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Author Topic: The Path to Prosperity?
TCB
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By now everyone's had some time to digest Paul Ryan's new budget.

To summarize the bill's effects, on Medicare, it privatizes the system, giving seniors vouchers that can be spent on exchanges. The vouchers will be indexed to inflation (not to health care inflation, which is typically 2x or more normal inflation). On Medicaid, it replaces the current system with block grants to states indexed to inflation + population growth.

The plan also reduces discretionary spending to 2008 levels, reduces growth in defense spending, cuts the top marginal tax rates to 25%, and repeals Dodd-Frank. It takes no action on Social Security.

Opinion leaders have reacted predictably - conservatives say it sets a new standard of seriousness, liberals question its growth assumptions and the political tenability of shifting health care costs from government to seniors.

Any opinions here?

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JWatts
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All of entitlements have to be indexed to inflation. You can not have any long-term large program be solvent over a decades long period if it's growing faster than inflation.

So none of this is really surprising. Something of this nature will eventually be forced upon us as the costs of the underlying programs exceed the Feds ability to pay for them.

This is one of the first times in decades that a politician has stood up and acted like an adult in respect to entitlements.

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Pyrtolin
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The whole thing is based on completely imaginary numbers. (2.8% unemployment within 5 years being the most absurd of them, and that's not even considering that he pretty much expects them to appear by magic in the face of the direct job losses that his cuts would naturally cause)

His Medicare changes not only won't cut health spending, but by trying to replicate the failure of Medicare Advantage, will significantly increase it, it will just shift the cost burden from the government to seniors, such that within 10 years of going into effect the cost to seniors will be more than the average Social Security benefit. If it's going to be limited, at the worst it should be limited to GDP growth, so that it's benefit remains roughly constant to overall economic growth, but even then it has the same problems of not actually doing anything to address any underlying problems, just shifting the burden of dealing with them to individuals instead of sharing the cost and responsibility on a community level.

Amusingly enough, his proposal there is pretty similar to the ACA system, except that it contains none of the delivery reform provisions and the rapidly decreasing value of the subsidy is pretty much guaranteed to drive people out of the market once care becomes affordable. He pretty much violates the fundamental point of Medicare, which is to ensure that Seniors have 100% coverage.

The Medicaid cuts are equally bad, especially in light of the current downturn which shows exactly why such programs need to be flexible so that they can adjust to the increased need for them in hard times, so instead of expanding when people need it to be there most, it would effectively shrink.

The fundamental goal of these changes is to be able to continue the process of, 15-20 years down the line, point to them and saying that they're broken and need to be cut further or eliminated and keep accelerating the pace of upward wealth transfer.

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TCB
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The primary assumption underlying the health care portion of Ryan's budget is that reducing the amount of money people can spend on health care will lead to reductions in the cost of health care. It's not entirely implausible, although I think the economics of health care make it mostly implausible. If your hypothetical father has a voucher for $25,000 worth of health care but needs $100,000 for emergency surgeries at the hospital, what's going to happen? Either he and his family will go into debt to pay or he'll skip the surgery. Talk about rationing care!

Which brings up the other problem with Ryan's proposal. The GOP ran hard against Obama's Medicare cuts in 2010. The last GOP president passed a prescription drug bill for seniors with absolutely no attempt to offset its costs. If the party that's traditionally opposed to entitlement spending couldn't help but increase Medicare spending and passionately fight against cutting it, how can we expect future congresses (which, if history is a guide, will probably be more idealogically supportive of entitlements) to sit back and do nothing as many seniors are unable to afford care?

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JWatts
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quote:
Originally posted by TCB:
The primary assumption underlying the health care portion of Ryan's budget is that reducing the amount of money people can spend on health care will lead to reductions in the cost of health care. It's not entirely implausible, although I think the economics of health care make it mostly implausible. If your hypothetical father has a voucher for $25,000 worth of health care but needs $100,000 for emergency surgeries at the hospital, what's going to happen? Either he and his family will go into debt to pay or he'll skip the surgery. Talk about rationing care!

A senior would use his voucher to purchase an insurance policy. Indeed, I imagine that would be mandatory just like Obamacare attempts to make insurance policies mandatory now. In this case though, since there is a voucher vs a mandate it would be legal.

Since, the amounts would be indexed to inflation, it would force patients and insurers to insist on modest increases to health care costs. There would be hard caps.

However, this argument is pretty academic. The Medicare budget is limited to 2.9% of the wages of the workers in the nation. We are already over that cap, so the current rate of expansion is completely unsustainable. Any delays in introducing changes will only result in less Medicare in the future, not more.

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Pyrtolin
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quote:
A senior would use his voucher to purchase an insurance policy. Indeed, I imagine that would be mandatory just like Obamacare attempts to make insurance policies mandatory now. In this case though, since there is a voucher vs a mandate it would be legal.
You're making no sense there, especially talking about two different items. There is no mandate in Ryan's plan, just vouchers. There's not even a requirement that insurers offer a given level of service at a given price point compared to the vouchers. At least the ACA specifies service levels and ensures that the vouchers that it gives cover a certain percent of that service level and grants states the power to act as prudent purchasers to actually negotiate the rates to reasonable levels; something that's impossible on the individual level.

And Medicare's budget isn't limited to anything. It's dedicated revenue is set at 2.9% of payroll, but that's not a budget limitation, and making it much more expensive by sending it to the private market and shifting that cost and more onto people that can't afford it isn't going to do anything but force people out of the program. You can get individual cost savings when you force and exploitative market to convert to be something much closer to a free market as ACA does. But if you take a market that's controlled at an optimum far better than a profit-based market can offer and open it up, costs can only go up; not only does Ryan's plan not try to address medical costs at all, it compounds the problem by increasing them dramatically, but tries to sweep that fact under the rug by forcing individuals to bear all of the costs rather than keeping them at the community level where they're harder to ignore.

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yossarian22c
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I think it's sad that he eviscerates the social safety net while dramatically cutting taxes on the wealthy. There is no way a middle class family could save enough working for 40 years to pay for medical insurance and procedures (even with a voucher) for 30+ years of retirement. If this plan is enacted retirement will become a luxury only the wealthy can afford.

A serious plan would follow more along the lines of Bowles-Simpson. I think they do too little raising of revenue's but at least that is a piece of the pie. I would eliminate the Bush tax cuts for everyone making over $100,000 and raise the marginal tax rate to 40% for individuals making over $500,000 a year and to 45% for individuals making over $1.25 million a year. Also we need to significantly raise the cap on payroll taxes and index the new cap to inflation to drastically improve the viability of SS and Medicare.

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Ben
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Yossarian, I'm still looking through the plan + such as has been discussed so far, but I notice that you talked about saving 40 years for 30+ years retirement. Where does that come from? Why is that set as it is? As things are now, you're saying people should have others care for them for 50+ years (assuming about 20 years as kids under parents and not Obamacare's 25+). Seems a bit much to expect, and gold plated retirement pensions + plans some politicians and connected folk get, doesn't leave much for the rest of us.

Used to be, people worked until they died unless they had family or someone to help in the last few years of their lives, + even then a lot of grandparents helped out with what they could, watching babies or such chores around the home. I do think there's a good purpose + intent behind Social Security and Medicare which has gotten a bad case of mission creep of which Obamacare is just the latest and biggest chunk. Just undo that and push back retirement to a few years past average life expectancy again (which I believe is where the qualifying age for Social Security was originally set), as now most people who survive to "average life expectancy" live longer than that.

Maybe we need to change our life expectations, count 15 years as kids (lots start part time work @ 16) then (edit to add: work + school for 4-10 years and start) a career for 40 years before we switch to low key work for 10 years before retirement for 15 years as seniors? Given the improved quality of life with 50 being the new 30 and all that, why can't people plan a dual career where they optionally can switch over to another low key career for 10-20 years more as consultants, parlaying hobbies into moneymakers, whatever works for each person. With modern technology, it'd be easy to work from home and set your own schedule.

/derail, back to other parts of the Plan that actually addresses what the gov't does...

[ April 10, 2011, 01:34 PM: Message edited by: Ben ]

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Pyrtolin
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The 40 year approximation counts the average number of years between college graduation and retirement. Keep in mind that lifespan at 18 years has not increased substantially; most of the increased lifespan numbers come from lower child mortality rates. In particular the lifespan most poor and middle class workers has not changed at all; they're not the ones that are living for decades after they retire, even though reaching 65 does improve their overall life expectancy because of the significant improvement in care that comes with it.

Pensions are fund based plans. The only thing they take away from, whether directly or implicitly, is the pay of the worker at the time the contributions are made to the fund for them. The pension payments come from market appreciation on those past deposits into that fund, not current payments into it. (That's why they're also called "deferred compensation" instead of being paid now, the money is invested on your behalf to pay you later) Also keep in mind that State and Federal wages are generally exempt from SS. Those pensions are the only definite plan those workers have.

Social Security works on a similar basis, except it invests all of its money into treasury bonds, so it's payments have to be correspondingly more modest.

quote:
Maybe we need to change our life expectations, count 15 years as kids (lots start part time work @ 16) then (edit to add: work + school for 4-10 years and start) a career for 40 years before we switch to low key work for 10 years before retirement for 15 years as seniors? Given the improved quality of life with 50 being the new 30 and all that, why can't people plan a dual career where they optionally can switch over to another low key career for 10-20 years more as consultants, parlaying hobbies into moneymakers, whatever works for each person. With modern technology, it'd be easy to work from home and set your own schedule.
Do you understand that one of the primary goals of instituting retirement as a social convention was to clear people out of the labor market so there would be enough jobs for younger workers? And out overall productivity has only increased since then. Right now retirement is used, by those who were able to retain enough wealth, to do exactly what you say- it's the only point where most people that aren't already independently wealthy have enough time and financial security to actually try to establish their own businesses or develop their "hobbies" into marketable talents. Delaying retirement only prevents even more people than are already forced to put such aside to struggle for security to delay such endeavors; it works exactly opposite of what we need in every aspect.
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TomDavidson
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I don't begin to understand the rationale behind cutting the maximum tax rate under Ryan's plan -- except, of course, the actual rationale, which is to take money away from the poor to give to the rich. What I don't understand is what he's willing to publicly claim that's meant to achieve.
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TCB
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I believe the main rationale is that Grover Norquist considers closing tax loopholes a tax increase. Since Ryan's budget proposes closing unspecified loopholes, tax rates thus must be lowered.

I've also heard implications that lowering taxes increases revenues (I think this is what Ryan mean when he says "broadening the base"), an idea that goes unchallenged in many conservative circles.

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yossarian22c
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Ben the 40 years was an approximation. It's probably somewhere between 40-45 depending on when people start their careers and when they choose to enroll in SS. The 30+ is a hopeful but not entirely unrealistic notion that people live into their 90's with enough regularity that people need to have some financial plan for living that long.

The only reason some seniors are able to transition into a low key semi-retirement is because they are either waiting until they qualify for Medicare so they have health insurance or they transition to another full time position that provides health care. Most people have some pre-existing conditions by the age of 55. If they loose their job that provides coverage or leave it for a hobby profession they would likely be unable to purchase insurance at a price they could afford on a part time/hobby pay check.

If society agrees to provide medical care for the elderly (Medicare) and a baseline support for food and shelter (SS) a middle class individual/couple can save enough in ~40 years of working to maintain their standard of living throughout retirement.

I'm not advocating for huge increases in SS payments just that as a society we maintain our commitment to provide health care for the elderly and enough cash through SS that people don't spend their golden years on the streets.

If our economy were hurting due to a lack of labor instead of a surplus of labor then arguments that we need to increase the retirement age would make much more sense. There are no jobs going undone today and there are no resources that are too scarce for our economy to function. The fundamental problem with our economy today is the concentration of wealth. The gini coefficient wiki - gini index (income) for income has increased to 47 which is higher than the 45 estimated for 1929 (the highest level before the year 2000). The gini coefficient when calculated based on wealth is 86.5 source. I don't think that it is a coincidence that the highest levels of income/wealth inequality in our history have preceded our greatest financial catastrophes.

If you don't want to look it up a gini coefficient of 0 indicates income or wealth equality and a coefficient of 100 indicates that 1 person controls all the wealth or income.

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AI Wessex
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This is a serious first attempt to make the Republican wish of repealing the New Deal happen. The Medicare changes will kill 100's of thousands if not millions of senior citizens who simply won't be able to afford health services as they near end of life. Their families will take up some of that burden, but that will only exacerbate their own financial difficulties, so they will scale back on their own medical care needs as well as other major purchases.

The question is whether the Republicans care, and I frankly think that if they're clever enough to think up this nightmare they know full well what it will mean. This is another form of state sponsored eugenics. I wonder why Glenn Beck isn't all over this.

Next is Social Security, but that is a harder nut for them to crack since the fund is "solvent" on paper. Even though that is just funny money, they can't dismantle it outright for people over about the age of 50. The rest of you beware because what they can do is privatize it for you. That will get it off the government books over time and into the hands of Wall Street investment fund managers where they think it (and you) belongs. When the market goes up you will feel like you won the lottery and you'll spend more, and when it goes down (gee, when has that ever happened?!?) you will simply lose your ability to retire.

So, the bottom line is that you won't be able to buy things when your parents get older, they won't be able to afford health care and nobody (except those in the "wealthy class") will be able to retire.

That is the Republican dream for America that they think is what the Founders had in mind.

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JWatts
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This open demonization of Republicans is laughable. [Roll Eyes]

No, you are wrong. Republicans aren't out to kill off the poor. And the mindless thought process that it takes to come to that conclusion belongs on DailyKos or The Huffington Post.

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TomDavidson
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quote:
Republicans aren't out to kill off the poor.
No. They're out to starve the beast. That some of them don't fully understand that this will kill off the poor is just a symptom of their fundamental misunderstanding of reality.

Bear in mind that conservatives tend, in terms of brain chemistry, to lack empathy but strongly register disgust; coupled with their slightly smaller MonkeySpheres, it doesn't take too much for them to overlook the impact their policies would have on people they don't know personally.

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JWatts
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quote:
Originally posted by TomDavidson:
Bear in mind that conservatives tend, in terms of brain chemistry, to lack empathy but strongly register disgust; coupled with their slightly smaller MonkeySpheres, it doesn't take too much for them to overlook the impact their policies would have on people they don't know personally.

[Big Grin] You make an excellent Progressive. You've already rationalized your opponents as sub-human.
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AI Wessex
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"No, you are wrong. Republicans aren't out to kill off the poor. And the mindless thought process that it takes to come to that conclusion belongs on DailyKos or The Huffington Post. "

I don't read either of them, fwiw. I came up with those thoughts on my own (!) after reading the full 70 page "proposal" (actually a manifesto). What do you think the answer would be if you asked Republican leaders or the Tea Party lights the following:

"Vouchers will reduce funding for health care for the elderly, and won't compensate for the loss of medical benefits that the elderly now receive from Medicare. Given that health care costs continue to rise about 3-4x inflation today and the nominal rate of Social Security benefits COLA, won't seniors be unable to access the level of health care that they have today if they rely on Medicare?"

If the answer is yes, the follow up question would be:

"How do you expect seniors to maintain the level of access to health care that they have today?"

Or you can answer it, if you like. Bear in mind that you already said in this thread:
quote:
All of entitlements have to be indexed to inflation. You can not have any long-term large program be solvent over a decades long period if it's growing faster than inflation.
So, a separate question for you is:

"How do you expect anyone to keep up the level of health care they have today if the annual cost increases continually exceed the rate of inflation?"

[ April 11, 2011, 01:11 PM: Message edited by: AI Wessex ]

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TomDavidson
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I don't think they're sub-human. I think they're another sort of human, in the same way that software engineers tend to be different from artists. I wouldn't hire an artist to write a spreadsheet program or a software engineer to paint a portrait. In the same way, conservatives relate to other humans very differently from liberals. It doesn't mean they're not human, or even less human; it means they're better at anger and disgust, and worse at empathy and collaboration.
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AI Wessex
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I don't agree with Tom's dissection, but I do think that Republicans are psychologically bound to a different set of beliefs than are Democrats or Independents. It's very hard for me to rationalize their policy objectives any other way, since many Republican proposals don't make a whole lot of practical sense, even for themselves.

They're not as bad as Libertarians, who believe that all public roads should be privatized, but reducing Medicare payments without addressing the underlying problem of spiraling health care costs makes no sense to me. The market *has* already spoken on that issue, and what the market says is: "We can't give you the health care you are accustomed to without jeopardizing profits. This isn't personal, and we don't like the term "death panel"; it's strictly business."

[ April 11, 2011, 01:35 PM: Message edited by: AI Wessex ]

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JWatts
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quote:
Originally posted by AI Wessex:
I don't agree with Tom's dissection, but I do think that Republicans are psychologically bound to a different set of beliefs than are Democrats or Independents. It's very hard for me to rationalize their policy objectives any other way, since many Republican proposals don't make a whole lot of practical sense, even for themselves.

Perhaps if you actually address the points instead of using hyperbolic phrases like: "The Medicare changes will kill 100's of thousands if not millions of senior citizens who simply won't be able to afford health services as they near end of life." you would have a point. That statement may appear rational to you, but it's not. Millions of seniors won't start dying, because they are capped at $15K + inflation per year.

It's quite likely that those very expensive medical procedures that on average only extend the term of life by a matter of months will be dropped. It's likely that using the very latest and most expensive drug that is marginally better than the older version will disappear.

quote:
Originally posted by AI Wessex:
They're not as bad as Libertarians, who believe that all public roads should be privatized, but reducing Medicare payments without addressing the underlying problem of spiraling health care costs makes no sense to me.

Reducing the increase in Medicare payments to the rate of inflation will start addressing the spiraling health care costs. I doubt it's the only actions that are necessary, but it's a start. And the fact that it's mathematically unavoidable is a point in it's favor. I expect that Medicare will eventually be set up to mirror Social Security's retirement age. Currently Medicare kicks in at 65 regardless, but Social Security doesn't start until age 67 for those born after 1959.


quote:
Originally posted by AI Wessex:
The market *has* already spoken on that issue, and what the market says is: "We can't give you the health care you are accustomed to without jeopardizing profits. This isn't personal, and we don't like the term "death panel"; it's strictly business."

Correct. American's can not keep spending ever increasing amounts of money on health care. And the right was being stupid and hyperbolic in using the term "death panels" when referring to ObamaCare.
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TomDavidson
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quote:
It's quite likely that those very expensive medical procedures that on average only extend the term of life by a matter of months will be dropped.
And yet millions of people will not die...?

What you're saying here is that some unknowable number of people will die sooner than they would otherwise, but that's okay because we can't afford to keep them alive.

quote:
Reducing the increase in Medicare payments to the rate of inflation will start addressing the spiraling health care costs.
As would simply capping health care costs and socializing the whole shebang.
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AI Wessex
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"It's quite likely that those very expensive medical procedures that on average only extend the term of life by a matter of months will be dropped. It's likely that using the very latest and most expensive drug that is marginally better than the older version will disappear."

"Dropped" by who? Those are exactly the loud and accusatory "moral" objections that Republicans have used to demonize the Democratic Health Care law. Now you're saying the same thing, but it sounds rational to you when it comes from you?

"Reducing the increase in Medicare payments to the rate of inflation will start addressing the spiraling health care costs."

In what way? Medicare pays less than standard health insurance plans do, so why would reducing the amount of money seniors have to spend on their medical care cause the market to drop its prices? Those seniors will be subject to the same market forces that the rest of us are.

"Correct. American's can not keep spending ever increasing amounts of money on health care."

I have the same question for you on this as I have on everything else on this topic. What is going to cause the cost of health care to fall?

How is the Republican plan going to maintain the "quality of life" that seniors have today?

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Pyrtolin
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quote:
Originally posted by JWatts:
quote:
Originally posted by TomDavidson:
Bear in mind that conservatives tend, in terms of brain chemistry, to lack empathy but strongly register disgust; coupled with their slightly smaller MonkeySpheres, it doesn't take too much for them to overlook the impact their policies would have on people they don't know personally.

[Big Grin] You make an excellent Progressive. You've already rationalized your opponents as sub-human.
What does that have to do with being a Progressive? That's a feature of divisive thinking, completely independent of any given ideology.
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Pyrtolin
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quote:
It's quite likely that those very expensive medical procedures that on average only extend the term of life by a matter of months will be dropped. It's likely that using the very latest and most expensive drug that is marginally better than the older version will disappear.

Except that,, by and large, such costs are generally paid by wealthy people that can afford to dump money into them regardless of support for their coverage.

We absolutely do need to shift more toward quality of live than length of life regardless of quality, but Medicare isn't where most of that particular aspect of the problem comes from.

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JWatts
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quote:
Originally posted by TomDavidson:
quote:
It's quite likely that those very expensive medical procedures that on average only extend the term of life by a matter of months will be dropped.
And yet millions of people will not die...?

What you're saying here is that some unknowable number of people will die sooner than they would otherwise, but that's okay because we can't afford to keep them alive.

Yes, that's precisely what I am saying.

If you spent every waking free moment tending to the needs of your grandparents and carefully watching their exercise levels, food intake and risky activities, you could extend their lives by months! Why aren't you doing it? Is it because you are greedy? Surely, your grandparents are more important than watching that sports event, or going on vacation or any other leisure activity?

All of our activities and behaviors have an opportunity cost. The US currently devotes more resources than any other country on the planet to it's seniors. What Ryan is proposing is capping the resource commitment at the current level and not extending it endlessly.

quote:
Originally posted by TomDavidson:
quote:
Reducing the increase in Medicare payments to the rate of inflation will start addressing the spiraling health care costs.
As would simply capping health care costs and socializing the whole shebang.
[DOH] So you want to artificially cap health care costs. Instead of capping health care payments? You do realize that Ryan's plan is not to cut Medicare payments, but to lock them in at the current level. a level that's far higher than the OECD average per capita.

Ryan's Medicare payment - $11,000

OECD figures:
Per capita spending PPP:
US - $7,538
Norway - $5,003
Switzerland - $4,627
Canada - $4,079
Germany - $3,737
France - $3,696
UK - $3,129
Japan - $2,729
Greece - $2,687
Israel - $2,165

OECD Health Data 2010

I really don't find it malevolent or greedy to cap Medicare payments at twice the per capita average of the next most generous country.

But I'm rational that way. I guess that means I have a different brain chemistry, or something [Roll Eyes]

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AI Wessex
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What is the unsubsidized individual or uncovered out of pocket cost of health care in those countries? How many of them subsume the bulk of health care costs in the *taxes* that people pay? Yet, in most of those countries health care overall costs much less than it does in our country and the overall health of the population is higher.

You're arguing for cut-rate health care, when we already pay far too much for less than we should get for the money spent.

[ April 11, 2011, 03:09 PM: Message edited by: AI Wessex ]

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AI Wessex
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"We absolutely do need to shift more toward quality of live than length of life regardless of quality"

I completely agree with that view, but how it can be done requires a fundamental shift in our culture, not a mandate from government. You're talking about the value of "caring" itself. The Ryan plan is intrusive and uncaring, respectful only of the costs.

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TomDavidson
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quote:
All of our activities and behaviors have an opportunity cost.
I would much rather pay the opportunity cost of making rich people marginally less rich, if I had to choose which to pay.

quote:
So you want to artificially cap health care costs. Instead of capping health care payments?
Yes.
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AI Wessex
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"artificially cap health care costs"

What does that phrase mean? Costs are influenced or controlled by a variety of factors, especially when the public welfare is at issue. IMO, health care should be considered a public "utility", like electricity or gas, where prices are under some degree of supervision.

[ April 11, 2011, 03:23 PM: Message edited by: AI Wessex ]

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Pyrtolin
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quote:
I really don't find it malevolent or greedy to cap Medicare payments at twice the per capita average of the next most generous country.
And yet, they're controlled at much _less_ than the US market rate. If we force them to pay that market rate instead of continuing to keep them down, costs can only increase. That's the core of why any serious fix to Medicare involves taking the issue directly to the delivery system; trying to just just enact upfront funding controls will only serve to replace public debt with private debt, which does significantly more economic damage.
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yossarian22c
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quote:
Originally posted by JWatts:

It's quite likely that those very expensive medical procedures that on average only extend the term of life by a matter of months will be dropped. It's likely that using the very latest and most expensive drug that is marginally better than the older version will disappear.

The average extension of life is in many ways a very poor metric. Consider one cancer drug has 25% success in terms of getting the cancer to go into remission. The new expensive drug may have a 35% success rate. Since the average age of patients with this type of cancer those who survive may only live on average 5 years longer than those who die within 6 months. That increase in success rates only leads to an average life expectancy increase of 6 months. An expensive treatment may not be worth 6 months of being sick but would it be worth 5 years of relative health? That is the real choice. The problem is we don't know who will respond to the treatment and who won't. To say just give everyone the cheap treatment will lead to 100 more deaths per thousand people treated (for my made up cancer treatment).

Another reason to continue to fund the expensive treatments (some of them anyway) is that medicine like any scientific endeavor is largely incremental. So a new expensive drug today that is developed today with a 35% success rate can lead to more study and understanding to a drug with a 40% success rate. That drug may lead to a new treatment protocol with a 50% success rate. That kind of research isn't cheap and no company is going to invest billions in developing an incremental improvement if no one will purchase it. Your idea of what we should pay for will drastically slow the development of new drugs and treatments.

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Pyrtolin
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I don't think many issues are as cut and try as that. What's far more true though, is that until recently, there has not been much good independent information on how different treatments compare to each other; what doctors mostly had to go on was marketing material from the drug companies and their own anecdotal experience. We can't even begin to make good cost/benefit analyses until we've build up a solid body of information to base them on.

At the same time, drug costs are one area where Medicare is absurdly handicapped. It has a huge customer base, but by law has to accept whatever price the drug companies feel like charging it, instead of being able to properly use that customer pool to negotiate reasonable prices as every private plan and all other national plans do.

We also need to take good a look at what Maryland has managed to do as far as controlling the cost of care. It's managed to stop the cost of care from rising and enable people to make clearer cost based decisions by working with its hospitals and other care providers to work out a standardized pricing system for services. It's actually managed to make the hospitals more consistently profitable at the same time by giving them a much more certain market to operate within.

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JWatts
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quote:
Originally posted by yossarian22c:
Your idea of what we should pay for will drastically slow the development of new drugs and treatments.

There's no money for any expansion of Federal spending on new drugs. We're forced to maintain spending at the current levels + inflation. The days of vast increases to all levels of medical spending are over.
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LetterRip
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yossarian22c,

quote:
Another reason to continue to fund the expensive treatments (some of them anyway) is that medicine like any scientific endeavor is largely incremental. So a new expensive drug today that is developed today with a 35% success rate can lead to more study and understanding to a drug with a 40% success rate. That drug may lead to a new treatment protocol with a 50% success rate. That kind of research isn't cheap and no company is going to invest billions in developing an incremental improvement if no one will purchase it. Your idea of what we should pay for will drastically slow the development of new drugs and treatments.
First off drug development is almost entirely government funded. After development drug companies buy and market the drugs and do the clinical trials. Most of the expense of a new drug is paying people who have the problem, but are happy with the current market drug for that category large sums to risk their lives taking the new test drug.

Private insurance can fund the R&D dollars.

Also there is so much fraud in the drug industry that many treatments aren't actually much different from a placebo, asside from the dangerous side effects.

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Pyrtolin
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quote:
Originally posted by JWatts:
quote:
Originally posted by yossarian22c:
Your idea of what we should pay for will drastically slow the development of new drugs and treatments.

There's no money for any expansion of Federal spending on new drugs. We're forced to maintain spending at the current levels + inflation. The days of vast increases to all levels of medical spending are over.
Money isn't what matters- it's people willing and able to do the work that wouldn't otherwise be doing something more useful. If the service if valuable to society, then, by definition, it justifies the creation of money to pay for it.
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AI Wessex
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"If the service if valuable to society, then, by definition, it justifies the creation of money to pay for it."

That is not the Republican position.

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JWatts
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quote:
Originally posted by Pyrtolin:
If the service if valuable to society, then, by definition, it justifies the creation of money to pay for it.

Ah yes the Statist Money Fairy again, come to save the day. Hmmm, That's not a very reality based solution. [Big Grin]


We can redistribute resources to medical care from other places. We've done that steadily and substantially for 40 years . In 1960, health care accounted for 5% of the US's GDP, now it accounts for 15%. There is a limit to how much we can afford.

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AI Wessex
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JWatts, you're right that not everything that has value should be funded, only the important things. Health care and home mortgages (Fannie/Freddie are another target of the Republicans) are important things that need oversight and funding.

You keep making my point but acting as if it's your point. I trust your statistic that health care costs have increased from 5% to 15% over the decades. You recognize that the increasing costs *are* the problem, but your approach is to hinder the government's attempts to mitigate the impact of the rising costs on people who are least able to absorb and pay for them.

Ryan hasn't addressed the real problem, nor have you or anybody else who wants to cut/limit Medicare spending as far as I can see. Cutting Medicare will make the problem hugely worse all of a sudden, and then it will keep getting worse after that without increased federal requlation.

[ April 12, 2011, 10:57 AM: Message edited by: AI Wessex ]

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JWatts
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First, I agree that the growth in health care costs need to be curtailed and reduced to equal or lower than the base line rate of inflation.

Second, there is no reason that the government can't work on any fixes to health care costs independently of these changes to Medicare. These changes do not hinder the government from working on that issue.

Third, you are wrong when you are saying the proposal is "cutting Medicare". The proposal links increases to Medicare after 2020 to the rate of per capita GDP growth +1%.

It's pretty clear that you are arguing against a proposal you don't really understand.

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AI Wessex
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First, it's convenient to exempt people who are over 55 today from the changes, who coincidentally represent the demographic that is the Republican Party's most solid voting bloc. That's a clever way to continue to get support from those people.

Second, the CBO conservatively estimates that Medicare recipients' percentage of out-of-pocket health care expenses under the Ryan plan will be double in 2022 what they are today. Since health care costs go up 3x-4x the inflation rate per year and the Ryan plan caps each person's benefits at a lower rate of increase, the real cost to seniors will be much higher.

Lastly, do you really think a Republican led Congress is going to introduce cost guidelines on the medical industry? Don't forget that they passed the Medicare Part B with absolutely no restrictions on what drug companies could charge for prescriptions under the plan (and no tax offset to pay for it). Did that represent care for the plan's recipients or concern for the interests of the pharmaceutical industry?

[ April 12, 2011, 11:23 AM: Message edited by: AI Wessex ]

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