Saturday, November 27, 2010

Let's Be Honest--About Social Security and Why We're Going Broke

It's funny how you often find insights where you least expect them.

A few weeks ago, my dog Kiva got bitten on the nose by a rattlesnake and I ended up with a better understanding of our health care system.  This week, I came to understand why our Social Security system is in such danger just by reading the mail. Actually it was a letter that a friend of mine received from the Social Security Administration outlining his future benefits.

This friend is almost 45 and isn't working at the moment. He worked for a total of about 20 years before his current hiatus. During that time, he paid about $17,000 into the Social Security system--an amount that was matched by his employer bringing the total contribution to $34,000. He also paid a total of $4,200 into the Medicare system.

According to the letter, When he turns 62, he can start collecting more than $10,000 a year in benefits (with cost of living increases it could be double that) for the rest of his life. So given how long healthy people are living these days (see my recent article on health care reform), he will probably pull between 10 and 25 times more out of the system than he and his bosses ever paid in. 

He paid $34,000 into the system and will probably take out between $300,000 and $500,000 over time.  And there are tens of millions of hard-working American citizens just like him.  And in 20 years, his $4,200 Medicare investment will buy him lifetime health care coverage that will also be worth a fortune.

Let's be honest.

The main reason our Social Security system faces so many challenges is pretty simple. We were promised and are receiving benefits based on formulas that tax us too little while we are working and assume that we would not live much past 70 years of age. Now that millions of Americans are living well into their 90s (with the help of very expense drugs and medical treatments that are paid for by the government) our new-found longevity has created a national financial catastrophe.

Just after reading my friend's letter and doing the Social Security math, I left to spend Thanksgiving in St. Louis, the place of my birth. My 84-year old mother (who still drives--which is one of the reasons why I don't live there) lives in a retirement community where the average age of the residents is 92 and most of them show up for Happy Hour every day. The young woman who works as the bartender says she is constantly being proposed to by the feisty older men.

This is not the demographic scenario that the people who set up the formulas for Social Security and Medicare had bargained for.  The dozens of people I talked with during Happy Hour have been collecting Social Security for an average of 30 years each and have pulled millions more out of the system than they ever put in.  And not one of them was an illegal immigrant or a welfare queen or a Muslim.  These once hard-working, "real" Americans are the ones who are bankrupting us--not the foreign invaders and poor people that Fox and the Right would suggest are to blame.

Responsible Americans need to have a grown-up discussion about what kind of benefit systems we can realistically promise our citizens and what our kids are going to have to pay in taxes to fund it now that we're living so damn long. It's the same grown-up discussion that we have needed to have since 9/11 about how to pay for our wars and security going forward.

But let's be honest.

These conversations have not yet taken place and there is no appetite for them now. Instead, we are encouraged by our political leaders and the cable and radio screaming heads to invent villains and blame them for everything that's wrong with the world--and some of the things that are right. Even the Tea Partiers who are angry about spending money on anything are not interested in dealing honestly with Social Security, Medicare, paying for our wars, or sharing sacrifice by calling for mandatory military or public service.

They just like to complain about politicians in general, Obama in particular, and how big government  has gotten out of control. When it comes to specific details of what needs to be done or any kind of positive agenda they don't have much to say.  And they sure don't want to talk about the morality of sending poor young rural kids to serve a dozen terms in Afghanistan draft or the economics of their favorite entitlement programs.

Instead of having that honest conversation, they spread phony allegations that the costs of providing Social Security and Medicare to illegal immigrants are what is driving us broke. Or they spread professionally manufactured email lies about free "Obamaphones" and other benefits that our president has allegedly decided to give to illegals, freeloaders, and drug dealers as though that would be enough to bankrupt America even if it was true--which it isn't.

They also like to talk about how we should be investing our own Social Security accounts in stocks and gold and whatever we want. But that's not honest either because it implies that we actually have money in our accounts to invest--which we don't.   Our taxes go to pay our parents' generation and there is no money actually set aside for us to be invested even if we wanted to.  That's the way Social Security has always worked and the news media and politicians know it.

Let's be honest.

We can't even begin to address these serious issues until we can have an honest discussion about the current situation and what our real choices are to effectively deal with it.

But promoting fear and outrage and creating villains is apparently so much easier that it seems unlikely that honest grown-up conversation will take place any time soon. As I've mentioned, CNBC now has a daily segment on Larry Kudlow's show that's called "Viewer Outrage." They are committed to finding people who are really pissed off about something every single day and giving them a podium from which to rant.

When we start seeing segments entitled "Viewer Sacrifice" and "What You Can Do For Your Country" where people talk about the responsibilities that each of us needs to take on to help make things better, then we will be getting closer to the road to fiscal sanity.

If the national obsession with fact-free anger, fear and demonization continues to grow, then maybe  I will stop writing and move back in with my mother.  Those folks seem to enjoy life more than most of my current friends and they don't seem to be afraid or outraged about anything except running out of Chardonnay during Happy Hour.  They won't make very good villains because most of them are white and don't speak with an accent. 

Besides, that bartender is really cute.

Sunday, November 21, 2010

Let's Be Honest--About Health Care Reform

A few weeks ago our dog Kiva was bitten on the nose by a baby rattlesnake. Kristen was walking him on a bike path near our home in Tucson and Kiva pounced on a bush hoping to feast on a lizard but got much more than he bargained for.

She took him to our vet whose office was fortunately just a few blocks away and she was told that the situation was serious. Kiva needed at least one vial of antivenim serum ($900 a vial) along with numerous blood tests, IVs, and other treatments IF everything went well. Within an hour, Kiva's head looked like a pinata after a wild party but he was lucky and made a full recovery in just a few days.

But this is not an article about my wonderful dog or our good fortune. It is about the epiphany I experienced during the 24 hours that he was in the doggie hospital.

Actually it is about the check-in process. Before the hospital would agree to accept Kiva as a patient, we had to go into a special room to make financial arrangements. We were told that his treatment would cost between $2,500 and $4,000 and that they wouldn't admit him unless and until we gave them a credit card up front and let them charge us up front for $2,400--60 percent of the high estimate. If we didn't have the cash, we could take Kiva home and take our chances.

They then told us that unless we signed an agreement to pay them an additional $600 (minimum) up front, they would take no action to resuscitate him if he suffered a heart attack or some other crisis in the middle of the night.

We agreed to their terms and, happily we picked up our very valuable canine son the next day well on his way to a full recovery. The treatment was a complete success. Everyone at the doggie hospital was delightful and responsive to our calls and treated Kiva and us wonderfully.

But it got me thinking.

Our dog is alive today because we had $4,000 that we were willing and able to pay to keep him alive. I'm pretty sure that he received a higher level of care than the vast majority of the humans in the world and most in our own country.

In the U.S., no hospital would turn away or refuse to treat an accident victim or someone whose life was in imminent danger. But follow up care, treatments for life-threatening conditions, and cutting-edge surgeries are often only available for those who are willing or able to pay up front.  My doctor friends here all confirm that is the case.

As a type-1 diabetic with a fake hip, no thyroid, and spots on his lung I am not unfamiliar with doctors' offices. In recent years, the biggest change in their decor are the many signs prominently announcing the types of insurance that are not accepted and other declarations that the physicians understandably want to make sure that they will get paid before treatment is dispensed.

Let's be honest. About health care

We live in a country where we pay several times what residents of other nations pay for health care and by any objective measure our outcomes are much worse. There are still more than 50 million Americans who lack any insurance coverage at all and where those of us who are insured have been paying more and more each years for less coverage, higher deductibles, and co-pays that have gone through the roof.

As a candidate for president, Barack Obama accurately identified health care reform as a top priority and most Americans agreed with him. After dozens of incarnations and versions (each of which was labeled "Obamacare" by his political enemies), an inadequate but important first step was passed and signed into law this year.

The response of the Republican leadership and and their media promoters has been to convince Americans that this undefined Obamacare has made us worse off today than we were a couple of years ago. That we are being charged much more (we aren't) for coverage that will somehow be worse (it won't)--even though most of the provisions of the bill haven't even kicked in yet and really haven't been set in stone anyway.

They have convinced millions of Americans that we are being bankrupted by a health care system that caters to dark-skinned people who pay nothing and get everything for free--Mexican immigrants and black welfare freeloaders--at the expense of the rest of us.

But let's be honest.

All those people really get is the assurance that if they walk into an emergency room bleeding to death or with some other pressing ailment that they will be treated whether they have insurance or not.

Beyond that, tens of millions of Americans who are too young for Medicare deal with the health care system in the same way that Kristen and I dealt with Kiva's vets. If you have a long-term chronic condition or symptoms of something seems like it might be serious, you'd better be covered by insurance that your doctor accepts (an ever shrinking list) or come up with a whole bunch of cash up front. Otherwise they face the choice that we did with our dog. Find the money or go home and hope you don't die.

All of the fact-free ranting about Obamacare has mainly succeeded in distracting Americans and keeping many of us from coming to grips with what a total disaster our current health care system has become. A comparison with Canada (which has socialized medicine) shows that we spend about 60 percent more per capita on health care than they do and yet our infant mortality rates and life expectancy is far worse than theirs.

Washington Post columnist Richard Cohen cites a CIA study that shows the U.S. ranking first in the world in health care costs and 49th in life expectancy and 47th in infant mortalityHis piece on the subject is well worth reading.

On top of that, about half of all personal bankruptcies in the U.S.--millions a year--are due to health care costs. People who don't have the money choose to spend it anyway to save their loved ones or themselves. Who do they think they are?

To make matters worse, most of them have financed those life-saving treatments by maxing out multiple credit cards which has only hastened their slide into bankruptcy.

Meanwhile, in Canada there are zero bankruptcies due to health care costs.

Reasonable people can disagree about how to best fix our broken system. But right now, Republicans seem to be only focused on undoing Obama's efforts to make things better--and undoing Obama altogether.

Let's be honest.

Our health care system is one of many things that are driving us broke not because of freeloaders or illegals or whatever your definition of Obamacare might be. It's because the rest of us are living much longer than we were supposed to. The whole system was financially based on the assumption that we would work until we were 65 or so and live a few years after that before succumbing to old age and/or diseases. Today, many of the members of my golf club are over 80 and can beat me scratch. We all have relatives who are in their 90s and are doing just fine.

They paid in a little and are taking out five and ten and twenty times as much in benefits. Many of them are retired and been net takers for almost as long as they worked and paid into the system. Two bipartisan committees have just recommended that benefits to retirees be cut significantly in the future as part of our effort to get out of debt but polls show that most of us and our elected officials just don't want to go that route.

We'd apparently rather get angry and outraged at blacks and Mexicans and single mothers and poor people. And, of course, Obama.

I tried to explain this all to Kiva but he just licked my face and begged for a treat. I'm not giving him anything until he learns to bark at Glenn Beck.