed federal dollars" I would be similarly concerned. This blog is advertising a band-aid, not a solution.

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Re: How Useful is the Health Care Bill Now?

Postby Indon » Wed Dec 16, 2009 6:07 pm UTC

Dauric wrote:Being part of the "You guys don't really benefit" group doesn't bother me, it's being part of the "By the way, now you're screwed" group that I worry about.


What group was that? I don't recall reading anything like that in the article.
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Re: How Useful is the Health Care Bill Now?

Postby Dauric » Wed Dec 16, 2009 6:34 pm UTC

Indon wrote:
Dauric wrote:Being part of the "You guys don't really benefit" group doesn't bother me, it's being part of the "By the way, now you're screwed" group that I worry about.


What group was that? I don't recall reading anything like that in the article.


Then check out the comments. There's quite a few groups that get nailed by the mandate to buy coverage, and a lot of disagreement over the article's numbers.
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Re: How Useful is the Health Care Bill Now?

Postby Heisenberg » Wed Dec 16, 2009 6:58 pm UTC

Numbers problem: This analysis is predicting growth of health care costs while ignoring inflation and wage increases. Sure, $54,000 seems like a reasonable amount of money right now, but how much will it be worth in 2016? Should we expect it to fully provide for a family of four?

I don't think you have an accurate picture when you're predicting an increase in costs partially based on inflation, but ignore any increase in wages or benefits due to that same inflation. In 2016, a family of four making $54,000 might qualify for Medicaid.

A family making $54k 7 years ago would have the same buying power as a family today making $65k. So it's entirely possible that this family's health care costs will be increasing at the same rate as their buying power ($10k over 7 years).

Basically, he's a guy in 1900 saying "In the year 2000, a house will cost $100,000! How can I afford that, I only make $2,500 a year!" The same job in 2000 will make $50,000 a year, and he'll be able to afford the house.

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Re: How Useful is the Health Care Bill Now?

Postby Lycur » Wed Dec 16, 2009 7:42 pm UTC

Heisenberg wrote:Numbers problem: This analysis is predicting growth of health care costs while ignoring inflation and wage increases. Sure, $54,000 seems like a reasonable amount of money right now, but how much will it be worth in 2016? Should we expect it to fully provide for a family of four?

I don't think you have an accurate picture when you're predicting an increase in costs partially based on inflation, but ignore any increase in wages or benefits due to that same inflation. In 2016, a family of four making $54,000 might qualify for Medicaid.

A family making $54k 7 years ago would have the same buying power as a family today making $65k. So it's entirely possible that this family's health care costs will be increasing at the same rate as their buying power ($10k over 7 years).

Basically, he's a guy in 1900 saying "In the year 2000, a house will cost $100,000! How can I afford that, I only make $2,500 a year!" The same job in 2000 will make $50,000 a year, and he'll be able to afford the house.


That's a fair criticism, but it actually only strengthens his point.

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Re: How Useful is the Health Care Bill Now?

Postby Indon » Wed Dec 16, 2009 8:02 pm UTC

Dauric wrote:Then check out the comments. There's quite a few groups that get nailed by the mandate to buy coverage, and a lot of disagreement over the article's numbers.


God, political blog comments? I mostly read/post on that sort of thing when I'm really bored and I want to correct stupid people.

I see a lot of people complaining, sure, but by far the biggest complaint is a moral one: "But health insurance corporations will actually make more money from it!"

It's a fine moral argument against the bill, but people are still paying less for their health insurance.

Personally, if the existing bill comes out, I'm going to game the system for everything I can: I'm going to get some tiny, bare-bones health insurance from some nobody company until I get seriously sick, then I'm going to switch to something premium at a big company that they can't reject me out of, if that is at all possible in the final version of the bill. If it isn't, I'll find the closest equivalent that is, and do that.
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Re: How Useful is the Health Care Bill Now?

Postby Dauric » Wed Dec 16, 2009 8:11 pm UTC

Indon wrote:
Dauric wrote:Then check out the comments. There's quite a few groups that get nailed by the mandate to buy coverage, and a lot of disagreement over the article's numbers.


God, political blog comments? I mostly read/post on that sort of thing when I'm really bored and I want to correct stupid people.

I see a lot of people complaining, sure, but by far the biggest complaint is a moral one: "But health insurance corporations will actually make more money from it!"

It's a fine moral argument against the bill, but people are still paying less for their health insurance.

Personally, if the existing bill comes out, I'm going to game the system for everything I can: I'm going to get some tiny, bare-bones health insurance from some nobody company until I get seriously sick, then I'm going to switch to something premium at a big company that they can't reject me out of, if that is at all possible in the final version of the bill. If it isn't, I'll find the closest equivalent that is, and do that.


Problem is that while the big premium company can't reject you from joining their plan, there's no actual reform of the system to prevent them from rejecting your claim once you're paying in to the system. The insurance companies have made an art out of denying claims that they've promised to pay out for. You could end up worse off, having just bought in to the plan only to find that they refuse to pay out -after- you rack up the bill.
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Re: How Useful is the Health Care Bill Now?

Postby Ixtellor » Wed Dec 16, 2009 8:21 pm UTC

I only read a Democratic Senators summary of the bill and:

1)Does it seem to help combat rising healthcare costs... possibly. There is good reason to believe it might help stem the tide. (competition, small businessess getting in pools, etc)

2) Will it make insurance companies stop being dicks? I read that losing your job, they can't cut you off so thats good, didn't get a clear answer on if they can 'drop you for getting sick'. Which is more important in my mind.

3) Will it help cover more of the uninsured. The bill has changed from day to day, but the last version I saw would cover more people (31 million is what the estimate was - but this might have changed in the last 48 hours)

So overall, it does something positive , it appears.


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Re: How Useful is the Health Care Bill Now?

Postby Heisenberg » Wed Dec 16, 2009 8:28 pm UTC

Lycur wrote:That's a fair criticism, but it actually only strengthens his point.

How so? If you told me that people making $20,000 a year can't afford to insure a family of four, I'd say "No shit, they can barely afford rent." It's not relevant information. With inflation, should we expect $50,000 to comfortably support 4 individuals, or is it the same scenario?

Edit: Instead of guesstimating inflation, the author should be speaking exclusively in 2009 dollars. If you remove the increase due to inflation of the dollar, and concentrate on the increase in costs after adjusting for inflation, the analysis would be more credible. Of course, it would lose the shock value that comes with the false comparison.

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Re: How Useful is the Health Care Bill Now?

Postby Dauric » Wed Dec 16, 2009 8:38 pm UTC

Ixtellor wrote:2) Will it make insurance companies stop being dicks? I read that losing your job, they can't cut you off so thats good, didn't get a clear answer on if they can 'drop you for getting sick'. Which is more important in my mind.


Except that "Being dropped" is not the same as "Refusing to pay", which they routinely do now. They'll happily keep you on their rolls and take your checks, but the moment you make a claim they'll fight you over it claiming some test or other was elective or preventable, and continue to take your money while doing it.

3) Will it help cover more of the uninsured. The bill has changed from day to day, but the last version I saw would cover more people (31 million is what the estimate was - but this might have changed in the last 48 hours)


As one of those uninsured I'm sooo looking forward to the additional bill to pay. Government aid or not there's still people who will need it to make ends meet, but will make too much to actually qualify, and by more than a few estimates I've heard over the year I'm smack in the middle of that hole. And just to cap it all off, unlike say the credit card bill I'm paying off that I used to buy a washer and dryer, if I ever actually need to get value out of buying health-insurance I'll have to fight lawyers for it.

It's not health-reform. It's not even substantive health-insurance reform. That may have been the original intent, but that's not what we're getting.
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Re: How Useful is the Health Care Bill Now?

Postby Ixtellor » Wed Dec 16, 2009 8:46 pm UTC

Dauric wrote:Except that "Being dropped" is not the same as "Refusing to pay", which they routinely do now. They'll happily keep you on their rolls and take your checks, but the moment you make a claim they'll fight you over it claiming some test or other was elective or preventable, and continue to take your money while doing it.


I made that distinction, and not sure what your point is since I said the same thing.

The fact they can not insta drop you for losing your job -- is an improvment independant of the other more serious thing.

Dauric wrote:As one of those uninsured I'm sooo looking forward to the additional bill to pay. Government aid or not there's still people who will need it to make ends meet, but will make too much to actually qualify, and by more than a few estimates I've heard over the year I'm smack in the middle of that hole.


I have not seen any threshold numbers, or how much the lowest premiums are going to be. Have you?

If you feel like sharing: What is your household income and how many people are there.

Part of healthcare reform does include having people enroll that can afford it but choose not to, then become a burden when they suffer a catastrophic health event and expect premium paying members to cough up the dough on their behalf.

Not saying your one of these people, but if you live alone and make $50K per year....



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Re: How Useful is the Health Care Bill Now?

Postby Endless Mike » Wed Dec 16, 2009 8:55 pm UTC

Dauric wrote: if I ever actually need to get value out of buying health-insurance I'll have to fight lawyers for it.

You're making it sound as if no health insurance company ever pays for anything, and, well, that's simply not true.

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Re: How Useful is the Health Care Bill Now?

Postby Indon » Wed Dec 16, 2009 9:06 pm UTC

Dauric wrote:Problem is that while the big premium company can't reject you from joining their plan, there's no actual reform of the system to prevent them from rejecting your claim once you're paying in to the system. The insurance companies have made an art out of denying claims that they've promised to pay out for. You could end up worse off, having just bought in to the plan only to find that they refuse to pay out -after- you rack up the bill.


A fair scenario.

But still preferable to the same scenario in the status quo, in which my claim gets rejected and my coverage gets dropped and I can't ever get coverage again, so I lose out on even the chance of stumbling on a company that doesn't find an excuse to deny me.

Endless Mike wrote:You're making it sound as if no health insurance company ever pays for anything, and, well, that's simply not true.


Paying for minor claims and problems isn't what insurance is for.

People buy health insurance to pay catastrophic claims that they could not possibly afford otherwise.

That's the kind of thing no health insurance company can ever be trusted to pay, since paying it would make you no longer a profitable customer.
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Re: How Useful is the Health Care Bill Now?

Postby Dauric » Wed Dec 16, 2009 9:47 pm UTC

Ixtellor wrote:
Dauric wrote:As one of those uninsured I'm sooo looking forward to the additional bill to pay. Government aid or not there's still people who will need it to make ends meet, but will make too much to actually qualify, and by more than a few estimates I've heard over the year I'm smack in the middle of that hole.


I have not seen any threshold numbers, or how much the lowest premiums are going to be. Have you?

If you feel like sharing: What is your household income and how many people are there.

Part of healthcare reform does include having people enroll that can afford it but choose not to, then become a burden when they suffer a catastrophic health event and expect premium paying members to cough up the dough on their behalf.

Not saying your one of these people, but if you live alone and make $50K per year....

Ixtellor


I'm just under $30K a year gross income, I net around $24k. Denver Metro median is $45K to $50K. Just myself now though I've been supporting my roommate since he lost his job in May, and now that he's had to move back with his parents I'm still stuck with effectively double-rent for the 2bd.2bath apartment (which eats up 1.5 weeks of pay on top of the 1.5 weeks pay that would be my normal share), and no savings to move with. Now that he's moved out my budget may shift somewhat (possibly lower electricity and food costs) and I may be able to start actually saving money again, however that was less than a month ago so I can't say by how much with any certainty.

The numbers I've heard, and again this is from various sources over the course of this whole debate, puts an aid cutoff at around the 20K to 30K marks, right where my current income is at. Some plans with sliding percentage-based aid (IE, at such-and-such a level you pay X percentage, the govt pays %100-x%) and others as a flat cutoff. As far as lowest premiums I've not heard anything that I feel I could quote with any certainty. Depending on the interest group involved they were anything between $60 to $600 a month.
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Re: How Useful is the Health Care Bill Now?

Postby netcrusher88 » Thu Dec 17, 2009 6:21 am UTC

Tomorrow the Washington Post will publish an editorial to the opposite by former VT governor and DNC chair Howard Dean:
Spoiler:
Howard Dean wrote:If I were a senator, I would not vote for the current health-care bill. Any measure that expands private insurers' monopoly over health care and transfers millions of taxpayer dollars to private corporations is not real health-care reform. Real reform would insert competition into insurance markets, force insurers to cut unnecessary administrative expenses and spend health-care dollars caring for people. Real reform would significantly lower costs, improve the delivery of health care and give all Americans a meaningful choice of coverage. The current Senate bill accomplishes none of these.

Real health-care reform is supposed to eliminate discrimination based on preexisting conditions. But the legislation allows insurance companies to charge older Americans up to three times as much as younger Americans, pricing them out of coverage. The bill was supposed to give Americans choices about what kind of system they wanted to enroll in. Instead, it fines Americans if they do not sign up with an insurance company, which may take up to 30 percent of your premium dollars and spend it on CEO salaries -- in the range of $20 million a year -- and on return on equity for the company's shareholders. Few Americans will see any benefit until 2014, by which time premiums are likely to have doubled. In short, the winners in this bill are insurance companies; the American taxpayer is about to be fleeced with a bailout in a situation that dwarfs even what happened at AIG.

From the very beginning of this debate, progressives have argued that a public option or a Medicare buy-in would restore competition and hold the private health insurance industry accountable. Progressives understood that a public plan would give Americans real choices about what kind of system they wanted to be in and how they wanted to spend their money. Yet Washington has decided, once again, that the American people cannot be trusted to choose for themselves. Your money goes to insurers, whether or not you want it to.

To be clear, I'm not giving up on health-care reform. The legislation does have some good points, such as expanding Medicaid and permanently increasing the federal government's contribution to it. It invests critical dollars in public health, wellness and prevention programs; extends the life of the Medicare trust fund; and allows young Americans to stay on their parents' health-care plans until they turn 27. Small businesses struggling with rising health-care costs will receive a tax credit, and primary-care physicians will see increases in their Medicare and Medicaid reimbursement rates.

Improvements can still be made in the Senate, and I hope that Senate Democrats will work on this bill as it moves to conference. If lawmakers are interested in ensuring that government affordability credits are spent on health-care benefits rather than insurers' salaries, they need to require state-based exchanges, which act as prudent purchasers and select only the most efficient insurers. Sen. John Kerry (D-Mass.) offered this amendment during the Finance Committee markup, and Democrats should include it in the final legislation. A stripped-down version of the current bill that included these provisions would be worth passing.

In Washington, when major bills near final passage, an inside-the-Beltway mentality takes hold. Any bill becomes a victory. Clear thinking is thrown out the window for political calculus. In the heat of battle, decisions are being made that set an irreversible course for how future health reform is done. The result is legislation that has been crafted to get votes, not to reform health care.

I have worked for health-care reform all my political life. In my home state of Vermont, we have accomplished universal health care for children younger than 18 and real insurance reform -- which not only bans discrimination against preexisting conditions but also prevents insurers from charging outrageous sums for policies as a way of keeping out high-risk people. I know health reform when I see it, and there isn't much left in the Senate bill. I reluctantly conclude that, as it stands, this bill would do more harm than good to the future of America.

The last sentence sums this article and the progressive position on the bill up nicely:
I reluctantly conclude that, as it stands, this bill would do more harm than good to the future of America.
It does next to nothing to control costs. Cost to the individual doesn't count, because the true cost of insurance will continue to rise and we'll be hurt by our government paying bigger and bigger subsidies as well as our employers paying bigger and bigger subsidies - both things that have a negative impact on the individual. Furthermore the individual cost control is a joke - $1.25k out of pocket per typical individual in a four person family is ridiculous. We'll continue to spend the highest amount per capita in the world on health care for the privilege of not covering millions, in large part because insurers will still be able to spend as much of our premiums as they damn well please to buy lawmakers to fight any further reform, buy lawyers to fight compliance with this watered-down reform, and dole out huge salaries to their executives to pat them on the back for doing such a good job of it.

Time to kill the bill. This isn't reform, this is a massive unchecked earmark for the insurance industry. Call me when Medicare for All is back on the table, because every single time single-payer has been implemented it's worked just fine and been cost effective - and every CBO report on this bill and even AHIP's own likely lowball estimate shows this "reform" won't be.
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Re: How Useful is the Health Care Bill Now?

Postby Diadem » Thu Dec 17, 2009 12:06 pm UTC

Ixtellor wrote:So overall, it does something positive , it appears.

But you have to ask yourself is a small improvement is better than no improvement.

Remember, this is politics. If the bill fails, that allows for a better bill to pass at some later time. But if it passes now, next time someone tries to fix the system everybody will just go "we already fixed it" and you'll be stuck with a slightly-less-crappy-but-still-very-crappy system for the better part of the rest of the century.
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Re: How Useful is the Health Care Bill Now?

Postby Ixtellor » Thu Dec 17, 2009 2:03 pm UTC

Diadem wrote:But you have to ask yourself is a small improvement is better than no improvement.


Yes.

Diadem wrote:Remember, this is politics.


Yes, and political realities dictate that the ultimate progressive healthcare reform is not possible at this time. You need 60 votes in the Senate, and the progressive don't have 60.

The Republicans won the spin war, and a Democrat in a moderate district would basically have to yield that seat to his challenger in order to make a progressive vote on healthcare. In the House they have safe districts and larger majorities so they can afford to make that vote, but in the Senate where constituencies are far more diverse and districts 'less safe', this is a far riskier vote.

Politics is about political capital with the American people. And Liberals are just about out. Stimulus Bill, Financial Bailouts (cars and banks), Jobs programs or Stimulus II, is what they have chosen to spend that capital on. (Regardless of their hand in creating the problems or Bush's involvelment in the bailouts - the spin is that these were Democratic agendas)
For a Senator, there just isn't much 'political capital' left.
You can assume that cap and trade, gays in the military, education reform, and other smaller liberal issues are over.

Everything is going to hinge on the economy and jobs. If it goes up, the Dems get more 'capital', if it goes down expect a Republican slaughter of Dems (The Dems will lose seats in the Senate and House in 2010, the question is how many)

Diadem wrote:But if it passes now, next time someone tries to fix the system everybody will just go "we already fixed it" and you'll be stuck with a slightly-less-crappy-but-still-very-crappy system for the better part of the rest of the century.


Think of this bill as a foundation.
If you pass this bill, it will be easier in the future to make additions. They can slip in minor reforms as 'riders' on other legislation as well as bring up simple popular issues one at a time, as opposed to the 'holy crap we are communist' major overhalls. Since the bill basically includes a patients bill of rights in it, it will be easier to just add new rights, as the populace realizes they like some of the reforms.

Think about the Invade Iraq vote. How many subsequent additions have we had sense then? It wasn't a case of "we already did that", its a never ending series additions.


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Re: How Useful is the Health Care Bill Now?

Postby Heisenberg » Thu Dec 17, 2009 2:14 pm UTC

Ixtellor wrote:Think of this bill as a foundation.
If you pass this bill, it will be easier in the future to make additions. They can slip in minor reforms as 'riders' on other legislation as well as bring up simple popular issues one at a time, as opposed to the 'holy crap we are communist' major overhalls. Since the bill basically includes a patients bill of rights in it, it will be easier to just add new rights, as the populace realizes they like some of the reforms.

This is the reason the GOP will continue to oppose this bill, even after all meaningful reform has been taken out.

Whether or not it's true, it's part of the current propaganda machine.

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Re: How Useful is the Health Care Bill Now?

Postby Ixtellor » Thu Dec 17, 2009 2:23 pm UTC

Heisenberg wrote:
Ixtellor wrote:Think of this bill as a foundation.
If you pass this bill, it will be easier in the future to make additions. They can slip in minor reforms as 'riders' on other legislation as well as bring up simple popular issues one at a time, as opposed to the 'holy crap we are communist' major overhalls. Since the bill basically includes a patients bill of rights in it, it will be easier to just add new rights, as the populace realizes they like some of the reforms.

This is the reason the GOP will continue to oppose this bill, even after all meaningful reform has been taken out.

Whether or not it's true, it's part of the current propaganda machine.


Or if you believe Jim Demint is true to his word, they will oppose it regardless because they want it to be Obama's Waterloo. (The Napolean thing, not the Abba song)

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Re: How Useful is the Health Care Bill Now?

Postby Indon » Thu Dec 17, 2009 2:39 pm UTC

Diadem wrote:But you have to ask yourself is a small improvement is better than no improvement.

Remember, this is politics. If the bill fails, that allows for a better bill to pass at some later time. But if it passes now, next time someone tries to fix the system everybody will just go "we already fixed it" and you'll be stuck with a slightly-less-crappy-but-still-very-crappy system for the better part of the rest of the century.


That's not what happened with Medicare and Social Security.
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Re: How Useful is the Health Care Bill Now?

Postby Heisenberg » Thu Dec 17, 2009 2:42 pm UTC

Ixtellor wrote:Or if you believe Jim Demint is true to his word, they will oppose it regardless because they want it to be Obama's Waterloo. (The Napolean thing, not the Abba song)

Oh sure, Demint thinks he's scoring points here, but I don't think that's a majority opinion. Frankly, while no outcome will stop Obama from being re-elected in 2012, I think a watered-down bill would be worse than no bill at all. After all, as evidenced in this thread, failure will be blamed on Republican opposition, even though the Democrats are entirely capable of passing reform without them. The worst outcome would be if Democrats forced through a bill, said "We reformed health care" and Americans felt no relief, and saw no meaningful results.
Indon wrote:That's not what happened with Medicare and Social Security.

God, I hope this is sarcasm.

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Re: How Useful is the Health Care Bill Now?

Postby Indon » Thu Dec 17, 2009 2:51 pm UTC

Heisenberg wrote:God, I hope this is sarcasm.


What? Both systems have been modified significantly from when they were first created. Not always to the better, certainly, but both have been changed over the decades since they were made.
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Re: How Useful is the Health Care Bill Now?

Postby netcrusher88 » Thu Dec 17, 2009 3:07 pm UTC

Medicare and Social Security are commonly used examples of that kind of failure. As good as Medicare is, there's no question it needs reform and the biggest reform to it in recent memory - Part D - was doomed to be an expensive mess that managed to do nothing for millions of individuals it should have helped before the ink was even dry (much like the current bill). Social Security will be bankrupt somewhere between 2015 and 2030 because nobody will raise the SS tax by a fraction of a percent.

If you're going to pass a program at the federal level, you'd better damn well get it right the first time.
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Re: How Useful is the Health Care Bill Now?

Postby Heisenberg » Thu Dec 17, 2009 3:13 pm UTC

Indon wrote:
Heisenberg wrote:God, I hope this is sarcasm.


What? Both systems have been modified significantly from when they were first created. Not always to the better, certainly, but both have been changed over the decades since they were made.

Ah, I thought you were holding them up as examples of success. Medicare didn't turn out as horribly as it could have, but Social Security's main modification has been "We, Congress, are going to pillage this fund for seniors to pay for our crap programs." It's still over a barrel, and even if it did have the funds to cover the baby boomers, it's not a reasonable replacement for retirement.

Social Security is a crappy half-measure that's riddled with problems. That shouldn't be the ideal we hold health care reform up to. However, your point that it has changed over the years is correct. Unfortunately, when you do something poorly, it sticks around forever. And modifications can only get you so far (and they often make it worse).

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Re: How Useful is the Health Care Bill Now?

Postby Indon » Thu Dec 17, 2009 3:31 pm UTC

Heisenberg wrote:Ah, I thought you were holding them up as examples of success. Medicare didn't turn out as horribly as it could have, but Social Security's main modification has been "We, Congress, are going to pillage this fund for seniors to pay for our crap programs." It's still over a barrel, and even if it did have the funds to cover the baby boomers, it's not a reasonable replacement for retirement.

Actually, Social Security was expanded significantly in its' early years. Only fairly recently (I'm not going to say "Reagan", because I'm not 100% on the dates, but...) was it used so obviously poorly.

Our government's dysfunctionality in this regard actually seems fairly recent.
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Re: How Useful is the Health Care Bill Now?

Postby Ixtellor » Thu Dec 17, 2009 3:31 pm UTC

Heisenberg wrote:Social Security is a crappy half-measure that's riddled with problems.


It is riddled with problems, including the one you already stated that Congress uses it to hide gaps in budgets.

But SS was created to prop up consumption for old people. Prior to SS, old people did not contribute to GDP because their consumption were just stolen wages from family members.
SS, gave old people the ability to help consumption and it does that. Its a forced retirement account that allows them to maintain a minimum level of consumption. So instead of GDP taking the full hit from a worker leaving the work force, it is cushioned by SS.

I wouldn't call that a crappy half-measure. It does exactly what it was designed to do in terms of combating recessionary cycles.


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Re: How Useful is the Health Care Bill Now?

Postby Vaniver » Thu Dec 17, 2009 4:02 pm UTC

Ixtellor wrote:It is riddled with problems, including the one you already stated that Congress uses it to hide gaps in budgets.

But SS was created to prop up consumption for old people. Prior to SS, old people did not contribute to GDP because their consumption were just stolen wages from family members.
SS, gave old people the ability to help consumption and it does that. Its a forced retirement account that allows them to maintain a minimum level of consumption. So instead of GDP taking the full hit from a worker leaving the work force, it is cushioned by SS.

I wouldn't call that a crappy half-measure. It does exactly what it was designed to do in terms of combating recessionary cycles.


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That's nonsensical- when someone retires from production, they retire from production. Old people don't contribute any more to GDP after SS was implemented. The consumption they are provided by SS is still stolen wages- now it's just not from family members.

In fact, they contribute less, because they're encouraged to retire sooner.
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Re: How Useful is the Health Care Bill Now?

Postby Indon » Thu Dec 17, 2009 4:05 pm UTC

Vaniver wrote:That's nonsensical- when someone retires from production, they retire from production. Old people don't contribute any more to GDP after SS was implemented. The consumption they are provided by SS is still stolen wages- now it's just not from family members.

In fact, they contribute less, because they're encouraged to retire sooner.


Indeed. Social Security is a social program, not an economic program.

If we wanted to push the economic aspect, we'd have no public retirement (and at the extreme, no retirement at all), so that our old people have to keep working until they keel over.

But there are some things in life worth a GDP hit.
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Re: How Useful is the Health Care Bill Now?

Postby Vaniver » Thu Dec 17, 2009 4:11 pm UTC

Indon wrote:Indeed. Social Security is a social program, not an economic program.

If we wanted to push the economic aspect, we'd have no public retirement (and at the extreme, no retirement at all), so that our old people have to keep working until they keel over.

But there are some things in life worth a GDP hit.
Also, the worst losses from early retirement are skilled professionals, who are likely to be able to retire without Social Security- so that impact is small.

More interesting, to me, is the transition from SS as a supplement to a small portion of the elderly (not only were a significant number of women and minorities excluded from participation, the retirement age was higher than the life expectency) to supposedly guaranteeing a retirement for everyone- I don't know whether to attribute that to government purposefully changing the way retirement works to economic and social changes (increased prosperity, and life expectency, especially through reduced smoking, drinking, and heart attacks, meaning that specifically dying on the job was less likely).
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Re: How Useful is the Health Care Bill Now?

Postby Ixtellor » Thu Dec 17, 2009 5:19 pm UTC

Indon wrote:Indeed. Social Security is a social program, not an economic program.


Yea... No.

Thats partly how it was sold, but that is not why it exists.
I don't feel like going into the history of SS, but let me point out a few important things:

1) SS was devised by the Committee on Economic Security in 1934. Their goal... economic security.
2) Roosevelt in his own words on SS:
"It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future Administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness."

Of course he threw in some "help the poor" but that was salesmanship, not the objective.

Vaniver wrote:That's nonsensical- when someone retires from production, they retire from production. Old people don't contribute any more to GDP after SS was implemented. The consumption they are provided by SS is still stolen wages- now it's just not from family members.


Yea.... No.

1) SS pays interest.
Social Security makes private and public investments in its long history. (Today they only issue whats called "Special Issue" private bonds available only to the US government, but they did make public bonds available in the past)
Today they are still making 4% interest rates on these bonds which range from 1 to 15 years.
In the 80's SS averaged over 10% rate of returns.

So when you factor in aggregate spending of SS recipients, it is going to be larger than total contributions, hence Consumption will be LARGER.

2) Our economic prosperity is less subjected to recessionary forces if it is absorbed in smaller percentages.
An old person going from a salary of $50,000 to $0 in 1 year is more significant in their ability to help consumption than then a person going from $50,000 to $46,900 (assuming the HIGHEST SS tax rate for their entire working life) per year for the life of their working contribution.
Yes GDP will go down by $3100 per worker per year, but it is less significant than a loss in consumption of $50,000 per retiree in a given year.

3) The sudden loss of consumption spending of old people ending their contribution is amplified in the investment sector as businesses make inventory adjustments based on current GDP figures. Company X sees a slight decline in consumption, and react by lowering production. Which affects all other sectors of the economy.

Indon wrote:If we wanted to push the economic aspect, we'd have no public retirement (and at the extreme, no retirement at all), so that our old people have to keep working until they keel over.


Unwarrented logical fallacy.

"If we really cared about national defense we would make everyone join the army at the age of 18"

OR in terms of economics another logical fallacy would be:

"If we really cared about the economy we would have mandatory savings and spending rates per income level".


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Re: How Useful is the Health Care Bill Now?

Postby Indon » Thu Dec 17, 2009 9:27 pm UTC

Ixtellor wrote:Yea... No.

Thats partly how it was sold, but that is not why it exists.

I would note that your Roosevelt quote describes what the SS program does. It furnishes relief to the needy, and it takes care of human needs.

The economic effect of that is to smooth out the consumption cycle, but it is a social program with an economic consequence, not an economic program that has a social consequence. SS does not give money to unemployed people (which is part of the original program that Roosevelt was probably talking about) and the elderly as a side-effect.

The difference is subtle, but very significant. "Trickle-down economics" would be a good description of working on economics for a social objective ('making the pie bigger', thus making everyone better off). I think we can both agree that only one of these approaches work.

Ixtellor wrote:1) SS pays interest.

SS wasn't originally created with a trust fund to accumulate interest. That was only created later to help sustain the program.

If the government wanted to create a public investment program (which, frankly, isn't entirely a bad idea), there would be way better ways of going about it than the Social Security trust fund.

Ixtellor wrote:Unwarrented logical fallacy.

Actually, it's perfectly warranted.

You described the impact of Social Security as being in relation to GDP, but it's better for GDP to discourage retirement than to facilitate it.
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Re: How Useful is the Health Care Bill Now?

Postby Vaniver » Thu Dec 17, 2009 9:53 pm UTC

Ixtellor wrote:So when you factor in aggregate spending of SS recipients, it is going to be larger than total contributions, hence Consumption will be LARGER.
You're assuming that the money would earn less than 4% (or whatever amount you want to label SS as returning) if it wasn't in SS. Are you accounting for the population effects (when population grows, the amount of money coming into SS increases; when population ages, the amount of money going out of SS increases)? Because SS is running out of money- that doesn't sound like an investment to me. That sounds like a collapsing Ponzi scheme people are forced into by the taxman.

The other problem here is that you seem to be mixing up production and consumption. There's a finite amount of production now; some of it goes into consumption, some of it goes into capital investment. If SS is increasing consumption later through capital investment, it has to do it through reducing consumption now. It's not clear to me that the government can manage capital better than private actors, or that it's desirable for the government to be managing capital.

Ixtellor wrote:An old person going from a salary of $50,000 to $0 in 1 year is more significant in their ability to help consumption than then a person going from $50,000 to $46,900 (assuming the HIGHEST SS tax rate for their entire working life) per year for the life of their working contribution.
When an old person retires, they don't stop spending money. If they retire from their job earning $50,000 a year, they're probably keeping their standard of living about the same- so maybe they were spending $35,000 before, and they're spending $35,000 now, out of their savings.

The SS scenario just forces them to 'save' a certain amount, and let the government manage that money for them. That money isn't actually saved in the sense that every person has a SS account like they have a bank account; future people buying in is necessary for you to get the money SS has promised you (where, for the bank, you just have to not ask for your money back until their loans pay back in).

Ixtellor wrote:Unwarrented logical fallacy.
You are aware that the implementation of SS was followed by a brief recession which some think was caused by increased retirement and that the program was sold as retiring old people to make more jobs for young people, right?
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Re: How Useful is the Health Care Bill Now?

Postby Ixtellor » Fri Dec 18, 2009 2:12 pm UTC

Indon wrote:The economic effect of that is to smooth out the consumption cycle, but it is a social program with an economic consequence, not an economic program that has a social consequence.


There were many SS like programs prior to our official passage that States and other nations had implemented and it is true that many of them were based on the premise of helping those in need.

This idea was bounced around the US, but was mostly left up to the States to do, or not do, at their discretion.

The reason we have SS today was a direct reaction obviously to the depression and it was conceived (borrowed) by the
Committee on Economic Security. Had it been introduced by some other government agency I might agree with you.
But SS was based on economic theory based on a variety of changing factors in the American economy. (more people in cities who were incapable of eeking out a subsistance level life was the main culprit)

You can disagree but I think you would be doing so based on the 'salesmenship' of the plan and not the group of up and coming economic theorists who pieced it togeather.

Indon wrote:You described the impact of Social Security as being in relation to GDP, but it's better for GDP to discourage retirement than to facilitate it.
.


Yes, but just because they don't discourage retirement does NOT mean that SS is not based on GDP. Thats your fallacy.
Hence my equally flawed example - The absence of a draft does not mean we don't have a large army for national defense.

You introduced a new variable that does not disprove the premise, but acted as if it did.

Vaniver wrote:You're assuming that the money would earn less than 4%


Nah. Include the average American savings rate and its still lower than the average interest rate. We currently have a negative savings rate and SS is paying 4.5%. So the aggregate interest payments are a net gain.

Vaniver wrote:The other problem here is that you seem to be mixing up production and consumption. There's a finite amount of production now; some of it goes into consumption, some of it goes into capital investment. If SS is increasing consumption later through capital investment, it has to do it through reducing consumption now. .


In 1934 when SS was introduced, America had a negative savings rate from all of 1932-1933. Hence wages in the aggregate were exclusivly going towards consumption. There were no future investments to 'cash in' and convert to consumption. And there was virtually no capital investment going on --- Great Depression.

Then you have all the years inbetween then and now where in recent years we again had a negative savings rate.

If you factor in the savings rate per capita, by the average rate of return, and then adjusting for inflation, you are going to find other periods where individual savings would result in a net loss.
THEN if you factor in that these are aggregate numbers, where the wealthy are more likely to save for the future, and the poor are less likely, you still end up in a situation where X% of the population is not preparing for their economic years where they are unable to contribute to consumption... and you can still and up in a scenario where SS acts as an automatic stabilizer.

As to your last part.
It's not clear to me that the government can manage capital better than private actors, or that it's desirable for the government to be managing capital


This leads into another conversation. Can the government manage my money better than I could if I were free to invest it... No? SS is not about the people with good habits and taking personal responsibility for the economic security, its for those that don't. In 1934 and in 2006 this included virtually everybody. For people retiring in 2006 its probably that they saw a devaluation of 40% in their investment portfolio. So even for the smartest investors who think long term, short term shocks in the stock market can have end life ramifications.

I would love to talk more about how Clinton and then Bush tried to revamp SS for higher yields and more personal involvement, but I am out of time.


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