Monday, May 21, 2012

Why We Cannot Afford Security In Old Age

This opinion piece conflates many of my favorite hatreds in one piece!  It begins with the extrapolation of a trend to its logical absurd end-point:

IF nothing is done about entitlement spending, and if our current tax breaks continue, then by 2025, tax revenue will be able to pay for Medicare, Medicaid, Social Security, interest on the debt and nothing else. The rest — defense, medical research, highways, education, energy — will have to be financed by deficits. Social Security’s funding is predicted to run short in 2033, Medicare’s trust fund in 2024.

One can do similar extrapolations with any kind of spending which is increasing.  Just figure out how many years that trend will take before all money in the world will be spent on just one good or service!  How many years before all the government money goes into national defense?   How many years before we spend all our national income on health care alone?

That's the first pet hatred.  The second is the hidden assumption in that paragraph that we cannot increase, say, the funding of Social Security.  Granted, there's a quick side-stab at the tax breaks but the rest of the piece goes on to explain why we have to change retirement age.  That we could reduce the regressive aspect of the payroll tax is something polite people never mention.

The third one is the conflation of Social Security with Medicare.  The two are different programs, you know, and it's Medicare which is in some real trouble, not Social Security as such.

The fourth pet hatred of mine has to do with the way these articles always, always attack certain programs and never the country-building or defense programs.  How much money has this country frittered away in Iraq and in Afghanistan?  For what benefit?  How many people could have gotten health care or retirement benefits with what was spent there?  Not to mention the lives saved if we could learn to do less war.

Indeed, I will not take these woe-is-me pieces about the entitlement programs seriously until the writer also addresses the military-industrial complex and its entitlements.  A good way to begin is to count the number of lives saved or made better under each alternative use of government funds.

My final point, not quite worthy of the label "pet hatred,"  has to do with Medicare spending.  Yes, Medicare IS expensive and, yes, we need to install good efficacy studies in geriatric health care, ask some hard questions about what the best types of care are for the group of individuals near the end of their lives and how to deliver that care most efficiently.

BUT the fact is that most health care spending will be done by all of us when we are old.  That is the nature of the beast.  Comparing the health care costs of younger individuals with private insurance to Medicare costs doesn't make much sense.  We cannot save money by turning old people into younger people (although such comparisons do show that centralized systems, such as Medicare, have much lower administrative costs).

In other words, health care for the group that is currently covered under Medicare will always be the most expensive chunk of the national health care expenditure.  How we fund that care is the real question.  Do we really want the frail elderly to pay for it at that point in the life cycle?