Government Insurance and Annuities are not Entitlements
Posted: April 6, 2011 Filed under: just because 43 Comments
I’m hoping that I can elucidate a theoretically complex idea for you as simply as possible. One of the hardest topics to study–if you’re doing anything with finance–is the area of decisions made under risk. It’s mathematically complex and the results depend on the types of assumptions you make about the decision maker. The assumptions dictate the shape of the ‘utility’ curve for the decision maker. That curve represents the choices that the decision maker will make at varying levels of risk and the costs of that risk as situations change. It sort’ve a ranking of how useful insuring against the risk will be under varying pricing schemes. You can assign people profiles that make them averse to risk, neutral to risk, or risk-loving. These profiles project their demand for insurance under various prices and policy offerings.
Insurance policies pay off under specific circumstances. The probability of those circumstances occurring and the amount of money they will provide on occurrence determines policy costs. Probabilities of occurrence for the varying circumstances must be estimated. Actuaries work with those probabilities using historical data and inference. It’s not a straightforward math problem. Some circumstances are more obvious and predictable than others. Time plays a role in the numbers. Behavior places a role in the numbers. Randomness plays a role. Of course, the final amount of payout plays a huge role. Many things are difficult to quantify. You can, however, bet that actuaries set rates and terms that benefit the house. It’s very much like the casino business except no one is very entertained by it.
Insurance companies are actually a lot like bookmakers and bookmakers who want the odds in their favor. I’ve always compared the insurance industry to Vegas and its surrounding thugs. The deal is this. If the odds are in their favor, private insurers are happy to offer up policies. If the odds are not in their favor, they either don’t offer the product or they try to do things to put the odds in their favor, or they charge a hell of a lot of money for the policy. A lot of getting people to pony up money for a policy has to do with getting them to overestimate the risk of something. A Fire policy is a great example of this. Insurers hate to insure things that have reasonably high probabilities of happening like old age and infirmity. They prefer the rare and random event like a house fire.
A really good example of something that no private insurer wants to touch is flood insurance. That’s why we have a National Flood Insurance Program. You never hear any one call that an entitlement. It’s not referred to as creeping socialism. It’s administered by one agency but sold by many insurance providers. It covers property and not life. If you live in a low to moderate risk area, your premiums are fairly reasonable. It’s not a for-profit product. It’s a huge risk pool set up so that an individual’s risk of suffering catastrophic loss due to devastating floods is minimized. It’s got deductibles and it has caps. You sign the contract. They tell you under which circumstances things will be paid and how much will be paid. You pay the premium. You’ve got the coverage and you’re supposed to sleep a little bit better at night knowing if that happens, you won’t be ruined for life. A private fire policy is similar. The reason private insurers provide fire policies is they are profitable. Devastating fires rarely happen. Floods are not so rare.
People aren’t always the best assessors of risk. We know from studying various human behaviors and decision making in game situations that many people will over or underestimate risks and this makes them liable to pay for a policy that’s got the odds of paying out of a slot machine. The industry thrives on this. It’s another example of our old enemy information asymmetry. Businesses–like the insurance industry–exist mostly because of these types of decisions and situations and the analysis they entail are beyond the grasp of most people. I’ll give a you a textbook definition of insurance from one of my doctoral seminars on Risk Theory. (Economic and Financial Decisions under Risk by Eeckhoudt, Gollier, Schlesinger.)
Insurance occurs when one party agrees to pay an indemnity to another party in case of the occurrence of a prespecified random event generating a loss for the initial risk-bearer.
Notice the use of the word random. Insurance is cheaper when the event is random and unlikely. So, fire and flood protection–hazard protection–tends to be something where actuaries must obsess on probabilities. As I said, the probability that you will experience a devastating house fire is extremely low and your insurance premium is based on that. Fire policies are quite profitable for insurance companies. Getting a hurricane policy in Nebraska is a breeze too. Not so for me in Louisiana. My house was barely touched during Hurricane Katrina and yet now, my deductible has been set at what they paid me last time for wind damage and the cost of my policy is now quite high. Even if they pay me my policy next time around, it will ruin me. I went from from a $1000 deductible to a $10,000 deductible within a year. If I’m wiped out by a hurricane, I will be wiped out even with insurance. That’s because the industry considers it just a matter of years before they will have to pay me again. I’m lucky (hah!!) to even have that bit of nonsense because it is required by my mortgage holder. Major Hurricanes in the Gulf are not considered very random any more. Also not very random is getting sick and getting old. It’s also very expensive these days to be sick and to be old and private insurance providers have not done a very good job of controlling the costs and risks of either. This is why they’ve relied on increased premiums and decreased underwriting. If the odds move against the house, the house changes the rules of the game.
Many insurance programs in the past were offered by mutual companies that operated on simply returning cost savings to policy holders and maintaining good records of cost control. Their profits were fairly meager by today’s standards because they weren’t expected to generate bonuses or extraordinary returns to a group of demanding stockholders. Blue Cross and Blue Shield was a pretty good example of what used to be the model of reasonably-priced insurance that brought the benefits of group coverage to consumers. They’ve now joined the let’s have stockholders bandwagon. They had a large risk pool which means the risks were spread over people likely and unlikely to have bad outcomes. This reduces the probability of payout and increase premium revenues to cover payout. BCBS has large enough numbers that they can negotiate price breaks with health care providers. This reduces the level of payout when triggered by the event.
Again, mutual companies act for the benefits of their policy holders. Companies owned by stockholders act for the benefit of stockholders. Government programs generally come about when private insurance won’t offer a reasonably priced product to every one. I still pay a premium for my flood insurance. I pay premiums for old age health insurance. I pay premiums for insurance against loss of income upon retirement. I have paid these since I had my first job at 15 so for me, that’s over 40 years of premiums paid into Medicare and Social Security. Ronald Reagan increased my premiums tremendously but promised that my policy would still be in effect when I retired.
Since my father first contributed to medicare and to Social Security in the 1930s, we’ve had this Social Contract. We’ve had this contract with the government that they would put us all into a risk pool and provide us an old age pension if we paid them. They would not seek to profit from our infirmities, our death, or our misfortune like private insurers do. We would pay them now and they would give us money later. They provided us with old age annuities and with old age health insurance because the private sector won’t do it at a reasonable cost. The federal government has messed with the programs a lot and changed the benefits, but the guarantees stood the test of time and promise, until now.
The Social Security system is not an “entitlement” program in the way of WIC or Food stamps or subsidies to farms and the oil industry. It’s not based on giving something away for nothing provided unless you were some of the very first recipients. It takes more than just being a demographic to get at the benefits. That’s why I hate this blurring of the word “entitlement”. Social Security is a program established to provide something that the private market either will not provide or will only provide at exorbitant costs. Annuities are costly. In the case of Medicare, costs go down when every one is in and paying. That’s how that public program should work. It’s not socialized anything because there are no real ‘assets’ to socialize. There’s no mine, there’s no factory, and there’s no inventory. It’s a contract. People like Paul Ryan are mislabeling the contract, breaking the contract, and lying about that contract. If anything drives the reliability of US debt repayment down it will be all this talk by people like Ryan of welshing on long term contracts.
I read the CBO Report on Ryan’s proposal today to turn the country over to the ice floes. Where is all the discussion on Death Panels now? I’ve also been reading the responses by people –like me–that really know about these things. First, let me quote something from the CBO.
Under the proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary’s spending on premiums and out-of-pocket expenditures as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary’s spending would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario.
Federal payments for Medicaid under the proposal would be substantially smaller than currently projected amounts. States would have additional flexibility to design and manage their Medicaid programs, and they might achieve greater efficiencies in the delivery of care than under current law. Even with additional flexibility, however, the large projected reduction in payments would probably require states to decrease payments to Medicaid providers, reduce eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves than would be the case under current law.
A bookie would blush at those terms.
Paul Ryan is proposing to throw future seniors to the very people that have made health care unaffordable and unattainable for years. This is a plan designed to fail. It’s worse than just a simple privatization scheme. Insurance companies–as an example any Medicare Advantage program–have not been able to control health care costs. They just adjust their policies prices, coverage, and underwriting as the market unfolds. All this plan does is push incredible problems off of a huge entity that can broker price breaks on to the individual seniors or future seniors. Even the ones with Alzheimer’s Disease. It is immoral. It also violates any precept of actual insurance provision. I can only think that this is because they’ve got public insurance provision deadly wrong. It’s not socialism. It’s not an entitlement. It provides coverage for an event given payment of premiums. It’s just provided by the government which makes it more cost and risk efficient than the private sector. That’s the major part of the big lie. That’s also why they worked their hardest during the Bush years to set up Medicare for near term failure. They want this to fail. It plays into their rhetoric of failure.
The insidious Ryan plan is also a lie because it is based on estimates of the economy’s ability to generate historically elevated incomes and cost savings. The private insurance market has shown the unique inability to get control of the high costs of health care provision. If you compare them to the VA, they fall miserably short. Paul Krugman refers to these as unicorn sightings. Ryan’s future economic performance probabilities would make an actuary’s toes curl. His document is obviously based on wishful numbers for an ideological rampage on America. Please notice that all of his alleged cost savings go to tax cuts too and we all know who that benefits. Evidently, Ryan believes the more he jerks off to Ayn Rand, the more the economy will just naturally improve. It’s the only rational explanation for such disingenuous predictions.
… Ryan is claiming that unemployment will plunge right away; that by 2015 it will be down to the levels at the peak of the 1990s boom (and far below anything achieved under the sainted Ronald Reagan); and that by 2021 it will be below 3 percent, a level we haven’t seen in more than half a century. Right.
Then there’s the Medicare business. According to the CBO analysis, a typical senior would end up spending more than twice as much of his or her own income on health care as under current law. As Dean Baker points out, this means that seniors would end up paying most of their income for health care.
Ryan’s plan amounts to a level of lying for which no proper metaphor can be found. Ryan is hoping his plan will be bought because it leaves folks like me alone while really screwing young people who don’t care about that sort’ve thing anyway right now. I don’t know any twentysomething that wouldn’t trade an insurance program premium right now for the money to buy some new gadget. They all see old age and bad health as an abstract. That’s why Ryan is trying to play the generational rage card.
Medicaid has not been priced right given today’s health care realities. The premiums are not high enough. There probably should be more co-pays. There are a lot of issues with the program. Many of the problems have come about because industries have managed to out-negotiate the federal government. There’s an incredible transfer of wealth to the Drug Industry alone. Medicare has been overpaying for Part B drugs, as an example. Medicare, Part D, put into law by the Bush administration was an abomination of a program. All you have to do is compare what the VA pays for drugs to Medicare. It’s a trillion dollar subsidy to drug companies. That’s not the purpose of a health insurance policy at all. If anything, Medicare Part D is an entitlement program for Big Pharma.
So, what can we do? First, we need to get the discussion back to the idea that these are supposed to be publicly sponsored insurance programs not health or financial industry subsidies. They aren’t set up to enrich stockholders of nursing care homes, cardiac machinery companies, or drug companies. There are substantial cost savings when huge entities risk pool (decreases probability of payouts due to high occurrence of the adverse event) and when they bargain for services (decreased payout when payouts occur). We don’t need to talk about dismantling Medicaid or Medicare. We need to talk about how to make them cost effective and efficient. We have plenty of evidence that the private insurance sector either can’t or won’t do that. There’s also plenty of evidence that public insurance plans do that much better and at lower costs with uniformity of paperwork and payouts.
Second, this conversation needs to be taken out of the context of the federal budget. The only people that put the problems in these contexts are people that prefer anarchy to government; people like Paul Ryan. These are standalone programs that should standalone. Also, people should detach Social Security from Medicare. Medicare’s the problematic one. Social Security isn’t endangered. Both need to be put back on financially stable paths by adopting sensible changes that any reasonable, mutual company providing policies would provide. They’re not supposed to enrich health care providers or bankrupt them. Reasonable rates of return are fine. Price-gouging should be unacceptable. Also, part of the problem is that the Health Insurance Industry itself has a fairly lousy record of costs controls. It’s not all frivolous lawsuits either. Doctors make incredible amounts of money sending patients to have multiple tests in facilities where they have financial stakes. This ought to be questioned.
Still, the problem isn’t so much health care delivery as that we have third party payers in the market and none of them have been getting the correct outcomes. The issue is complex which is why so many people fall prey to the rhetoric of liars like Paul Ryan. Privatizing all of this is not going to make the social costs associated with old age go away. We’ve had a American Social Contract for some time. Even the Tea Party didn’t carry signs that said “Steal my Medicare, Please!” Huge numbers of people have planned their lives based on the provision of public old age annuities and old age health insurance by the federal government. Breaking faith with the public on such a basic level using spurious rationale and hyped-up projections is just immoral. I still can’t believe that not one Democrat will engage this nonsense head on. That Democrats are entertaining devastating people’s lives under the banner that austerity is in with some segment of voters is just shameful.
(Sorry this is so long. Somethings just take awhile to expound.)
peej
Carissa
bostonboomer
ecocatwoman
mablue2
peggysue22
quixote
skydancingguestblogger
Mona (aka Wonk the Vote)
Sky Dancing 
This is a righteous rant!
Our Social Security taxes have been decreased 2% this year from 6.2% to 4.2%, thereby reducing SS, and hastening the day when SS runs out of money.
http://www.fatwallet.com/forums/finance/1052888/
Way NOT to go!
The reduction was temporary, but point taken. Thank You DAK, I have been upset, SOOOO UPSET since the GOP announced they are coming to get the programs that make it possible for seniors to retire, without becoming full on bag people…and retire on insurance programs that THEY PAID FOR and THEIR EMPLOYERS PAID FOR! I will not vote for any evil political that says that Social Security and Medicare are ‘Entitlements’ and if they do say so, then demand to ask where the money you paid into the programs went…oh, they took it…
CAN WE ALL SAY LOCK BOX NOW!
Excellent explanation, thanks. Simplifies things and makes sense. The main principles are not hard to understand even without doing the actual math. It’s basically the way I always understood insurance to work – spread the risk and the costs will be affordable to everyone without leaving anyone minus needed medical care. It’s appalling what Ryan and his ilk are trying to do.
Yes, they are trying to rob us in DAY LIGHT and we are being told OBAMA, Reid and side kick foot in his mouth Biden are fighting for us like they fought for the Public Option and the Medicare Buy In! God help US!
First, I want to say that I loved this post. A fundamental and deliberate confusion exists in many minds about what is in the public sector, and why. The Social Darwinist think tanks, which were built to make wealth transfer to the top 1% acceptable to as many Americans as possible, have been the worst offenders in this regard. Of course the Democrats, instead of fighting back on the term “entitlements,” have enabled this confusion. I knew when I heard Obama use that word (Hillary would never do so) that he was a fan of privatization.
Evidently, Ryan believes the more he jerks off to Ayn Rand, the more the economy will just naturally improve. It’s the only rational explanation for such disingenuous predictions.
Oh, there’s another one: He’s been paid off by the insurance industry.
I think sometimes we give our “public servants” way too much credit for believing what they say. Maybe I’m too cynical that way.
I heard Clyburn use the term entitlements last night. I wanted to scream! They’re not “entitlements” because you pay for them with premiums. Same with unemployment insurance. Drives me nuts. The biggest problem is they’ve accepted all these ‘costs’ from private contractors and haven’t done a darn things since the Reagan years about funding the changes in the programs. It’s very disingenuous.
Well, unless you consider you’re “entitled” because you paid for it. Medicare and Social Security are not means tested and you don’t get them if you don’t pay into them … it’s ridiculous to try to put a word on them that implies you’re entitled just because you meet some characteristic and then ignore the fact that no one who hasn’t paid into it doesn’t get that benefit.
Lindsay Graham said he doesn’t want social security to become welfare. Since he has a pension, 401k and savings, he doesn’t feel he should collect social security at all. So he put it out there that social security is welfare. Made me really angry. And clyburn is out of touch. They all need to go.
He should collect it and then increase his charitable donations. I hate that they’re trying to make it means tested. It’s setting up that stigma thing again. You’re a failure. You’re not rich like us. Oh, wait! You’re daddy didn’t leave you a billion dollars like mine? That doesn’t matter. I deserve everything because the wealth tells me that the angry sky god likes me and not you.
SCREAMING! They (politicos) should have all their insurance cancelled and their cushy retirements too. Clyburn is not representing the people, he is trying to offer cover for Obama to cave in, as he caved in on the Public Option and the Medicare Buy In.
“I think sometimes we give our “public servants” way too much credit for believing what they say. Maybe I’m too cynical that way.”
That’s exactly what I was thinking when I read this post.
Dak, very interesting and well written post. Thank you.
Excellent synopsis, Dak. I am far from a financial expert [my husband is the financial analyst of the family] but it seems to me that we’ve ditched the idea of the Common Good or supporting the notion of the country’s General Welfare and replaced it with the withering, destructive idea of Social and Financial Darwinism. In the latter philosophy, the weak, the elderly, the struggling poor [even the vanishing, unemployed middle-class now] are regarded as dead weight, those who stand in the way of American prosperity and/or Liberty.
It’s such a perverse way of looking at the world that I feel like gagging everytime I read another pro-Libertarian/Republican rant. And yet, too many citizens, even those struggling mightily, are buying into this nonsense.
Let’s dance on our own graves! That’s the ticket.
I picked up an interesting paraphrasing quote a few days ago, ideas expressed by Alexis de Tocqueville, describing what he saw as the genius of America:
“something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.’”
This was taken from a longer piece by Stiglitz, a piece he wrote in Vanity Fair. It was picked up by Crooks and Liars, a discussion about the inequality of wealth in the US, which seems to have no end. And all of these discussions about budgets and taxes and entitlements seem to come full circle in this mindless pursuit to eat our own. The piece at C&L can be found here:
http://crooksandliars.com/susie-madrak/joseph-stiglitz-fate-top-1-bound-how-
Not sure where this will end. But it’s certainly not looking good. For anyone.
I read the Stiglitz article and did a thread on it last week. The most hypocritical thing about most of the people that scream I’ve got mine is that they got theirs either through government subsidy themselves or they inherited wealth from their families. There’s no way some one like Donald Trump,Steven Forbes or the Koch Brothers would be any where without their daddies’ monies and plenty of government subsidies.
Sadly, I missed your article. I’m still trying to catch up on readings and my own work. But I think you’re right–the people who scream the loudest are too often the ones who have gained from governmental largesse and family money. Goes back to that old Balzac adage: behind every great fortune is an original crime.
It’s here if you’re at all interested. I beginning to think that the crime model is probably the best way to view all of this. It sure ain’t finance or economics.
I beginning to think that the crime model is probably the best way to view all of this
yup….smash and grap
They are trying to rob us, and well DAK thanks for helping us to put up a fight and smacking back with our PINK PURSE POWER…and no we aren’t planning on shutting up any time!
Really good article. I need to print it and absorb it. Probably will send it to my Senators and Congressman.
The real problem is our short story media which is incapable of discussing the subject as needed.
The Repulicans are liers and the Democrats allways go for status quo. Both are unsustainable. Congress and the public seem to be stymied with the unnecessary Wars.
As a country we still subscribe to exceptialism and believe in a free lunch. The concept of fairness across economic strata is not acknowleged.
I am tweeting it, maybe we can Tweet it over to Obama’s account if I knew which one it was…
If there were higher co-pays, lots of old people just wouldn’t get health care, period. If you want good medical care on Medicare, you have to pay quite a bit already for a supplement plan. Those are very expensive for someone living on a fixed income. If you add anything more low income seniors will be sh&t out of luck.
If Ryan’s plan happens, as I said awhile ago, there will be plenty of jobs created for workers who have to pick up the dead bodies and dispose of them.
Someone should ask Ryan why the Republicans don’t just pass a law to euthanize anyone who is poor and elderly.
Great post, BTW. I’m glad you’re getting back to your old self, Dak. You’re on fire the past couple of days! This piece should be published as an op-ed in the NYT.
Yes BB, it should be an op-ed piece. Dak you should send this in as a letter to the editor…at least.
Because we’re all more useful as indentured servants. They’ll shoot undocumenteds then force us to mow their laws and watch their mewling brats in exchange for meager payments on our mastercards that we will no longer be able to discharge in bankruptcy court. Our choice will be jail or indentured servitude.
I’ve started defaulting on my credit cards due to lack of funds. I don’t know what’s going to happen.
Talk to a bankruptcy lawyer.
OK, but I did in Sept. (to the tune of $400) and she told me if I filed bankruptcy they would go after my house. (The house was jointly owned by my father and me, with no survivor’s benefits. It has since been probated to me alone.) I can still call her and consult more for no extra money. I got a few job interviews but no offers yet. It is absolutely terrifying.
Yup. They’re going to go after your house after a few months of nonpayment. You’re going to try to have to do something to hold them off. At the very least, you need to call the credit card companies and tell them what’s going on. If you’re in active bankruptcy, there are protections and some of them have to do with your house and any retirement funds you have. Call her back up and do what you have to to get whatever protections you can or you’re going to be in worse shape shortly.
OMG. OK, thanks.
I have told the credit card companies what is happening.
Someone should ask Ryan why the Republicans don’t just pass a law to euthanize anyone who is poor and elderly.
Don’t tempt that evil sonuvabitch. Why isn’t Sarah Palin twitting about this f*cker’s “death panels?”
Apparently it was OK for Ryan to benefit from Social Security.
Quelle non-surprise! See, these people don’t hate government programs. They just hate OTHER PEOPLE getting them.
Scratch that – they just hate other people. That’s where they’re “jerking off to Ayn Rand,” as Kat so correctly put it. They deserve everything because they’re “exceptional.” Everyone else is expendable. That’s the kind of philosophy moral midgets like Ryan love, because it makes them feel spayshul.
Here’s what Ian Welsh has to say about Ryan’s plans for Medicare, etc.
http://www.ianwelsh.net/when-medicare-is-destroyed-is-only-a-matter-of-when/
I’m getting more convinced that I need to get out all the time and provide some place where my children can run to … I fully expect that it will only get worse and we’ll begin to see riots and even that won’t accomplish much. The fact that no one is standing up in the MSM and saying the Paul Ryan is a lunatic is appalling. I’ve never seen anything like this in my life. It’s like they’re all snorting imaginary fairy dust.
I’m also convinced that if Ronald Reagan’s plan was to bankrupt the Soviet union into submission, George Dubya Bush’s plan was to bankrupt modern American into submission. Congress is playing a power game of Biggest Loser. They’re not thinking about the results. I’ll pull the guillotine lever on Michelle Bachmann too. She’s as insane as Paul Ryan. Crazy people are running our country.
I’d rather guillotine the super rich.
Excellent post! Thank you
Oh GOOD GRIEF
John Boehner Cries Amid Government Shutdown Standoff
He is such a pathetic man…
Excellent post, Dakinikat. They should be called “earned benefits” or “pre-paid benefits,” not entitlements. Remember, like Social Security, Medicare comes out of each paycheck while we work — not just when we are finally allowed to benefit from it.
Bostonboomer, great catch on the Ryan hypocrisy!
Branjor, I do not know what state you are in. Some states have “homestead” laws that allow you to keep your home and a few other things (car, clothes, etc.), so long as you pay your mortgage, even if you default on other debts like credit cards and/or declare bankruptcy. Please check on this with your attorney. Best of luck! I know how bad things are in the marketplace, having been out of work myself for months. I think it is beginning to improve a little and I hope you find something soon!
djmm
As with so many things, a great idea gets turned upside down to the point where it doesn’t work as intended – or, it works only too well. While SS benefits are notoriously difficult to get approved, it is usually just a matter of going to the right lawyer and having some means of supporting yourself until approval comes through. A couple of examples come to mind…my sister has MD – a rare form that began in her 40’s. She continued to work part time jobs, both outside and inside the home. However, when it began to slow her down and she finally filed for disability she was denied. We all know they do this at least once. Rather than seek legal assistance, she let it go and adjusted to life within her husband’s income. Another case in point – my BIL. He messed up his knee a few years back by falling out of the back of a pickup truck while drunk – obviously breaking a couple of laws in the process. A few surgeries later, his knee is iffy at best. He was employed through the state on a road crew. Tried working in the office – wasn’t a good fit. The State finally settled (even though he wasn’t hurt on the job), he finally got his disability and now drives a Harley with handicapped plates – cause, you know, holding up a Harley doesn’t stress out a knee – especially one that is damaged to the point where you can’t hold a job. I can’t wait to see how everything will play out when it comes my turn…I have RP and am slowly going blind. Desperately trying to hold off long enough to get my daughter through college, but after that? It’s anybody’s guess…I can no longer drive and my job involves looking at a screen all day…very taxing for a normal person.
I’m all for collecting what we’ve paid into…but the fraud perpetrated by both individuals and companies need to stop.
Also, why should one have to sign up for Medicare if they don’t need it? There are a few folks around financially stable enough who don’t need it…ridiculous. Common sense seems to be completely lost on our legislators and unfortunately many of our voters. As always, just my humble thoughts.
When people are allowed to opt out, it changes the risk pool and the intent of the coverage and therefore distorts the costs in another way. You have to be all in or all out in order to get the maximum cost control. That’s one of the biggest problems with having multiple insurance schemes and why we have so many problems now. Each plan has unique, complex paper work and different benefits. Each plan has different coverage amounts. Any time you have a third party payer you distort the market in a probably the worst way possible. By having a single, third party payer, you at least pick up efficiencies. The only way a privatization scheme would work would efficiently would be doing it like the National Flood Plan. Although, you do get some choice there but that’s because Flood Zones are more predictable than devastating illness occurrence. You have one plan and get private companies to administer it. Problem is, we’ve found that it’s cheaper to let an agency do it and government workers do that too as with student loans. Single player health insurance is just the most cost efficient way to handle this. It’s one of the areas where you can actually show that monopoly is the most efficient market structure. There are a few other goods like this including national defense although Donald Rumsfeld destroyed that model too with all that privatization. Efficient Markets don’t uniformly conform to a generic structure. There’s a lot of different features of production and provision that make some markets more efficient concentrated and some less efficient. Markets with a lot of risk tend to do better when they are big and transparent. It’s sort’ve like why we don’t see Mom and Pop automobile manufacturers or steel manufacturers every where.
Well, at least someone in government is telling the cost/toll on the working people of America.
RT @tpm: Sen. Bernie Sanders: GOP Budget Would ‘Stick It To Working Families’ http://tpm.ly/gQYQ3T
but that’s just half the tweet
here’s the other
And the Dem would watch