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One Month’s Rent for One Night at the Vet Hospital

January 10th, 2011 . by economistmom

taco-at-hospital1-0108111

My dog, Taco, a (speculated) chihuahua-dachshund-miniature pinscher mix dog I adopted in the fall of 2009 (as an estimated 8-month-old pup), came violently ill late last week from something that was delicious to him but ended up effectively “poisoning” him.  (The circumstances under which he got himself into that situation were beyond my control and will not be elaborated on here.)  I rushed him to the emergency vet late Friday night after he had very uncharacteristically refused food for over a day and couldn’t even hold down any water.

The emergency facility I took him to was incredible.  State-of-the-art technology, the best of trained veterinarians–and even a coffee bar in the waiting room(!).  Taco stayed overnight hooked up on IVs to rehydrate and medicate him, and was subjected to a battery of tests to rule out more serious conditions.  I received regular, comprehensive updates over the phone and also by email.  By Saturday afternoon, I was able to visit him (that’s when the photo above was taken), and by Saturday night–a bit less than 24 hours after his admission–he was able to come home with me.

The bill was a real shocker for me.  Nearly exactly equivalent to one month’s rent (which in the DC area isn’t very cheap).  And I don’t carry “pet health insurance.”  Was it worth it?  Of course.

I’ve explained how the health care market when it comes to demand for the care of one’s loved ones does not exactly follow economic theory, where one is supposed to compare marginal benefits with marginal cost.  In the case of health care for our loved ones, we ask what is the marginal cost?  And then, can I come up with that money?  I suppose that implicitly, we are saying the marginal benefits to us are infinite or at least priceless.

And as long as there are rich enough people around who willingly pay for these health services–even pet health services–out of their own pockets, then reforming health care even in the most efficient ways will not necessarily reduce overall health care costs as much as we might hope.  Health care is not like any other market.  There will always be a ton of demand for health care even when the out-of-pocket prices aren’t held artificially low by subsidized health insurance.

39 Responses to “One Month’s Rent for One Night at the Vet Hospital”

  1. comment number 1 by: Gipper

    Economistmom,

    Just spent $450 at the veternary hospital repairing the chunk of skin tore out of one of my Whippets’ face by his half-brother.

    As for the “demand for the care of one’s loved ones,” there is a way to break this down into 2 parts from an economic point of view.

    Part 1: I’m in favor of publicly supported trauma care. If you’re in an automobile accident or you fall and break a leg, no one should be asking you about your health insurance plan before you receive treatment. After you’re fixed up, I’m not opposed to the government seeking reimbursement based on ability to pay and/or whether the injury resulted from high-risk activity (like skate boarding jumps onto hand rails near concrete steps). Ditto for poisoning or other things that could cause immediate death or permanent disability.

    However, that’s not what causes healthcare expenditures to reach 17% of GDP in this nation. It’s the morbidity afflictions that are entirely preventable with proper nutrition and exercise. Research has demonstrated that the rates of type 2 diabetes, strokes, heart disease, osteoporosis, knee and hip joint pains and replacement and most cancers are largely determined by activities completely under an individual’s control. Yet these are the very ailments that drive the largest portion of our health care costs.

    What bothers me about all the health care wonkery is that the wonks don’t get that if government is to do anything positive, it must intervene before people do things that get them sick.

    Walk into a doctor’s office populated by Medicaid recipients. It’s horrifying to see the obesity of these patients. For starters, I would regulate access to Medicaid patients who don’t follow a prescribed regimen and achieve measurable results over time to reduce the bio-markers that predict high morbidity rates. Target body fat percentage, blood pressure, cholesterol counts, and other measures.

    The same kinds of interventions should apply to Medicare recipients. We could alter deductible and co-pay schedules based on health marker measurements. This would provide compelling incentives that could truly make a measurable difference.

    Why aren’t any of the health policy wonks advocating these kinds of interventions?

    Basically, it’s all about personal responsibility for your own health. When someone else is paying for it, then it’s easier to fail in your responsibilities.

    For those of you looking for an effective way to fulfill your New Year’s resolutions and reduce the nation’s percentage of GDP going to insurance companies, doctors, and hospitals, check out your nearest Crossfit affiliated gym. No weight machines. Just old school barbell, weights, kettlebells, jump rope, pull up bars, gymnastic rings, medicine balls, and rowing machines. Anaerobic, heart-bursting group workouts in under an hour.

  2. comment number 2 by: AMTbuff

    Would people improve their diet and exercise habits if they didn’t have access to government-funded health care? Would the risk of bankrupting their families provide enough incentive? It might help, but I have a feeling that most of the people who do poorly in these areas also do poorly with financial decisions, so they don’t have much wealth at risk.

    Would people improve their diet and exercise if they had no access at all to health care? In other words, would the threat of premature death make a difference? Again, in most cases I doubt that it would make a difference.

    Should taxpayers be on the hook for the adverse consequences of lifestyle choices? Perhaps not, but if taxpayers are on the hook for millions of people’s health care the government will not be able to say no.

  3. comment number 3 by: Gipper

    AMTBuff,

    I don’t see why we should offer medical care to able bodied individuals who refuse to do what is necessary to get healthy. I’m sure that most taxpayers would say good riddance.

    Let them go to a private charity for assistance if someone wants to work on a more spiritual or phsychological level not permissible with a governmental agency.

    Like smoking, the government must send a strong signal that obesity and bad lifestyle habits are not OK. My bet is that most people would respond over time.

    Again, I stress that initially, you take the 5′3″ 300 pound woman and help her, but she has a timetable with goals to meet. It might take her 2 years to reach her ultimate destination during which time she receives help. But if she falls off the track, then she has given up on herself. It’s not the government’s job to subsidize her lack of self-love with Medicaid benefits.

  4. comment number 4 by: Vivian Darkbloom

    “I don’t see why we should offer medical care to able bodied individuals who refuse to do what is necessary to get healthy. I’m sure that most taxpayers would say good riddance”.

    That sounds a bit extreme. Why not just allow higher premiums to those who voluntarily put themselves at greater risk? If you want to put a more positive spin on it, we could turn that around and offer a health carrot by allowing lower premiums to those who lead healthy lifestyles. To a limited extent, that’s what insurers are already allowed to do. In fact, PPACA allows it, albeit in a very limited fashion.

    Also, Gipper, you seem to be have a very blindered view of our federal finances. While that 5′3″ 300 pound woman (or man) might cost the health care system more in the short run, she’s probably saving the social security system and medicare a lot in the long run, too because of her much lower life expectancy.

  5. comment number 5 by: Will Rubin

    “… even when the out-of-pocket prices aren’t held artificially low by subsidized health insurance.”

    How would poor or even average income people these days afford routine care if out-of-pocket prices are not held low? Answer: poor and average income people with medical problems SHOULD have worse health care and potentially die earlier. Being healthy is not a right NOT a privilege. A right granted by money and/or connections. People need to start accepting that … and we need to start saying it out loud if we’re going to bring this country back from the edge.

  6. comment number 6 by: Will Rubin

    “… even when the out-of-pocket prices aren’t held artificially low by subsidized health insurance.”

    How would poor or even average income people these days afford routine care if out-of-pocket prices are not held low? Answer: poor and average income people with medical problems SHOULD have worse health care and potentially die earlier. Being healthy is a right NOT a privilege. A right granted by money and/or connections. People need to start accepting that … and we need to start saying it out loud if we’re going to bring this country back from the edge.

  7. comment number 7 by: AMTbuff

    Government-run health care results in a two-tier system in which the rich and powerful get much better care than the middle class and the poor. Canada and England demonstrate this.

    Government non-involvement in health care results in a multi-tier system in which people get health care in proportion to their ability to pay without regard to political connections. This outcome is not dissimilar to the first scenario.

    Government-funded health care only for the poor (Medicaid) guarantees a minimalistic level of health care if you are unable to pay. I believe that this third way is morally superior to the other two. This could be accomplished by repealing Medicare.

  8. comment number 8 by: Gipper

    Vivian,

    Sounds like you were confusing Medicare with Medicaid. To my knowledge there are no Medicaid premiums to pay. And I did advocate higher Medicare deductibles and co-pay percentages based on health markers.

    The worst thing you can do for an obese person is to subsidize the dereliction of their duties to themselves. There is nothing compassionate about medicating an obese person to help them deal with not changing their behavior. At some point society must express its values through government policy that certain behaviors are not OK.

    As for the long-run global view of government entitlements, I disagree vehemently with your assessments. If my policy could actually be put in place, then overall healthcare costs would drop to about today’s average cost of a 35 - 45 yr. old cohort of citizens. If you look at entitlement spending trends, it’s Medicare and Medicaid that look really scary. Any additional Social Security spending would be a drop in the bucket in comparison.

    To be fair, I’ve also advocated a self-financing, non-Ponzi structured Social Security program with a Govt. managed mutual fund of US Treasuries where each SS recipient has an account with balances based on contributions over his life. That addresses this extended lifespan problem.

  9. comment number 9 by: Gipper

    Vivian,

    Sounds like you were confusing Medicare with Medicaid. To my knowledge there are no Medicaid premiums to pay. And I did advocate higher Medicare deductibles and co-pay percentages based on health markers.

    The worst thing you can do for an obese person is to subsidize the dereliction of their duties to themselves. There is nothing compassionate about medicating an obese person to help them deal with not changing their behavior. At some point society must express its values through government policy that certain behaviors are not OK.

    As for the long-run global view of government entitlements, I disagree vehemently with your assessments. If my policy could actually be put in place, then overall healthcare costs would drop to about today’s average cost of a 35 - 45 yr. old cohort of citizens. If you look at entitlement spending trends, it’s Medicare and Medicaid that look really scary. Any additional Social Security spending would be a drop in the bucket in comparison.

    To be fair, I’ve also advocated a self-financing, non-Ponzi structured Social Security program with a Govt. managed mutual fund of US Treasuries where each SS recipient has an account with balances based on contributions over his life. That addresses this extended lifespan problem.

  10. comment number 10 by: Vivian Darkbloom

    OK, fair point about Medicaid. However, since my point was about longevity and the effect of bad habits on reducing longevity, I referred to Medicare and Social Security since these are normally collected by persons over, say 65. While such persons can qualify for Medicaid, my understanding is (I’m no expert) that these “dual eligibles” collect Medicaid almost exclusively to fill Medicare gaps and to pay required Medicare premiums. As far as social security is concerned, someone with the profile (no pun or offense suggested) you mention would likely also collect SSI. The bottom line is that the taxpayer may well spend less for a poor obese person than it would for a poor healthy person due to the longevity issue. So, there may be godd reason for you to simply cheer them on. If you want to take social security off the table (because everyone needs to privately finance their own retirement, I’m willing to agree (but only for argument’s sake). Presumably, you would like to have everyone pay their own medical costs as well, but that’s unfeasible, in the strictest sense, even for healthy non-obese people like me (and presumably you). Not everyone cans self-insure medical costs. What can be done, however, in the spirit of what you are suggesting, is to have those with unhealthy lifestyles pay higher premiums for health insurance to account for the higher risk involved. If costed properly, this would mean that as a group, the obese would pay their own way (just like smokers). There is no need to completely kick them out of the system to do that. That was the point of my earlier post.

    You indicate “the worse thing you can do is subsidize the dereliction of their duties to themselves”. Again, if I accept this for argument’s sake, having the obese pay higher premiums removes any subsidy. Likewise, offering healthy persons in the same risk pool lower premiums has the same result, but it sounds less penal.

    The big picture point here is that when considering issues like this and the effect on our finances, we tend to take a very narrow view when costing things out. It would be ideal if all factors could be counted, but of course they can’t. That doesn’t mean we shouldn’t try.

  11. comment number 11 by: AMTbuff

    Great discussion, with good insights, except for that one sarcastic post.

    Oh, by the way, that is one of the cutest dog faces I have ever seen!

  12. comment number 12 by: Arne

    “I’ve also advocated a self-financing, non-Ponzi structured Social Security”

    One of the reasons we have a paygo social insurance program is that our society has always taken care of elders who could no longer put in a days work. Before SS it was pretty hit and miss, but people did not live long after they stopped working, so it was a smaller issue then. The transition costs have gone up and we have never been prepared to pay them. Why bother? Paygo works as long as you adjust as yo go too.

    The biggest problem I see with personal accounts is that it provides no assurance against outliving your funds. Enough funds to last the average of 17-18 years is not enough for somone who lives to 95. When a cohort of retirees pools its money, it actually requires each person to bring less. Rampant socialism, but (as long as the administration does not take too much) it works.

  13. comment number 13 by: Gipper

    Arne,

    Outliving your funds can be solved in 2 ways: 1.) you could be permitted to purchas a life annuity from an insurance company with your SS balance upon reaching a retirement age. 2) if you don’t purchase an annuity, then the SSA uses actuarial tables to ensure that you do not prematurely withdraw too much from your account and outlive your savings. Basically, you work as long as you need to to ensure you’ve got enough to live on in retirement. What a concept!

    Great that you admit that SS is an income redistribution program. That’s true, but that’s not the Democrat party line, and it isn’t what most folks believe. Pay as you go doesn’t work fine because “adjusting as you go” is not run by actuaries but by politicians. Creating individual accounts creates more certainty for individuals instead of being victims of political fiscal malpractice.

  14. comment number 14 by: Arne

    “purchase a life annuity from an insurance company”

    Compared to SS, the administrative costs (profit) will blow away much of the advantage.

    “Basically, you work as long as you need to to ensure you’ve got enough to live on in retirement. What a concept!”

    That only works if you actually know when you are going to die. Being accurate to +/- 15 years at retirement is just not nearly as effective as creating an insurance pool. Check it out on a spreadsheet.

    “Great that you admit that SS is an income redistribution program.”

    All insurance generates redistribution.

  15. comment number 15 by: Arne

    “Pay as you go doesn’t work fine because …”

    I would be happier to have less politics in the adjustments, but with pay as you go coupled with outgo cannot exceed income, there are bounds on how much politics can actually mess it up.

    Adjustments will be necessary, though, because people do not want or need to spend all of the additional years they will live working, and that does cost money.

  16. comment number 16 by: Vivian Darkbloom

    I’m all for social security, but not necessarily the way in which it is currently structured. As originally designed, social security was meant to do exactly what a couple of commenters have suggsted—to provide insurance against outliving one’s assets. Intelligent and informed experts like Andrew Biggs remind us of this when they propose to raise the SS retirement age (especially the minimum retirement age). FDR was very clear that SS was not designed to be “welfare”.

    Of course, the term “welfare”, like an old tea pot, has acquired the patina of moral stigma. Political correctness suggests we shouldn’t use that term anymore–”income re-distribution” should do for now although others prefer more euphemistic terms. Worse, most choose to ignore or obfuscate the issue altogether when it relates to SS.

    The fact is that SS, as it now functions, is very highly re-distributional. I don’t know how many times I have tried to correct people on this point. Almost everyone, right or left, has the view that “I’ve paid my premiums so it can’t be welfare” (oops! Did I just write that? Mea culpa. Mea maxima culpa). Those paying the highest premiums over their lifetimes get proportionally much lower benefits than those who pay just enough to qualify. And, due to the tax rules, those high and even moderate income folks are required to pay tax when they get even part of their contributions back. SS is, in fact, one of the biggest redistribution schemes in the federal government and few people seem to be aware of it. There is now a lot of talk about making it even more re-distributional—even from folks on the right, such as Mitch Daniels, who calls for “means testing”. Taxing benefits that represent getting part of your money back is no longer sufficient–proposals now are to preclude certain persons from getting even part of their money back.

    Although I probably have a certain libertarian streak, I am in favor of a social compact under which everyone agrees to set aside a certain amount for their respective futures. In other words, members of society agree to impose forced savings on themselves. And, I don’t necessarily object to the idea that these savings should be invested in government securities. If anything, I would favor increasing the amount of forced savings that are required should be increased. Perhaps this is what everyone means by PAYGO, but that term is confusing in this context because its main connotation does not imply “self-financing”. Also, there is absolutely no problem with SS acting as “insurance” or, if you will, as an “annuity”. When you purchase an annuity you are, in fact, participating in an insurance program. However, with an (private) annuity, one’s benefits are based strictly on the amount of premium you pay.

    What I do have a problem with is that SS and other programs are designed to hide the redistribution that is going on, and judging from the public’s perception of the program it does a very good job at this. I’m not opposed to redistribution per se, but I do think that if we are going to do it the program should be more transparent. Our revenue raising and spending functions should be separated so that we can all clearly see what is going on.

  17. comment number 17 by: SteveinCH

    Good post Vivian. But that is why means testing and eliminating the tax is a good combination. It makes the redistribution clear to all. And, parenthetically, it concentrates funds on those with greatest need.

    Yes, it creates moral hazard on the margin, but not so much given the uncertainty about retirement.

    And for those who worry about “outliving their means”, there is welfare and Medicaid for that.

    The other thing worth mentioning here is the implicit subsidy for intergenerational wealth transfer. I’ve never understood the government interest in increasing intergenerational wealth transfer which is exactly what a non meanstested SS program does. Same is true for Medicare incidentally.

  18. comment number 18 by: AMTbuff

    >Taxing benefits that represent getting part of your money back is no longer sufficient–proposals now are to preclude certain persons from getting even part of their money back.

    This has already been implemented in Australia.

  19. comment number 19 by: Vivian Darkbloom

    SteveinCH,

    I’m not sure I get the moral hazard issue. Perhaps you could explain.

    There is another implication here with respect to means testing. If we are talking solely of social security, the current contribution rate is 6.2 percent for employee and employer. For a lot of folks today, those contributions are essentially a bad investment. But, if you introduce means testing that would eliminate benefits altogether for top earners,. For them, it would have the very same effect as raising marginal income tax rates. For employed persons that’s a rise of 6.2 percent and for self-employed, a rise of 12.4 percent in marginal rates. I’m admittedly overstating the case somewhat because of the “bad investment” situation today, but hopefully this illustrates the point. I happen to think that raising marginal tax rates has a negative effect on incentives where incentives matter most and that this would be bad economic policy.

    I said I’m not opposed to income re-distribution, but I also do have limits. If solvency of the program is the issue, or if strengthening the program to provide even higher benefits is the issue, I’m in favor of raising rates across the board and the raising benefits proportionately, if solvency permits. To the extent the system forces people to save for their own retirements, re-distribution through genuine public assistance programs such as Medicaid become much less necessary. For most folks, forcing just a little bit of additional saving each year through higher FICA taxes might mean forgoing some other un-essentials. I’m not concerned too much about that. As citizens, I’m think we should agree with one another that first things need to come first. First things include saving for retirement and future medical needs. And, nothing at all against pets and such, but to bring this discussions somewhat back to the original post, it might just mean having one less pet if that is otherwise precluding saving for those “first things”.

  20. comment number 20 by: Arne

    I think “intergenerational wealth transfer” is a bad characterization. The fact that the program is pay as you go means there is transfer of *income* from one generation to another, but since it is from the generation whose wealth is going up to the generation whose wealth is going down, “wealth transfer” is not very accurate.

    I believe that Pay As You GO essentially denotes “self-financing”. There really should not be any confusion. As long as adjustments are made to keep it balanced (in the face of increased lifespans), it can continue to be self-financing forever.

    The perspective of your analysis also matters. It is a feature of SS that money that would have gone to someone who died in their 60s instead goes to someone still alive in their 90s. You aren’t actually transferring money from that dead 65 year old, but you can see it that way.

  21. comment number 21 by: Vivian Darkbloom

    Arne,

    Here’s the confusion of equating “pay as you go” with “self financing”; at least, this is the source of my confusion.

    PAYGO normally refers to rules by which Congress agrees to “pay for” spending or tax cuts with offsetting tax increases or spending cuts. I could interpret the “self financing” of social security in a number of ways. I could view it as the social security system as a whole keeping itself solvent, I could view it as each generational cohort paying for itself, or I could interpret it to mean each individual paying his or her own way by having an individual account. Gipper when you used the term “self-financing” had the latter in mind, I’m sure. He wrote; “I’ve also advocated a self-financing, non-Ponzi structured Social Security program with a Govt. managed mutual fund of US Treasuries where each SS recipient has an account with balances based on contributions over his life. That addresses this extended lifespan problem.” But you seem to have interpreted his comment differently and somehow equated this with PAYGO

    You wrote: ” I believe that Pay As You GO essentially denotes “self-financing”. There really should not be any confusion. As long as adjustments are made to keep it balanced (in the face of increased lifespans), it can continue to be self-financing forever”. What, if anything, would that have to do with individual accounts?

  22. comment number 22 by: Arne

    Vivian,

    Apparently I got confused about what the confusion was about. I was unable to tell who you were looking at when you said self-financing (and it appears I was thinking fully-financed rather than self-financed).

    I have been using the term PAYGO to describe the SS program for several years now. A PAYGO program is pretty much diametrically opposed to a program of personal accounts.

  23. comment number 23 by: SteveinCH

    Arne,

    We’ve gone round and round on this before and I’ll briefly reprise. SS is a direct moment in time transfer program. You are not paying taxes to yourself, you are paying taxes to a current recipient. You can choose to conceive of the program as if you are paying for yourself but when you look at the cash flows, this is simply not the case.

    Thus, we are subsidizing intergenerational wealth transfer in fact even if you’d like to conceive of it differently.

    Your point about adjustments is also incorrect. The adjustments basically increase costs at moments in time. Thus, depending on where you are in your payin cycle when the adjustment happens, there is a very unequal outcome.

    In fact, as best I understand it, current recipients will, on average, receive more than they paid in. This is not true for every recipient but is true on average.

  24. comment number 24 by: SteveinCH

    Vivian,

    The moral hazard issue is that if I pay benefits to people, I discourage savings at the time. In a way, means testing reduces aggregate moral hazard although only by a little.

    As to your point about rising tax rates, I disagree. I already pay the 6.2 (or 12.4) percent tax rate today and today a receive not SS benefits. Means testing benefits has absolutely no effect on my marginal tax rate. The only people whom it would affect are people who are collecting benefits today and might not receive them under a means tested regime. However, for those people, their marginal tax rate would stay the same or decline based on the decline in their benefits.

    In a way, I feel like you are making the same mistake as Arne, somehow conceiving of SS as an entirely separate and walled off program from the broader federal budget.

  25. comment number 25 by: economistmom

    per AMTbuff: “Oh, by the way, that is one of the cutest dog faces I have ever seen!”….

    So, do you think I could get Taco a modeling job that would pay off his medical bills?…. Let me be clear: he’s currently unemployed but still in the job market.

  26. comment number 26 by: Vivian Darkbloom

    SteveinCH,

    You wrote:

    “I already pay the 6.2 (or 12.4) percent tax rate today and today a receive not SS benefits.”

    I understand this to me that you already pay SS premiums but don’t get SS benefits. I don’t think that is the right way to look at it.

    SS is highly progressive–some gain more than they contribute and some less, depending on income. I’m going to assume you are in the latter group. What I think you mean is that you pay the premiums currently, but you don’t get any benefits because you are not yet retired. Under the system as it now exists, you will get at least some of your contributions back after retirement (if you are poor, or just plain lucky enough to live long, more than the contributions).

    Under your logic, if you paid premiums into a private annuity you would apparently consider this to be a “marginal tax” because while you are paying now, the benefits only come later. The point that I originally made was that if there is no expectation of return, it is functionally a tax, particularly as regards incentives. If there is an expectation of return, it is no longer exclusively a tax, and the effect on incentives is quite a bit different.

  27. comment number 27 by: Vivian Darkbloom

    SteveinCH,

    As regards the moral hazard issue, I get the point now. On reflection, I guess what I am advocating moves in the direction of what Gipper wants with his individual accounts, although I think we could work within the framework of the system we’ve now got. So long as SS is so highly re-distributional, it will certainly have the moral hazard risk that you describe. If other people are going to pay for my retirement, why should I save? This is not only an economic issue, it is truly a moral one in the traditional sense. People who delay gratification by saving end up subsidizing those who have had a lot of fun by spending their money during their lifetimes. That’s not fair, in my view.

    What I lean toward is forcing more saving through SS by raising rates across the earnings board to ensure not only SS solvency but to allow SS benefits to increase above the poverty level so that the need for re-distribution within the system (and within generations) is substantially reduced or eliminated. The longevity risk will always be there, but it would be spread across the entire SS cohort. Of course, we would still need to solve the problem of the fact that the government would have much greater access to easy credit through the SS system. Such a change would require even greater diligence and safeguards in other areas of public spending so that this new source of revenue would not be abused.

  28. comment number 28 by: Arne

    “somehow conceiving of SS as an entirely separate and walled off program from the broader federal budget”

    It is managed that way.

  29. comment number 29 by: SteveinCH

    Not really. Consider the trust fund fiction. The trust fund has no actuarial impact on Federal finances. It’s a pure book keeping entry.

  30. comment number 30 by: SteveinCH

    Vivian,

    Where we disagree is on this sentence…”Under the system as it now exists, you will get at least some of your contributions back after retirement (if you are poor, or just plain lucky enough to live long, more than the contributions).

    Under the system as it now exists, I get none of my contributions back after retirement. I get somebody else’s money after retirement. If I got some of my contributions back it would be like a forced contribution to an after tax account, meaning the interest off of my account would be taxed and those tax dollars could be used for whatever purpose.

    I get none of my own money back from SS. I might someday get my son’s money, but not mine.

    With due respect, your proposed solution is a “government knows best solution.” Personally, I don’t think it is the role of government to force people to save for retirement, even recognizing that some (many) will not do so adequately. A more generous tax and benefits would be an even greater discouragement to savings. To encourage savings, we should make SS less attractive not more.

  31. comment number 31 by: Vivian Darkbloom

    Sorry, SteveinCH, I don’t buy it. Money is fungible. If you buy stock in the market and later sell it, the funds you get upon that sale are not “yours” in the sense you are using. Sure, there is a generational issue with respect to social security, but if under this system I’m getting money back, I really don’t care whose money it is.

    And, I don’t really consider this to be the “government knows best solution”. If you want to call it that fine. I’m looking for something that is fair and that works. What label is put on it is of secondary importance to me. I don’t want to repeat everything I wrote before, but if everyone is required to contribute a bit more to the system in return for higher retirement benefits later, those contributions are “savings” in a real economic sense. I’m quite sensitive to the trust fund issue and the fact that someone might be tempted to steal those “savings”. That’s an issue that definitely would need to be addressed. And, I’m also not opposed to forced savings through individual accounts. In fact, I would prefer it. Either way, I think realistically “forced savings” is the only practical solution to the lack of savings problem.

  32. comment number 32 by: SteveinCH

    I don’t think lack of savings is a collective problem. Maybe that’s where we disagree.

  33. comment number 33 by: Arne

    “It’s a pure book keeping entry.”
    But they do that bookkeeping, which makes it functionally the same as being a separate program.

  34. comment number 34 by: Vivian Darkbloom

    The Urban Institute (Gene Steuerle) just came out with a study showing the expected returns on Social Security and Medicare premiums for various income and generational cohorts. The study assumes a real 2 percent return on contributions. Per the study, everyone earning up to approximately $68,000 in today’s dollars (I ignore here effects of marriage) would get more back than paid in.

    http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

    While the Urban Institue is supposedly a non-partisan group, and Gene Steuerle is a respected economist, I have to wonder why they stopped the income cohorts where they did. Currently, the FICA wage contribution limit is about $107,000 and Medicare has no limit. $68,000 is far below these limits. Had Steuerle expanded the study to include higher income cohorts (given that the groundwork had already been done, the additional steps would not have been difficult) readers would have learned that those persons are subsidizing the returns of the lower cohorts substantially. Is this something that Mr. Steuerle and the Urban Institute don’t want the public to know? It appears the answer to this is “yes”.

  35. comment number 35 by: SteveinCH

    No Arne, it doesn’t. If it were a separate program, the balance of the government would not be allowed to borrow from it as it has.

    But my point is that its separateness, even if you believe such exists, is irrelevant. It rises and falls with the Federal government of which it is a part. It’s a budgeting convention, nothing more and nothing less.

  36. comment number 36 by: Arne

    “If it were a separate program, the balance of the government would not be allowed to borrow from it as it has.”

    The government borrows from China as well. Your reasoning is faulty.

  37. comment number 37 by: SteveinCH

    Well, I’m certain you think so. When the government defaults, I’m sure SS will be spared the costs.

  38. comment number 38 by: Arne

    “When the government defaults”

    Not going to happen. But it if it did, a lot of other separate governmental AND non-governmental as well as SS will be troubled.

  39. comment number 39 by: SteveinCH

    Which is of course, why it isn’t separate.

    Peace.