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Asks Coyote:

Paul Ryan is catching grief for his proposal to convert Medicare from “all the medical care you wish to consume” to grants of $X per year.  This seems unimaginable to people (forgetting for a moment that the US functioned for nearly 200 years without it at all).

But what if Social Security were Medicare.  What if, instead of giving $X per year, Social Security made an open-ended promise to fund whatever consumption one thought necessary to maintain his or her lifestyle.  Can you imagine the fiscal disaster?  The horrible incentives

And if Social Security had been structured that way, and we were now trying to change it to fixed grants, what would people be saying?  They would say, “what if something unexpected happens – won’t that just leave people in the cold?”

6 Responses to “What if Social Security were Medicare?”

  1. dan says:

    I enjoyed this perspective…my pet peeve is that SS is a catastrophic insurance policy that is treated like a retirement plan/entitlement .

  2. Rod says:

    Sounds good to me. I’m 66. Send me all those freebies!

    You’d pay these benefits in Federal Reserve Notes, I presume. Please excuse me while I make my daily visit to the currency exchange.

  3. Michael says:

    Don’t forget that I’m a veteran; you all owe me. (sarcasm)

  4. Rod says:

    Speaking of the currency exchange, my brother in law actually did go to the currency exchange on a weekly basis when he was teaching chemistry in Antofagasta, Chile, when he was in the Peace Corps back in the mid-60’s. Everybody who could add and subtract did this, as the inflation rate was in double digits per week, and there were plenty of German Marks to provide a money supply for a backward South American socialist economy. American cigarettes and Levi bluejeans were also a store of value.

    Here in the United States we could have the best of both worlds: smoking cigarettes could become illegal, but the tobacco companies could produce an ample supply of Marlboros and Kents for a stable-value medium of exchange. Instead of buying cigarettes at the gas station (no need for them any more with solar-powered cars and Windwagon Smith All-Terrain Vehicles), you’d get them at the bank. Thank you for not smoking.

  5. Rod says:

    Before I went on Medicare, I paid $475 a month for Keystone Health Plan East, a Blue Cross insurance plan that had relatively modest co-payments and deductibles and that covered all the really big, catastrophic stuff, like expensive operations and hospital stays. It seems that Ryan’s voucher system, which would pay something in the neighborhood of $16,000 worth of insurance, would be more than adequate for a 65-year-old new enrollee. Indeed, that should be enough to pay for the increased health care liabilities of older medicare-covered legal and illegal Americans and aliens.

    I don’t know how many of the readers of this website know how Medicare works (I sure didn’t until I signed up). I now pay $130 a month from my socialist security as a co-payment for medicare insurance. If I were to stop at that and not get supplementary insurance, I would get hit annually with a $1250 deductible for hospital expenses before Medicare would pay a dime toward my care. But I also am allowed to buy supplemental insurance from government-specified field of choices, and I have selected the top plan, Plan F, which covers the balance unpaid by Medicare for anything that Medicare itself touches. Thus when I was recently hospitalized for two operations on my broken leg, I did not pay anything at all for my hospital stay, my surgeons, my nurses, my hospital food or my rehab. Because Medicare does not pay for the telephone or the television in one’s hospital room, I had to pay $3.50 a day for that. And I had to pay fifty bucks for transport from the hospital to the rehab center. My supplemental insurance only costs me $130 a month, from Gerber Life. Other insurance companies offer the same Plan F coverage for more money, but Gerber Life just does the same job for less. Under Ryan’s plan, Medicare enrollees could shop around for the best price plan, including the one that would offer what supplemental insurance now covers. Others may choose to have insurance with higher deductibles in order to save on premiums.

    The main thing I worry about as an aging American on the dole is that I have insurance coverage for the really catastrophic things that could happen, including long-term care in a nursing home. The way it works now is that the government will provide you that care indefinitely (and at great cost) as long as you exhaust all your personal assets first. At that point Medicaid takes over, and that’s the reason why Medicaid will go broke fairly soon if the system is not fixed. Care in a nursing home can be very expensive, and my experience with my own aged relatives has shown that you wind up paying maybe double what it would cost to get a suite in the Four Seasons hotel and order from room service for every meal. My experience also has shown that the care one gets in a nursing home depends greatly on whether one’s relatives show up on a daily or frequent basis, and that care can lapse easily into a situation not at all unlike One Flew Over the Cuckoo’s Nest. Why does it cost so much? I think it must be all those federal and state dollars driving up demand. If people actually had a voucher for healthcare, maybe they would choose insurance that would cover long-term care, or they would choose to save on the premiums and take care of Mom and Dad at home.

    One more thing. When I was a kid, I remember it being the whole family’s financial and moral responsibility to take care of my grandparents, and when my grandmother broke her hip and had to go into the hospital, my father and my uncles would just write checks to the hospital and doctors. I don’t think my grandmother ever had Blue Cross. When I started working, the cost of the Cadillac Blue Cross plan was so inexpensive that I could afford to pay half of the $10 monthly premium from my $4,400 annual teacher’s salary (plus a free apartment in the dorm and all the school food I wanted to eat). I also did not even use the Blue Shield part of my insurance for regular doctors’ visits. I just wrote a check to Dr. Kistler for $6.00 and walked out of the office with some pills and some of Dr. Kistler’s white lightning cough syrup. Then, in the 1980’s, it seemed every doctor in the universe discovered medical insurance, and I had to use my BC/BS to pay for a doctor’s visit. The same doctors then had to hire ten or twenty people to handle the Medicare, Medicaid and private insurance. And I had to go to the drugstore for prescription cough medicine, which was not 160-proof white lightning.

    So now it scares the yips out of me that the government has me in its safe hands. I have zero confidence that Medicare as it is set up now will last very long, and I worry that if I make it into my 80’s some death panel will say, “No, you are too old for orthopedic surgery. Take two aspirin and call us between 9 and 3 Monday through Wednesday, and never on Federal holidays. Have a nice day.”

    BTW, now that I am living on cat food, I find Fancy Feast to be a lot better than the food at Sacred Heart Hospital.

  6. wintercow20 says:

    Indeed, the profession does not even know how to handle people who wish to pay out of pocket for expenses. Our son was in the emergency room two years ago, and we have a $5,000 deductible on our catastrophic plan. The visit would cost around $1,000 give or take – and the hospital refused to talk to me about the bill for two years until it determined, with its accountants and the insurance company, how much it should actually charge me.

    My cat food is great too – especially the stuff I share with my neighbors.

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