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That's how all our social programs work. People pay for the benefits that others receive and could not "pay" for anyway... It's the core concept behind all government run social programs. You may not like it, but that's how they work.

 

NOG,

I already addressed this. The reason that happens with Medicare and Medicaid is because Medicare and Medicaid are filled with high risk people. That's not how most of the industry works, largely because all the other insurance industries are private. Furthermore, bringing up an example of Medicare or Medicaid is moot - those programs are not going to change one iota. The point at hand is that we're putting 30 million more people on health insurance, and while some of them are high risk with pre-existing conditions, most of them are not. NONE of the 30 million people who are being added are on Medicare or Medicaid, so saying that doctors get paid less with people on those programs does not prove your point.

 

Thrasher, my problem is that it's government mandated, but not government run. Not that social security has been the most shining example of a government run system, but at least then the government is responsable.

Aldeth, actually, from my father's experience, the rest of the industry is the same. How much a particular insurance company pays him is directly related to how big they are. The bigger they are, the less they pay out to the doctors.

And my point is that adding that many people to any program (private or public) is going to have similar results. Distributing them across multiple insurance programs is better, but it's still a serious impact that needs to be addressed.

 

I would like to point out that this is not without reason. Larger insurance companies can get away with paying out less because of the sheer volume of patients the doctor would stand to lose by not accepting the **** sandwich the insurer is offering. Adding 30 million people to the system, however, is not likely to create the same effect. We only have so many doctors. Adding another 30 million people to the mix makes patients easier to come by, moving the supply-demand curve in the doctors' favor. Doctors could very well see better payouts than they currently do.

The individual mandate is a hell of a lot stickier than it appears at first blush. We can't "just" remove it from the bill. The mandate is in there to facilitate banning insurance companies from using pre-existing conditions clauses. Without a mandate, there would be nothing to stop a person from just waiting until he gets sick to secure coverage -- and then dropping the insurance after treatment is completed. Insurers will understandably be unhappy about this. If we pull the mandate, we'll probably have to go back to letting insurers use pre-existing condition clauses.

 

I agree Drew - removing the pre-existing condition clause practically requires the personal mandate. That why I said you also need to add healthy people to the insurance program as well, or everyone's premiums will go up.

NOG, out of curiosity, does your father have a policy of not charging patients beyond the co-pay? I know that I have had medical/dental visits in the past where I pay the co-pay, and then receive a subsequent bill from the office for whatever the insurance picks up. In fact, every time I go to my dentist, the insurance does not cover $16 worth of services, so I always get a bill for $16 a couple of weeks later. Does you father not do this?

 

Actually, it is a shining example. It is considered to be one of the most successful government programs.

 

Drew:
Those are good points, and ones I had not considered. Thank you for the insight.

Aldeth:
I'm not sure, but I don't think so. Additionally, I've never seen that from my dental and doctor visits. Whatever my co-pay is, that's all I pay.

Chandos:
Social security is little more than a massive and sustained Pyramid Scheme. It can't be sustained that way. Additionally, from what I've heard, it's being used as something of a "cookie-jar fund" for the rest of the government, and the bulk of the "money" in it now is actually IOUs from everyone else.

 

You mean like the kind of fraud that is often found on Wall Street?

I don't mean to make fun, but after all we know about what happened to private investing on Wall Street over the last decade, that was just too much. Sorry, I'm not trying to be offensive in anyway.

A few points about the Social Security program that you errantly refer to as being a "pyramid scheme."

The Social Security program is essentially a government sponsered pension plan that has been active since WWII. That's over 60 years and it has covered millions of seniors. It is portable between jobs, so you don't lose the benefits if you lose your job, for whatever reason. And it's good for your entire life. Plus, it has a cost of living allowance, regardless of what the markets do (I think this last year may have been an exception because of the global meltdown). It also covers widowed spouses and has the feature of disability protection. It also uses only 1% of it's annual income for administration costs. Can your broker claim that? I didn't think so.

A pyramid scheme, by the way, is a scheme in which members pay into a "network marketing program" (they distribute products or services) and they make returns on the number of new recruits that they bring into the system on their own.

 

Actually, it's an annuity.. People ordinarily pay into the system for years before pulling anything out. The money grows in interest-bearing accounts and after a set period of time paid back in installments. A majority of funds paid out come in the form of interest on money already in the fund. Social Security is not a pyramid or ponzi scheme. It isn't even broken. There is currently a projected shortfall, but is not the massive insurmountable problem the far right would have you think.

From the Center for Economic and Policy Research:

Spoiler

The 2009 Social Security Trustees Report shows a considerably worse short-run picture and slightly worse long-run picture than the 2008 report. In the short-run, the annual surplus of taxes over benefits is projected to be just $18.8 billion in 2009 and $18.3 billion in 2010. This compares with projected surpluses of taxes over benefits from the 2008 report of $87.1 billion for 2009 and $82.7 billion for 2010. (It is important to note that the Trust Fund is projected to collect $238 billion in interest on government bonds in these years, in addition to its tax revenue.)

It is not surprising that Social Security's annual financial picture deteriorates in a downturn. This is entirely predictable and in fact desirable. Social Security's tax revenues fall as workers lose their jobs.

Almost two-thirds of the reduced surplus this year is due to an unusually large cost-of-living increase for 2009. The latest adjustment accounts for last year's rise, but not the fall in oil prices. Though continuing benefits are automatically adjusted for inflation, this year Social Security will be paying a 6.9 percent larger real benefit to retirees, disabled workers and their families.

In this way the program provides income security to households and acts as an important stabilizing force in the economy. Social Security would be a much less effective program if its annual finances did not deteriorate when the economy went into a slump.

This short-term falloff in revenue has a relatively limited effect on the program's finances as indicated by the limited movement in the projected date of the Trust Fund's depletion (from 2041 to 2037) and the modest increase in the projected size of the 75-year shortfall (from 1.70 percent of payroll to 2.00 percent of payroll). The longer-term financial health of the program will be dependent on a series of factors about which we can only guess at this point.

First, we do not know whether the economy will sustain the accelerated rate of productivity growth from 1995-2005 period. The average annual rate of economy-wide productivity growth averaged 2.3 percent over this decade, far above the 1.7 percent growth rate assumed in the 2009 trustees report. If the economy can sustain this rate of productivity growth in the years following the recovery, then more than 30 percent of the projected shortfall would be eliminated.

The second key factor about which we have knowledge at this point is the wage distribution. The upward redistribution of wage income in the years following the 1983 reforms substantially worsened the projected shortfall. In 1983, 90 percent of wage income fell under the Social Security cap. However, this had fallen to just 83 percent by the beginning of this decade.[/quote]

It is possible that the events of the last two years will at least partially reverse this upward redistribution of income, most obviously by cutting salaries for the most highly paid workers in the financial industry. If the upward redistribution of the last quarter century were fully reversed, it would eliminate approximately one-third of the projected shortfall.

A third key factor will be the trend in health care costs. The trustees assume that there will be a growth in the gap between hourly compensation and wages of 0.2 percentage points a year. This is due to the projection that health care cost growth will continue to outstrip the rate of economic growth by a large margin. However, if health care reform succeeds in constraining costs to grow at the same rate as the economy (except for aging), then the gap between the rate of compensation growth and the rate of wage growth can be largely eliminated. This would reduce the size of the projected shortfall by approximately 10 percent.

In short, as a result of the economic collapse there is even more uncertainty than usual around the long-term projections. This is a good reason to put off for the moment any plans to substantially alter the program. Of course, it would be incredibly mean-spirited to propose cuts to those who are either retired or nearing retirement, since they have been the primary victims of the economic collapse.

Retirees and near retirees have lost more than $10 trillion in housing and stock wealth in the last two years. It would be incredibly malicious policy to amplify the impact of these losses by cutting Social Security benefits, especially since people in these age cohorts already paid for these benefits through their Social Security taxes.

In short, Social Security will be fine. 30% of the shortfall is likely to go away on its own when the economy recovers. If health care reform successfully brings cost growth in line with economic growth, that'll knock off another 10%. The rest of the shortfall can be placed directly at the feet of our steady upward distribution of wage income. We can easily compensate for this disparity by raising the income cap for social security taxes, replacing the cap with a "doughnut hole", or a combination of the two techniques. If we can successfully reverse our upward income distribution trend, this problem will also go away on its own.

If, by IOU's, you mean US treasury bonds, you are absolutely correct. That, however, is how annuities are supposed to work. The money taken in is invested, and payouts ideally come only from a portion of the interest accrued on money in the pool. As a result, the pool gets bigger each year. A "shortfall" only occurs when the annuity actually pays out more than it takes in from both funds deposited and interest earned. Currently, this isn't projected to happen until 2018. As I addressed above, this projected shortfall is likely to (mostly) go away on its own, with the rest taken care of with some modest reform.

 

Chandos:
The kind of pyramid scheme I was talking about was the one where you pull in a few people with a small "investment" and promise them big returns. You then pull in more for a "second generation", and their "investment" pays the "returns" for the first "generation", because you actually stole their money. Social Security is kind of like that, only without the stealing (well, sort of), and with (theoretically) 100% population contribution. The first generation payed in to provide for the people who had lost everything in the Great Depression. The next generation payed for the retirement of the first, and so on. It's been pretty well sustained, because each generation is bigger than the last (when you include legal immigrants). This may start to break down in the future, though, because of negative population growth, the increasing number of illegal workers (some do pay social security tax, but others don't), and potential inflation (the money in the system isn't worth as much any more). It's good for as long as it's needed, but it's the kind of system that should be shut down (at a loss for the government if you want to pay people back) as soon as it can.

 

I have no idea what you are trying to describe here but it isn't SS. It sounds more like some of the hedge funds on WS. Typically, they are only offered to a few selected investors.

That's a ponzi scheme, similar to like Bernie Madoff ran. Only "generations" really have nothing to do with anything. Neither is that SS.

No it isn't. It is backed by the US government. And no it is not 100 percent of the population. You must be a citizen. SS is social insurance, and works somewhat like insurance does.

Here is some help for you:

http://en.wikipedia.org/wiki/Social_insurance

Actually, I'm wrong about the taxes on non-citizens. Even non-citizens who will never receive benefits have to pay. But you pay only if you are employed. But it's still not 100 percent of the population, only those who are employed. I know people who never worked at a regular job and don't have SS accounts.

http://www.irs.gov/businesses/small/international/article/0,,id=104936,00.html

The reason I thought that is because there were guys working at Circuit who were not US citizens and always claimed they paid NO taxes. But they must of have paid SS tax according to the rules.

 

This isn't how social security works at all. Social security is a pool of funds held in assorted T-bills. Taxpayers contribute to the pool, increasing its size, and payments are disbursed from the interest earned by the pool and a portion of the taxpayer contributions. In other words, it works like every other annuity on the face of the planet. The first generation received benefits without paying into the system, but we aren't actually transferring money from one generation to the next, since the bulk of Social Security payouts come not from taxes taken or money already in the pool, but from interest earned on those funds. We currently have a projected shortfall because of the economic downturn and our growing wage disparity. With higher unemployment and lower wages, the pool isn't growing as rapidly as it should. We have also been artificially holding down interest rates for years, which has lowered the return on the money already in the pool. When unemployment goes down, the projected shortfall will be pushed back. When median household income begins to rise on pace with the cost of living again, the projected shortfall will be pushed back. When we raise interest rates, the projected shortfall will be pushed back. If we can reign in medical costs*, the shortfall will be pushed back even further. If we can reverse the wage disparity; or if we raise the cap on social security taxes, the projected shortfall can be eliminated entirely.

* While this may seem counter-intuitive on its face, the reasons for it are spelled out in the spoilered section of post #509.

 

Americans: I'm happy for you. It seems like you're finally going to join the rest of the world in having a sane system that won't throw you under a bus as quickly as possible when you get sick. Hopefully I'll never have to read another story about people dying because of your ****ed up insurance corporations.

 

Aikanaro, don't be so sure. This bill is a typical Washington comprimise: it leaves everyone equally unhappy.

All in all, I don't think it'll help that much, but hopefully it won't hurt that much either. If I understand it correctly, there will still be plenty of issues to be fought over, but hopefully a few of the worst will be addressed.

 

Just a question btw - if I understand right, if the bill passes in something like its Senate incarnation people will be able to buy insurance in group markets from non-profit funds. Which are those NPFs, and who runs/regulates them?

 

The exchange would be run by privates and regulated by the federal government. It's hard to say what the final bill will look like, because the House gets to make some changes. The big thing is to remove the anti-trust exemption. They really should have spilt the bill into 2 halfs: health care and insurance reform, but the White House wasn't that smart. Much like the stimulus bill, the health care "reform" bill represents a failure of leadership by Obama, and his notion of leaving everything up to Senate. The House has been pretty much marginalized by Obama, for some strange reason, which I'm sure the lobbyists know and we don't....

 

Actually, in the version of the bill that passed the cloture vote this morning (at around 1AM) the regulation and policing of the measures are being left up to the states, just as the insurance exchanges are going to be on a state-by-state basis. I don't know how I feel about it. With 50 different states analyzing criteria, it's nearly certain that some states will screw this up. OTOH, if it was federally run, and the feds screwed it up, then all 50 states would be screwed up. A rather Machiavellian choice...

 

Imagine Arkansas as the only state that gets it right. The mass migration to Arkansas for good healthcare would be hilarious. Like they need anymore free-loaders...

 

Chandos, I imagine Obama's marginalized the House because the 40 (it's 40, right?) Reps in the Senate are a lot easier to back into a corner than the hundred+ of them in the House. I doubt it's uncommon.

 

I absolutely agree.

Leiberman claims that Obama didn't even ask him for a compromise, or pressure him about the PO, but just went along with whatever he wanted. If it's true, what a joke.