...

[moda0306]

Keep in mind I am absolutely NOT for hiring people for gov't make-work jobs that do nothing, and I know there's a bunch of that out there.  I am saying that both of the following could arguably legitimate forms of gov't:

1) Local government civil engineers, planners and judges that make things work better amongst the cities inhabitants.

2) (and this will get more backlash) broad-based social insurance programs that while they cost a lot of money, don't really seem to involve much administrative payroll costs for the level of service provided.

The first involves smart people (hopefully, if we try) with difficult jobs... the second doesn't involve many people at all... simply very large transfers of income from workers to retirees and an administrative framework that doesn't appear too bloated if compared to the private sector in those industries.

The person with a make-work do-nothing job in government is a big problem, IMO, but one that involves an active citizenry petitioning for better, more efficient government, not just claiming gov't is incompetent and thinking that everything it touches turns to coal.

[moda0306]

LW,

If the majority of that 50% is going to social insurance programs less rife with administrative costs than their private-sector counterparts, can you really say there's undo complexity worth putting much weight behind when discussing our federal tax bill?

The thing that "checks" government is called the democratic process.  This is flawed, yes, but I don't see much of that 50% total tax feeding complex administrative bureaucracies so much as being large transfers of income to old people (and some poor people).

The actual cost of administrating programs makes up a VERY small part of that 50%.

Now if we're here to talk about the logical, moral and economic consequences of massive wealth redistribution to the elderly mostly, and some to the poor, then I'm all for that!

I just don't think having a big discussion about massive administrative bureaucracy as having nearly as much merit when discussing the federal government, as with 2 Million civilian employees, at $100k per year (that has to be higher than average) we're talking about less than 6% of the total federal budget in 2010.

I'm using rough numbers here from various quick sources, but this seems to me to be a very small portion of what we pay, and even if we cut the federal gov't workforce by half, we'd only have cut the federal gov't footprint by 3%.


All that said, to your points about growth in government... yes I do have some problems with that.  I think it's natural to think government would have to be a larger part of organized society as congestion builds, but probably not to the degree it has.

Also, I definitely don't think it has to continue to grow, nor should it, due to the very sustainability you mention.

I would say, though, that I think equally unsustainable is our distribution of wealth trend, which I think is aided immensely by slashing taxes on the wealthy to accomplish heavy social insurance cuts.  This is where I tend to scratch my head regarding the role of the federal gov't.

[Lone Wolf]

If the majority of that 50% is going to social insurance programs less rife with administrative costs than their private-sector counterparts, can you really say there's undo complexity?

Throughout the process of trying to sell us on Obamacare, Peter Orszag was out there constantly talking about the 30% of Medicare costs that were "outright waste".  Not a good start.

Administrative costs?  Per-person, Medicare's administrative costs are higher than those in the private sector.  The rub is that Medicare spends so much per patient (because its members are elderly and use a lot of medical care) that as a percentage of total expenditures it can claim to be lower.  In addition to that, private insurers have to count things like insurance premium taxes that they pay to states as administrative costs.  This puts us well into apples-to-oranges territory.

As for Social Security, there can be no "private-sector counterpart".  Good luck establishing a private enterprise where you:

• Promise someone a lifetime annuity in exchange for a paycheck deduction
• Don't let people keep their own money -- pay beneficiaries with the money taken from young workers today
• Raise the rates people pay from 2% to 12% when you can't keep your promises
• Raise the age at which your annuity pays out when you still can't keep your promises
• Reduce their benefits if your work was so shoddy that you still can't keep your promises

That's a Ponzi Scheme (and a fairly transparent one at that!)

You really think you're better off with this stuff than having that 40% of your earnings back, safely tucked away in your Permanent Portfolio? 

[moda0306]

LW,

Ok some good points were made... I'll give you a partial-touche... I'd still say that SS is comparable to a private annuity combined with private disability insurance, and while it's forced on us and grown to be too much (IMO), the VAST majority of the money that goes towards it transfer to the elderly.

Further, wealth transference isn't in and of itself a ponzi scheme.  SS makes no bones about being a wealth transfer from worker to retiree, and theoretically you COULD keep this up until the end of time as long as the benefits aren't continuously increased.  If the amounts SHOULDN'T be increased, then yes we have a very valid discussion, but the costs of SS administration is simply minescule to the overall programs income transferrence.

Maybe I shouldn't talk about administrative cost comparisons to the private sector so much as go back to the points on federal payrolls making up 6% of the budget.  I just don't see the stone/LW description of a maze of administrative bureaucracy hiring vast sums of do-nothing employees being a good description of the federal gov't's function.  It's much more a story of huge sums of income-transferrence to the elderly and poor, with few middle-men in between to worry about paying (relative to our tax bill).

Am I better off with SS?  No, but I'm financially savvy.  Yes, I could say I should be rewarded for that, but I think some basic (it's too much now) level of social insurance is appropriate, and if administrative costs are low, we don't gain much by running it at smaller levels of government.

Regarding gov't funded healthcare, I think both private and gov't sectors are rife with mismanagement and inefficient care, so I don't feel either is serving me better than the other with much confidence.  I think an insurance mandate is reasonable for a society to impose, since someone who doesn't have insurance is putting society in a pickle when it comes to a car accident or surgery they can't possibly afford to ever pay for.

In general, though, I'd prefer some level of social insurance so poor and/or elderly people aren't pushed into desperation... but I have few good ideas on how to accomplish that most efficiently.  I think a 12%+ FICA tax is WAY too high to simply serve the basic needs of elderly Americans.

Also, my aforementioned concerns on the distribution of wealth make me weary of slasing social insurance programs to provide tax-cuts to very wealthy individuals.  I don't hate them by any means... I just have my concerns.

[Lone Wolf]

No, but I'm financially savvy.

Oh yeah?  Financially savvy, eh?  Last I heard you had half of your money in gold and long-term government bonds.  What the hell, man?

[moda0306]

Nice shot.  I didn't mean to sound arrogant.  I just feel sometimes like the only on in the room that knows why bonds go up in value when yields drop!  Not here of course.

I don't like the idea of little old ladies getting screwed by "financial adhypnotizers" so I defend SS from time-to-time.

[Lone Wolf]

Nice shot.   I didn't mean to sound arrogant.  I just feel sometimes like the only on in the room that knows why bonds go up in value when yields drop!  Not here of course.

Nothing wrong with giving yourself credit where it's due.  Brother, you buy I-series savings bonds.  You're either financially savvy or like 87 years old. 

I can tell you, I find it personally humbling that after a lot of thinking about history, economics, and investing, half of my wealth is tied up in:

• Shiny yellow metal
• A bunch of pieces of paper that say, "I, the gubmint, will pay you [sucker's name here] back in 30 years.  LOL!  At 3% interest!  ROFLMAO!"

[Reido]

Wow - Very interesting conversation here...

Ok, so I watched a Milton Friedman lecture on Medical economics from 20-30 years ago.  His main premise was that if we deregulated healthcare sufficiently - even more than I think is reasonable - we could create an extremely efficient healthcare market with significantly lower cost per capita.  Of course, this involved abolishing all government standards for health professions, hospitals, etc. which is a fairly daring step and not one I necessarily agree with!

He went on to discuss the most efficent form of taxation - which he believed was property taxes on land only.  Basically, if you taxed all land based solely upon it's unimproved value, you would incentivise investment, as the value of surrounding properties would affect your land value and increase your tax burden rather than disincentivising you by raising your taxes after you improved the property.

In a way, this is fairly similar to a wealth tax, as it would incentivise profitable utilization of assets, rather than an income tax which, in effect, does the exact opposite.

[stone]

The US FDA procedures are astonishingly complex. It is worth realizing that the FDA payroll is only a fraction of the cost to the wider economy. The pharma companies spend vast sums jumping through inane hoops to comply. If European etc type pharma regulation were applied by the USA, then either pharma would rake in more excessive profits or medicine would be cheaper (I don't know which it would be). Perhaps US social security has low admin cost but by the sound of it your tax system is not adverse to complexity. In the UK we have social security via Byzantine systems of tax credits etc. UK Farm subsidies are astonishingly complex. Apparently in Japan they are even more wedded to immense admin structures.

I think that your "pay as you go" SS pension system is the least ponzi-esq pension system that there is because it expressly states that money paid in can not be taken out as a lump sum and instead is paying current retirees just as in the future when you are a retiree, current workers will pay you. In reality, for the market as a whole, that is also true for asset based pension savings but the nonsense is put about that they are somehow more "real". The demographic influences on the stock market make that nonsense painfully clear. Current retirees can collectively only take money out of the stock market in so far as current workers are putting savings in. Just as the baby boom demographic meant that the SS system has to take in more now than in the 1980s and 1990s- so too the stock market mirrors that same demographic influence. No amount of financial engineering or anything else can physically store man hours such that they can be accessed in the future. The best we can do is to have in place a system to care for our elderly now and to ensure that that continues. The SS pension system and the global asset markets just seem two alternative attempts to do that. At least the "pay as you go" SS system is up-front about what it is.

Regarding land value taxes- I think general asset value is a better target than land value. I don't follow the argument that land value is logically different from other asset values. I guess once value has flowed through the economy, its final resting place is as asset value. In order to have a sustainable flow through the economy, asset values need to recycle back around. Otherwise asset values expand in relation to the productive transactions in the economy and start to distort everything.

I'm still left scratching my head at why US people don't want to expand your veterans medical care system to anyone in the wider population who wants to buy in. Supposidly it gives the best care in the world at a good price with the waste cut out

[Reido]

Interesting point about the VA - as someone who's worked there, I can easily say that I'd prefer our broken system over the VA system.

IMO - The reason the VA system looks so good is that in medical care, the vast majority of the gain in terms of expected quality of life years comes from inexpensive basic medical care - i.e. cheap meds that everyone should get for prevention, and some screening procedures, both of which the VA system addresses well.  It also helps to have a population that (I believe) makes a more conscious effort to follow physician instructions.

But there are massively long lines for appointments, and emergencies are simply not addressed at the VA - come in septic in the middle of the night??  Not the place I'd want to go!!

Other problems are the politically driven medical care choices - for example Vets can't get adequate diabetic testing supplies, but the government spends $3+ Million on a vascular interventional lab which has shown little to no scientific evidence supporting that it helps!!

Still, I'll ceed the point that the rest of our system has the "everything for everyone" mentality which does more harm than good many times - and it makes NO effort to control costs.

[smurff]

I'm still left scratching my head at why US people don't want to expand your veterans medical care system to anyone in the wider population who wants to buy in. Supposidly it gives the best care in the world at a good price with the waste cut out

It's not that we don't want to expand  the Veterans Administration Medical System or the Medicare payments system to cover everyone, or at least to cover those who want to be enrolled.  It's that corporate interests (and some very prosperous individuals) don't want to do that.  If one or both of these systems were to be expanded, that would mean that these agencies would have negotiating power to radically bring down prices of many medical goods and services.  There would be no more medicines that cost $8.00 per tablet, for example, where you'd need three tablets per day for the rest of your life, or $30,000 per dose chemotherapy.  One week stay in the hospital would not cost $50,000.  An arm and ankle broken in a traffic accident would not cost $1,000,000+ in hospitalization, surgery, medicines, outpatient care, and other related costs. 

Also, the insurance companies that make billions of dollars by collecting premiums, and then denying care they should be paying for, would see an end to their party.

[MediumTex]

I'm still left scratching my head at why US people don't want to expand your veterans medical care system to anyone in the wider population who wants to buy in. Supposidly it gives the best care in the world at a good price with the waste cut out

It's not that we don't want to expand  the Veterans Administration Medical System or the Medicare payments system to cover everyone, or at least to cover those who want to be enrolled.  It's that corporate interests (and some very prosperous individuals) don't want to do that.  If one or both of these systems were to be expanded, that would mean that these agencies would have negotiating power to radically bring down prices of many medical goods and services.  There would be no more medicines that cost $8.00 per tablet, for example, where you'd need three tablets per day for the rest of your life, or $30,000 per dose chemotherapy.  One week stay in the hospital would not cost $50,000.  An arm and ankle broken in a traffic accident would not cost $1,000,000+ in hospitalization, surgery, medicines, outpatient care, and other related costs. 

Also, the insurance companies that make billions of dollars by collecting premiums, and then denying care they should be paying for, would see an end to their party.

We would go from a society in which half of us drive Cadillacs and the other half walk to a society where we everyone drives a Chevy (including those who would rather not drive at all).

I always thought that one form of health care reform that would have gone a long way toward solving many problems would have been to simply require health insurance companies to cover everyone within a certain age range within a state at the same premium.  There would be an age 21-30 premium, 31-40 premium, etc., and no one who applied could be turned down.  The government could then come into a system like this and spend money wherever it wanted to (subsidizing coverage for poor older people, helping compensate insurance companies when people waited until they got sick to buy coverage, etc.).

Such an approach would be far from perfect, but it would be a modest step that would have addressed a lot of big problems without having to set up another Medicare-scale bureaucracy.

Then again, I never really understood why so few people favored simply expanding Medicare to cover everyone.  If it's good enough for granny, why isn't it good enough for everyone?  That would still leave a large market for the private insurance carriers to sell Medicare supplement policies, and it would have given the government the purchasing power to reduce the cost of some treatments and medications.  It would have been disruptive for sure, but anything is going to be disruptive in a system that is as broken as ours is.

[Reido]

If we actually tried to base a system upon medicare/medicaid payments, the whole system would most likely collapse.  At least many small-time family physicians would be forced to fold... 

Keep in mind that on average Medicare pays at least 20% less per procedure/office visit (and in some specialties up to 66% less!!) than private insurance.  In a small family practice office, with significant fixed costs, that 20% is huge!

People will either have to pay more out of pocket, or medicare costs will be forced to rise.

Medicaid is a whole separate issue - most practices will take a significant loss to care for someone with medicaid as it usually will not cover costs of staff salaries for the amount of time it takes to see the patient...

The gov't takes huge advantage of the system because by law anyone who comes to the ER must be treated, regardless of ability to pay.  Therefore, those practitioners who have hospital-based practices are at the mercy of the greater population who tend to frequent those institutions and if they come in, the physician is obligated to see them regardless of payment.  This forces the private insurers to effectively subsidize the gov't patients and those without coverage.

[Reido]

I think the most feasible option is the two-tiered option - like in Germany.

In Germany, there is "healthcare" for everyone, but it comprises only well-proven treatments which are cost-effective.  Most of the time, you don't "really need" the $20 pill and the 30 cent pill from 5 years ago is just fine.  Your hospital stay will be free, but you will have to be seen by medical and nursing students and be expected to help them learn in return for not paying.  You may have to wait quite a while in the ER if what you have is not TRULY an emergency (as is the case for EVERYONE in the US as it is now).  You may not get to choose your doctor, it may be a foreigner.  Still, it's "free"!!  Do, however, keep in mind that there are limits to this as well.  Here, most healthcare money is spent in the last two years of life - largely because we are willing to put people on ventilators in ICU's for weeks at a time, at $2k+ per day, and take other extreme measures for people who will die anyway...  In short, if you're going to die anyway, the government's of most European countries won't spend $100k letting you live one additional month in a coma because that's what your family thinks you might have wanted.

If you want to pay up, then insurance can be purchased for convenience and you can get the NEWEST pills from ANY doctor.  If you're sick, but not critically ill, you can have a private doc meet you in the ER and minimize that wait...  etc.  I'm sure you get the point...

This is even similar to the Canadian system but there are laws to prevent a free market system in Canada - so people just come to the US instead!!! 

[Ad Orientem]

I think the most feasible option is the two-tiered option - like in Germany.

In Germany, there is "healthcare" for everyone, but it comprises only well-proven treatments which are cost-effective.  Most of the time, you don't "really need" the $20 pill and the 30 cent pill from 5 years ago is just fine.  Your hospital stay will be free, but you will have to be seen by medical and nursing students and be expected to help them learn in return for not paying.  You may have to wait quite a while in the ER if what you have is not TRULY an emergency (as is the case for EVERYONE in the US as it is now).  You may not get to choose your doctor, it may be a foreigner.  Still, it's "free"!!  Do, however, keep in mind that there are limits to this as well.  Here, most healthcare money is spent in the last two years of life - largely because we are willing to put people on ventilators in ICU's for weeks at a time, at $2k+ per day, and take other extreme measures for people who will die anyway...  In short, if you're going to die anyway, the government's of most European countries won't spend $100k letting you live one additional month in a coma because that's what your family thinks you might have wanted.

If you want to pay up, then insurance can be purchased for convenience and you can get the NEWEST pills from ANY doctor.  If you're sick, but not critically ill, you can have a private doc meet you in the ER and minimize that wait...  etc.  I'm sure you get the point...

This is even similar to the Canadian system but there are laws to prevent a free market system in Canada - so people just come to the US instead!!!  :o

Costa Rica has a similar two tiered health care system that I have long admired.  I think something similar would be a good fit here in the US.  Of course you have two major obstacles.  The first being the health care industry especially the insurance cartel who benefit hugely from a system where health care is mainly rationed on the basis of ability to pay.  They have billions of dollars they can throw at politicians to kill to any meaningful reform.  And the second being the hard core political right that believes anything government run is tantamount to a Communist takeover of the country.

It's really sad but there are times I wonder if we are not slowly sliding into 2nd rate power status based on our knee jerk hostility to any kind of government activity.

[MediumTex]

If we actually tried to base a system upon medicare/medicaid payments, the whole system would most likely collapse.  At least many small-time family physicians would be forced to fold... 

Keep in mind that on average Medicare pays at least 20% less per procedure/office visit (and in some specialties up to 66% less!!) than private insurance.  In a small family practice office, with significant fixed costs, that 20% is huge!

People will either have to pay more out of pocket, or medicare costs will be forced to rise.

But doesn't that just mean that the market has made up for underpriced Medicare reimbursements by charging more for procedures that are covered by private insurance?

If that is true, perhaps that is part of the reason that health care costs have been rising so rapidly for those who are not covered by Medicare.

OTOH, when you look at how much money is spent on Medicare, and then you hear how medical professionals complain about low Medicare reimbursement rates, and you see how the total U.S. health care spend is not translating into longer life expectancies, you do seriously wonder where all that Medicare money is going.  With the amount of money spent on Medicare, one would think that doctors taking Medicare were rich and old people in the U.S. lived forever.

[smurff]

The Medicare program is rife with frauds of all types.  This--and the fact that a good chunk of the money is spent in the last two months of life for people the system does not require to have a living will, medical directive, or other type of end-of-life decision documentation--is where most of the money goes.

Most of the frauds are trivial in terms of dollar value (a few thousand here and there but they add up), but many of them are spectacular, comprising millions of dollars per criminal.  I'm not certain if there is even a functioning anti-fraud division.  Just google "Medicare fraud" and see the kinds of nonsense that comes up.  In the past few weeks the feds have busted fraud rings that took in more than a quarter billion dollars.  It's disgusting.

[stone]

One thing that is important to factor in is that doctors actually become better doctors the more patients they see. A production line approach such as the Veterans Hospitals use means that the doctors have seen it all before in the recent past and so can pick up on something not right "by instinct". If instead the doctors spend their time having indulgent extended chats with each patient then ironically the consequence of that customer service is a less competant doctor and that could cost you your life.

[moda0306]

When I hear that if we "just remove all government from healthcare, prices will plummet," if that's the case, what does that mean for the insurance industry, or especially the small practices we're talking about.

Let's assuming "prices will plummet" means a 20%-30% drop in healthcare spending by our country.

This is probably mostly due to doctors ordering less procedures and charging less to now-price-sensitive customers.  Insurance just being a middle-man between these two and charging enough in premiums to make a profit.

So all of a sudden we are paying our doctors (maybe some more than others) 20%-30% less than they're already making??  Maybe a bit less assuming insurance companies will take a small chunk of the hit?

That hardly sounds like the outcome that many conservatives that admire the hard work of doctors and private practices would like to see.  A 20%-30% decrease in revenues would kill most business ventures.

[MediumTex]

When I hear that if we "just remove all government from healthcare, prices will plummet," if that's the case, what does that mean for the insurance industry, or especially the small practices we're talking about.

Let's assuming "prices will plummet" means a 20%-30% drop in healthcare spending by our country.

This is probably mostly due to doctors ordering less procedures and charging less to now-price-sensitive customers.  Insurance just being a middle-man between these two and charging enough in premiums to make a profit.

So all of a sudden we are paying our doctors (maybe some more than others) 20%-30% less than they're already making??  Maybe a bit less assuming insurance companies will take a small chunk of the hit?

That hardly sounds like the outcome that many conservatives that admire the hard work of doctors and private practices would like to see.  A 20%-30% decrease in revenues would kill most business ventures.

Ironically, when we talk about expanding Medicare we talk about how bad it would be for doctors, and when we talk about doing away with Medicare we talk about how bad it would be for doctors.  And then, of course, everyone knows that Medicare's current configuration is bad for doctors.

[moda0306]

Maybe doctors do more than ok, but have to pay for it through heavy regulatory bs... just a thought... I tend to believe they're very valuable.

[stone]

I think the crucial thing is to compare your health care costs against those of systems that have as good outcomes. Your Veterans' system or say the German, French, Swedish etc systems have just as good outcomes and cost half as much as the standard US system. The UK system used to be ropey and cost a quarter as much as the US system. They then pumped money into it and it stayed just as ropey but now costs as much as French or German systems  (but still half as much as the US system).

I don't think you need to worry about doctors going bust. German doctors are still rich. UK doctors have always been rich.

[Reido]

@MediumTex

Basically, Medicare payments to Drs. (and I believe to hospital organizations as well) have grown at less than the rate of inflation in recent years, while private insurance costs (have skyrocketed (and reimbursements have grown at around the rate of inflation).  It suggests to me that Medicare is being indirectly subsidized by private payers. 

If you remove health insurers, the supply of medical providers will drop dramatically - I can just imagine how many foreign doc's who work here now will leave once it's no longer advantageous to practice here rather than in their home countries...  So I don't think a TRUE single payer system can fly without still having a significant private insurance industry offering additional care options.  Many countries work well with 2 tiers, as orientam mentioned, and that could work here as well.

What's holding that back is not the "insurance cartels" but instead outrageous costs...

[Reido]

Consuming hundreds of thousands of dollars (and sometimes millions) in the last few months of life is better avoided in other socialized medical systems.  In the UK, for example, you can't get dialysis beyond age 70 without significant out-of-pocket expense.  In the US we view this as "letting granny die," but in reality the UK is choosing to spend more money on trauma or other services that help younger people...

Unfortunately, if we EVER want cost-effective care, we're going to have to admit not EVERYONE can have EVERY service ALL of the time.

In the UK, minor heart attacks can be followed as outpatients, whereas in the US we ALWAYS admit these patients to the hospital...  This is a matter of "cover-your-ass" medicine as a way to prevent yourself from being sued.  The "correct" thing to do is what the UK does (based on scientific evidence), but in the US, the Doctor is typically incentivised to be overly conservative based on our legal system and avoiding lawsuits.  After all, the doctor has nothing to lose if what he does costs more money, but he has a lot to lose in the extremely rare chance that there is a lawsuit.

[Reido]

@ Smurff
There is a lot of fraud, absolutely!  It makes it worse because the government shifts the burden to the physician or hospital to submit more and more evidence that a service was actually rendered.  Then, paperwork mistakes like an incorrect date, or a missing signiture become billing nightmares.  It's a total headache for both the government and the private industry.

@ Stone
Couldn't disagree more about a production-line practice!  By the time a physician is fully trained he or she should have adequate skills to diagnose quickly (having seen thousands of patients), but keep in mind that all it takes is ONE minimal oversight and an error can be made with dire consequences. 

@Stone
With regard to "I don't think you need to worry about doctors going bust..."
Small practices are going "bust" all the time.  Kaiser Permanente and other huge medical practice companies are growing at unprecedented pace, as individual practitioners can no longer balance their books.  The medical company often comes in and develops a local monopoly - which can drive healthcare costs higher.  There was an article on this in a financial magazine a couple months ago...  If anyone really cares I can try and dig it up.

As a personal aside, the hospital I just left had been unable to hire an internal medicine (general practice) doctor for the past several months.  Keep in mind that the average doc will graduate from their training program with approximately $300k in debt and after the age of 30.  When the government skews reimbursement towards specialties, thats the direction everyone heads largely because payments on a $300K loan at 7% are almost $3500 per month.