I haven’t climbed atop my Medicare hobbyhorse in a while, so why not now? — October 24, 2015

I haven’t climbed atop my Medicare hobbyhorse in a while, so why not now?

A Politico article about Ben Carson’s plan to completely dismantle Medicare and Medicaid and replace them with savings accounts features the notable silence of all his Republican opponents, and this:

Carson’s GOP rivals are largely holding their fire so far. Trump’s campaign declined to comment, as did the campaigns of Jeb Bush, Ted Cruz, Carly Fiorina and Marco Rubio. A spokeswoman for Bobby Jindal noted the Louisiana governor’s support for reforming — but preserving — Medicare and Medicaid.

“Without change, they will go bankrupt,” said the spokeswoman, Shannon Dirmann. “Abolishing them is bad policy.”

The following needs to be repeated until we stop hearing nonsense like Ms. Dirmann’s, and until journalists cut that stuff off at the source: Medicare is only at risk of ‘going bankrupt’ because of how it’s financed. How it’s financed is not a fact of nature; it’s something we control.

To review: Medicare is divided into several parts. Part A pays for hospitalization. Part B pays for doctor visits. Part C is known as Medicare Advantage. Part D is for prescription drugs.

Now. Your paycheck contains a Medicare-tax piece. Today the rate is 1.45% for you, and 1.45% for your employer. That funds Part A. Which is to say: Part A has a dedicated funding source.

“So what about Parts B, C, and D?” you might ask. “Where do they get their money?” Their money comes out of general revenue. That is, Parts B-D are funded the same way the Department of Defense is funded. If the government spends more on jet fighters or Medicare Parts B-D in a given year than it budgeted for, then it funds the gap using debt.

Which is to say: the Department of Defense, by definition, cannot go bankrupt. Medicare Parts B-D, by definition, cannot go bankrupt.

The first thing to note, then, is that people should be a little clearer: when they say that ‘Medicare will go bankrupt’, what they mean is that Medicare Part A will go bankrupt. Medicare Parts B-D will never go bankrupt, because it is impossible for them to go bankrupt. Or rather, they will go bankrupt exactly when the rest of the U.S. government goes bankrupt. The U.S. government will go bankrupt when it no longer has access to enough money to fund continuing operations — i.e., when it can no longer tax, borrow, or inflate the currency enough to generate adequate revenue. And when that happens, we’ll have other problems on our hands.

The second thing to note is that the Department of Defense would also be teetering on the edge of bankruptcy if we funded it through a dedicated ‘DoD tax’ on your paycheck. I will never tire of comparing Federal programs to the DoD, because that department seems to be treated as though it were incomparable. (Note the pernicious habit of discussing “non-defense discretionary spending.”) We could manufacture a false DoD crisis if we stuck a ‘DoD tax’ line item on everyone’s paycheck, required the DoD to only fund itself from that line item, and set the line item to a low number. The next time we had a recession, lots of people would lose their jobs, which would lower tax revenue (because fewer jobs means less employment income), which would cause everyone to run around in a panic, wondering how in the world we’ll ever fend off DoD bankruptcy.

The Medicare ‘bankruptcy’ scare is an artificial crisis. It is simply an artifact of how we choose to count things. We could trivially end that scare tomorrow: write a bill declaring that Medicare Part A is hereafter funded the same way parts B-D have always been funded. Crisis: ended.

It’s not surprising that the GOP wants to keep us scared. It’s somewhat more surprising that someone like President Obama isn’t calmly explaining the fictional crisis to the American people. If I were in a really idealistic mood, I’d wonder why candidates don’t also repeatedly say, “It’s funny that funds are always available for war, but that paying to provide a good life for our citizens is somehow the height of fiscal irresponsibility.” But we all know why that is.

Medicare releasing data — January 23, 2014

Medicare releasing data

So this is really interesting: the more data Medicare releases on provider payments, the better. But there are real concerns about patient privacy here. I remember when I was a wee undergraduate at CMU, Professor Fienberg was working on how to release raw data from the Census Bureau without revealing personally identifiable information. You can imagine the problem like this: in towns like the one I grew up in in Vermont, revealing that “the average black person” earns a certain sum of money could well mean that you’ve just revealed John Smith’s income; there just aren’t that many black people in Vermont.

As I understood it at the time — note here that my understanding is many years out of date — the Census Bureau had a couple ways of releasing its multidimensional contingency tables. First, it would only publish data in a given cell if the number of observations in that cell was above some threshold (that is, if the cell didn’t uniquely identify John Smith). I believe they also applied some scaling factor to every cell, deliberately obfuscating it so that any summary statistics from the table would come out right, but raw data were all incorrect.

These problems get harder if you’re able to combine, say, Census Data with data that you get from credit-card companies or data from (as above) hospitals. The more data you can agglomerate, the less anonymous any one source is, no matter how hard you try. I’m sure there are lots of people, all around the country, working very hard to de-anonymize various databases for marketing and law-enforcement purposes.

Point being just that, while releasing raw Medicare data would be terrific (the AMA’s comment in that link that people wouldn’t know what to do with all that raw data, and would take it out of context, is thoroughly disingenuous), there are difficult problems to surmount first. I wish them luck. I should check to see where Professor Fienberg’s work has taken him; the last update I got was more than a decade ago.

Social Security and Medicare are unjust: sure. So let everyone have them! — December 3, 2012

Social Security and Medicare are unjust: sure. So let everyone have them!

There are at least two possible reactions to the realization that a lot of your Federal taxes transfer money from the young to the old (Medicare, Social Security, etc.). One is to argue that this is unjust and try to cut these programs. Another is argue that this is unjust, and therefore to *expand* them: eliminate the injustice by making the benefit available to everyone. Expand Medicare to everyone. Make Social Security available to people 50 and older. After all, we’re a more prosperous country than we were when Social Security was passed; shouldn’t we reward ourselves for our productivity by providing official support for greater leisure?

It seems like people (e.g., “the execrable Robert J. Samuelson”) only ever take the first option: we must cut Social Security. But why? We’re wealthier than we’ve ever been! (That’s disposable personal income per capita, where disposable personal income is defined as personal income minus taxes. Personal income, in turn, is what you’d expect.) Social Security is an unjust transfer? Sure it is! So make it more just and let more people have it; problem solved.

As it happens, the government has been keeping close watch over productivity statistics since after World War II. If I’m looking at the right data series, and I think I am, aggregate productivity — that is, output per hour of labor — is 4.6 times what it was just after the war. The miracle of compounding, brothers and sisters! Imagine if we as a society had made the decision to take half of that productivity and plow it into our own leisure at the end of a lifetime of hard work. We’d still have the standard of living of postwar America — the most prosperous time this country has ever known. We’d just be able to enjoy more of it.

I’m sure I’m missing important pieces here. For instance, maybe Social Security does now indeed consume twice as much of every person’s paycheck as it did back then; maybe we’ve quite kept up with the productivity gains. Chart A in a summary of the latest Trustees’ Report, for what it’s worth, says that even in their fevered dreams, the actuaries can’t conceive of Social Security consuming more than about 6.5% of GDP.

You could certainly continue working past age 50 under this idea. By all means! You can continue working under the current system. Some people will choose not to, however. And I’m sure the hardworking Social Security actuaries have plenty of good estimates of the benefit level that would induce x many millions of people to drop out of the workforce.

Not that Social Security is any kind of panacea. It pays out an average of $1,230 per month. Even with that meager payout, Social Security constitutes the majority of retirement income for the poorest 60% of retirees; retirees are poor. Social Security is a way to keep people out of poverty; it’s not a retirement with dignity.

Likewise with Medicare: despite liberals’ love for the program, and our desire that everyone be allowed to buy into it, it’s by no means salvation. Marilyn Moon goes into great and fascinating detail about this in her [book: Medicare: A Policy Primer], of which I desperately need to write a review. Moon’s take, which is woefully rare, is to look at Medicare from the perspective of the beneficiaries; too often we look at it only from the perspective of the Federal budget. From the beneficiaries’ perspective, Medicare is a den of complexity. It’s not the single-payer health-care system of our dreams, and it leaves too many retieees (who are, again, by no means wealthy) paying a significant portion of their disposable income toward medical care. In the single-payer system that I think most liberals imagine, you’d pay some amount in taxes, and that would be that. No one expects me to pay a Department of Defense co-pay if the country gets invaded: my taxes are supposed to do the job on their own.

Decades of bludgeoning by the Republican Party has left us with the mistaken impression that we’re a poor country, and that the only thing we can do is cut cut cut. We’re not; we’re an astoundingly wealthy country. What is that wealth buying us? (Well, other than $1.121 trillion to fly money to the Middle East, drop it out of planes, and blow it up.) Wealthy societies should be willing to spend more on health care: a year of life is worth more to us than a year of life in a poorer country — indeed, worth more to us than a year of life to our relatively impoverished 1960s selves. (That’s the fundamental argument underneath David Cutler’s excellent [book: Your Money Or Your Life], which I’ll review soon if I know what’s good for me.)

Wealthy societies should also, at some point, decide whether to convert some of their hard-won gains into leisure. We never seem to have had that discussion. Even opening up this discussion in “libertarian”-friendly ways — like allowing people to contribute money to their Social Security now to buy themselves extra retirement income — would be a worthwhile place to start.

Instead all our discussions are of a crabbed and nervous and desiccated sort. We act as though we’re a poor country. Every politician likes to say that he opposes the story of U.S. decline, but this incessant poverty drumbeat says quite the opposite.

Paul Ryan and “libertarianism by default” — May 22, 2011

Paul Ryan and “libertarianism by default”

I’ve feared for a while that my generation would become libertarians by default: the social safety net has been so thoroughly worn down that there’s little social contract left; I fear that people expect Medicare and Social Security to be gone by the time they retire. If that’s what people expect, then they stop lobbying to strengthen Social Security and just look out for #1. Republicans, meanwhile, have never stopped trying to destroy Social Security. Current retirees will never let Social Security end, but maybe my generation will. My parents’ generation expects Social Security to be there, and many of them have pensions. My generation might well expect Social Security to die, and we all have very weak 401(k)s instead of reliable pensions. So we may not know what to lobby for, because we’re not used to having a social safety net to fall back on. We may not know what we’re missing until it’s gone. Hence libertarianism by default: the libertarianism of apathy.

This is all just speculation about what might happen, of course. This generation might turn out to be just as passionate about liberal causes as was FDR’s generation — particularly after watching several bubbles and crashes over just the last decade. Certainly *I* think that this calls out, more than ever, for more active management in the economy, and particularly for more protection against the business cycle. I think a lot of people my age think the same way. Now if only our elected representatives would stop merely trying to prevent the death of Social Security, and instead take the fight to the Republicans.

These thoughts have all been bubbling for a while. They were brought to a boil by a terrific short piece in the New Republic (via Matt Yglesias). Well worth your time.