Attention early retirees in Kentucky

[Maddy]

Would you consider someone who is (or will-be with their spend-down plan) dependent on Social Security and Medicare to be in "retirement?"

I'd guess that 90% of the "retired" population would have to radically adjust their spend-down plan if it weren't for those programs.

The idea of early retirement suggests a choice made during the prime of life, when options are still plenty. For someone who decides to retire early but lacks the ability to do so without resorting to governmental assistance, it necessarily entails a decision to put leisure, or at least personal fulfillment, ahead of personal responsibility. Your typical 65-year-old, in contrast, has only limited options and is fast running out of steam, so the decision to stop working often reflects practical necessity more than anything else.

I have nothing against early retirement--even for those who haven't achieved the usual financial benchmarks--but that choice involves trade-offs. If you're not prepared to make those trade-offs, chances are you're counting on somebody else to pull the wagon.

[whatchamacallit]

The frustrating thing is the welfare cliffs. You are encouraged to keep income low. In Colorado specifically, you have to pay for the school bus or preschool unless you stay under cliff.

Just give to everyone for free at that point.

Edit :Another welfare cliff Colorado has, subsidized home loans under certain income.

Probably many others as well.

[WiseOne]

Would you consider someone who is (or will-be with their spend-down plan) dependent on Social Security and Medicare to be in "retirement?"

Yes, because that's the over-67 population and that's not "early" retirement. Social Security income depends on how much you paid into it previously, so you might consider that a prepaid pension.

Medicare is different, but it's a reasonable tradeoff. There is cost shifting at work here since not everyone's pre-paid premiums (during their working years) dd up to enough to cover the premiums that they'd otherwise have to pay a private insurer at Medicare age. There is an efficiency with cost shifting this way though: Medicare's administrative overhead is a tiny fraction of that in the private insurance world. If Medicare were replaced by private insurance, health care costs for the elderly would go through the roof.

Conversely, if Medicare were to be opened to everyone, health care costs in this country would instantly drop around 20-30%. That's the extra we are paying for the luxury of feeding private health insurers (to say nothing of big pharma). It's so much fun to watch Congress try very, very hard to forget this little fact.

EDIT: This isn't incompatible with my view that routine labs & office visits should not be covered by insurance at all. That would yield even more savings - well over half the cost of office visits is sucked up by billing & required documentation.

[clacy]

Early retirees who use welfare to fund their early retirement during prime working years, are just that..... welfare recipients. You have to have a pretty low amount of pride to do that IMHO.

[Maddy]

The frustrating thing is the welfare cliffs.

I've never thought much of the "welfare cliff" argument. And I've thought about it a lot because I have a close relative who's used that excuse for the last 30 years.

The argument is that the system makes it impossible for the beneficiaries of public assistance to get off welfare because a recipient who loses a dollar of assistance for every dollar he earns gains nothing by working. Those recipients who really milk the system through the receipt of tangential benefits (e.g., energy assistance, day care, supplemental nutrition, etc.) can argue that it actually costs them to work. The unstated assumption is that the recipient of public assistance is as entitled to money he gets from others as he is to the money he earns himself.

It takes a wierd, distorted kind of logic to appreciate this argument, which frames the question solely in terms of which situation provides the "better deal." When a recipient of public assistance engages in this kind of calculus, he or she ignores the fact that somebody else is on the giving end of the equation, and that "somebody else" may actually be considerably less well-off than the welfare recipient--in no small part because he or she is carrying the load of the wagon-riders by doing exactly what the recipient has determined is not worth doing.

I guess you have to be a low-income, pull-the-wagon type, to get it.

[whatchamacallit]

I have been fortunate enough to have never been in a situation to need welfare.

I don't like how the system punishes savers though. I have come across people that fall into the trap of not wanting to save at all.

I like the citizen dividend idea the most as a solution but there will never be anything perfect.

[clacy]

Citizens dividends may actually work some day if the AI/robotic revolution fully takes form.

[Libertarian666]

I guess it all depends on your definition of "early retirement," but I tend to think of "retirement" as a situation in which a person intends to support him or herself for the duration of his or her life out of savings and/or investment income. There are plenty of people (my community provides a great example) who lack a source of income sufficient to meet their basic needs and who nonetheless choose not to work, or to work only minimally, relying upon public assistance to get by. I wouldn't dignify that state affairs by calling it "retirement."

Would you consider someone who is (or will-be with their spend-down plan) dependent on Social Security and Medicare to be in "retirement?"

I'd guess that 90% of the "retired" population would have to radically adjust their spend-down plan if it weren't for those programs.

If it weren't for those programs, people would save a lot more for retirement, and medical costs would be far lower.

[Libertarian666]

Would you consider someone who is (or will-be with their spend-down plan) dependent on Social Security and Medicare to be in "retirement?"

Yes, because that's the over-67 population and that's not "early" retirement. Social Security income depends on how much you paid into it previously, so you might consider that a prepaid pension.

Medicare is different, but it's a reasonable tradeoff. There is cost shifting at work here since not everyone's pre-paid premiums (during their working years) dd up to enough to cover the premiums that they'd otherwise have to pay a private insurer at Medicare age. There is an efficiency with cost shifting this way though: Medicare's administrative overhead is a tiny fraction of that in the private insurance world. If Medicare were replaced by private insurance, health care costs for the elderly would go through the roof.

Conversely, if Medicare were to be opened to everyone, health care costs in this country would instantly drop around 20-30%. That's the extra we are paying for the luxury of feeding private health insurers (to say nothing of big pharma). It's so much fun to watch Congress try very, very hard to forget this little fact.

EDIT: This isn't incompatible with my view that routine labs & office visits should not be covered by insurance at all. That would yield even more savings - well over half the cost of office visits is sucked up by billing & required documentation.

Sorry, but this makes no sense. Much of the reason that health care costs are so high in this country is that Medicare and other "cover nearly every medical expense" plans push them up, by detaching payment from usage.

So it should be obvious that "Medicare for all" would push costs to the moon, and result in Draconian restrictions on service and/or national bankruptcy.

The correct solution is to "make insurance great again" :-) by the following plan:

1. Getting rid of all restrictions on what can be covered, which would mean that catastrophic plans would cost 1/4 as much as "cover-everything" plans, mostly by getting rid of the paperwork burden.
2. Level the playing field by exempting personal purchases of health insurance from income tax, to match the tax exemption for corporate-paid coverage.

For those too poor to pay even for a catastrophic plan, charity or a last-resort government catastrophic plan would fill in.

[Libertarian666]

The frustrating thing is the welfare cliffs.

I've never thought much of the "welfare cliff" argument. And I've thought about it a lot because I have a close relative who's used that excuse for the last 30 years.

The argument is that the system makes it impossible for the beneficiaries of public assistance to get off welfare because a recipient who loses a dollar of assistance for every dollar he earns gains nothing by working. Those recipients who really milk the system through the receipt of tangential benefits (e.g., energy assistance, day care, supplemental nutrition, etc.) can argue that it actually costs them to work. The unstated assumption is that the recipient of public assistance is as entitled to money he gets from others as he is to the money he earns himself.

It takes a wierd, distorted kind of logic to appreciate this argument, which frames the question solely in terms of which situation provides the "better deal." When a recipient of public assistance engages in this kind of calculus, he or she ignores the fact that somebody else is on the giving end of the equation, and that "somebody else" may actually be considerably less well-off than the welfare recipient--in no small part because he or she is carrying the load of the wagon-riders by doing exactly what the recipient has determined is not worth doing.

I guess you have to be a low-income, pull-the-wagon type, to get it.

To fix this problem, there are two possible approaches:

1. Try to convince people with a high rate of time preference that they should delay gratification by working rather than goofing off; or
2. Get rid of the programs that subsidize idleness.

The evaluation of which of these is more likely to succeed is left as an exercise for the reader. :-)

[WiseOne]

The correct solution is to "make insurance great again" :-) by the following plan:

1. Getting rid of all restrictions on what can be covered, which would mean that catastrophic plans would cost 1/4 as much as "cover-everything" plans, mostly by getting rid of the paperwork burden.
2. Level the playing field by exempting personal purchases of health insurance from income tax, to match the tax exemption for corporate-paid coverage.

For those too poor to pay even for a catastrophic plan, charity or a last-resort government catastrophic plan would fill in.

This wouldn't help with the paperwork burden. All you need is one insurer demanding the current level of documentation & billing nightmares, and you're back to square one. That 20-30% savings I was talking about has to do with this ridiculous overhead.

The idea is to get rid of ALL non-medically-motivated documentation requirements for low-margin services like office visits and simple lab tests and make them cash basis for payments, and put everything else under a single insurance mechanism with a consistent set of requirements. There are plenty of doctors offices out there who already implement sliding scale fees based on income, and there are volunteer-staffed clinics who will see patients for free - so no need even for Medicaid to deal with this. An office visit SOAP note should take just a couple minutes to write or type - as opposed to the current system where physician documentation and office staff work takes at least 15-20 minutes each and requires electronic systems costing millions to purchase and maintain, and then the whole setup goes to a billing agency which takes ~30% off the top, and which will manage to collect about half the charged fee after various rounds of insurance denials, requests for added documentation etc. Get the picture? After all this, the profit on office visits is probably something like $30-$50 for a followup (or less). So why not just charge that at the get-go? For heaven's sakes MOVIES cost almost that much!!

For hospitalization/major procedures, you have this same overhead but it's unrealistic not to use an insurance system for this. Medicare incurs maybe a tenth of the overhead that private insurers do. Thus the instant savings if everyone is invited to join Medicare (paying premiums just like they do for private insurers), assuming Medicare is scaleable.

[Libertarian666]

The correct solution is to "make insurance great again" :-) by the following plan:

1. Getting rid of all restrictions on what can be covered, which would mean that catastrophic plans would cost 1/4 as much as "cover-everything" plans, mostly by getting rid of the paperwork burden.
2. Level the playing field by exempting personal purchases of health insurance from income tax, to match the tax exemption for corporate-paid coverage.

For those too poor to pay even for a catastrophic plan, charity or a last-resort government catastrophic plan would fill in.

This wouldn't help with the paperwork burden. All you need is one insurer demanding the current level of documentation & billing nightmares, and you're back to square one. That 20-30% savings I was talking about has to do with this ridiculous overhead.

With a catastrophic-only plan there is no such burden of paperwork, as nothing is covered other than catastrophic costs, which obviously don't include office visits.

If I were a physician in private practice I wouldn't accept any insurance plans for office visits. Surgery or hospitalization, yes.