Sunday, June 12, 2011

Privatizing Social Security and Medicare: Who Can Defuse Political Dynamite?

In response to my prior post where I averred that cigarette companies were treated as scapegoats, I have had several cyber and actual conversations about personal responsibility. I believe that folks should realize the consequences and the benefits of freely made decisions. While we want American society to be compassionate, we do not want to punish success and reward failure. Our goal is to do all that we can to maximize everyone’s success. We should be ready to assist those who need and deserve our private and governmental assistance, but personal effort and responsibility are necessary elements of these interventions.

When we see patients who are in financial difficulty, my physician partners and staff will do all that we can to help them. While it is not our policy to do colonoscopies for free, we will make whatever adjustments are necessary to make sure that the patient receives colon cancer screening. However, when patients who owe us money hang up on our calls, or express their view of medical entitlement with foul language, then we forward these accounts to a collection agency.

There is also a self-interest angle to helping others. One day, we may need a boost ourselves.

In one of my post-scapegoat posts, I discussed the concept of privatizing social security, a sound proposal that was vilified and snuffed out during George W. Bush’s presidency. Antagonism against this modest proposal was seasoned with a large measure of arrogance, a splash of hubris and a dash of paternalism.

In summary, this proposal argued that if folks could manage a small portion of their social security money, which they earned themselves, that it could be a force that would reinforce and extend the program’s solvency. The political left turned white hot over the notion of the government transferring any responsibility for managing these retirement funds to the citizens who actually earned the money. Isn’t this preposterous? They predicted doomsday when our imbecilic citizenry, who were somehow smart and industrious enough to earn the money in the first place, would squander it all, vaporizing the last remaining safety net that would keep them afloat. Then, the lefties argued, the rest of us would have to rescue them at much greater expense.

Their argument is specious and transparent. Review some pesky facts below.

The plan only permitted individuals to invest 4% of their earnings privately in the first year, with modest increases permitted in subsequent years. So, even if these investment tyros lost it all, which is hard to do in any investment, it wouldn’t be a game changer.

The government was not permitting folks to invest in hedge funds, penny stocks or junk bonds. They were required to select from a list of legitimate investment vehicles.

The program was voluntary. If an individual did not have the skill or desire to make personal investment choices, he did not have to. He could continue to allow the government to manage his money.

The program was so modest and so reasonable, that it seems that it would be difficult to attack it. Why, then, did it provoke such ire and vitriol from the left?

These guys were scared. They weren’t frightened that folks would lose money and be vulnerable during their retirement years. They weren’t spooked that it would jeopardize the social security system’s financial stability. They were terrified that the privatization program would actually work. They couldn’t tolerate any fissure in their edifice that stood for total government control of other people’s money and personal decisions. If this initial privatization effort succeeded, they knew that the public, now empowered, would demand greater control of their own money.

To those who believe that the government knows best how to invest my social security retirement money, then why shouldn’t it control all of my investment income? Should I be trusted to invest money that will one day be used to pay tuition for my kids? Indeed, anti-privatizers could argue that all of our money should be turned over to the government, so they can wisely manage it and then disburse it as it sees fit.

Alice Rivlin, a Democratic economist and Paul Ryan, a Republican congressman, who many hope will become a GOP presidential candidate, advised consideration of privatizing the Medicare program. Of course, this idea is political dynamite, but their proposal from two thoughtful public servants on opposite sides of the aisle shows that this strategy deserves air time and public discussion.

Privatization should not be a private matter. Let’s bring it out into the public square.


  1. Have had to cut comment to 1/4 of original. Only X Amount of characters allowed. Doctors/hospitals not only need to be able to say the word "sorry" to patients, I believe they must. When there is a "bad outcome" completely unrelated to error or negligence which is probably more the %90 of the time - doctors must be able to say "I'm sorry" without fear. Again going back to "the litigious person" they will file claims no matter what we say/do. Yet I propose that when the consequences of a bad outcome are very significant our response and attitude can prevent, in this case frivolous, claims. Moreover  I truly believe that our response and attitude in cases where an error caused a bad outcome can also prevent claims from being filed - I even believe that some patients will seek no compensation at all for errors in this case. Obviously I'm not talking about gross and unacceptable errors. I refer to cases where despite our best intention we commit an error the consequences of which can be very significant. 

    Regardless of our backgrounds, education, ethnicity, politics, and so on... there isn't a person in this world who can't relate to having made mistakes, or committed an error and lamented the outcome. What is preventing the medical profession from relating to and engaging in this fact as it pertains to litigation. Finally, and again, any opinions would be greatly appreciated.

  2. I hate to be so cavalier, but...

    ...I've paid into The Government System for 40 year now, and I want my due when I hit 65. The under 30 demographic supported "Hope and Change". Well, I hope they have lots of change, because they'll going to have to work their fannies off to cover my entitlements.

    That's the problem with socialism: sooner or later you run out of other people's money.

  3. @A. Baily Don't you think civil discourse is necessary for solutions in a society? How will a society bent on absurdity and sarcasm accomplish anything at all during such crisis? Beyond a shadow of a doubt you know that far more than the under 30 demo voted for Obama which is what you meant by - support of hope and change - I suspect you also fully know that we are not under the leadership of a socialist party. What bearing does Bush's 2005 proposal as a means to prevent insolvency have on Obama?

    I don't know what the solution is. In retrospect I'm glad people did not lose up to 40% of invested SS along with the rest of their retirement. All I know is that the attitude reflected in your comment adds to the problem.

    I didn't think it was the worst idea, nor the best. In retrospect I'm relieved for my mother that SS was not privatized as she would have lost 30% of it along
    with the rest of the very soundly private investments she worked so hard for. I don't know, definitively, what the solution is. I do know that the attitude reflected in your comment adds to the problem.

  4. Nations without a safety net are called third world countries. It's every man for himself and wealthy people send their kids to private schools, buy expensive health care (by traveling to other countries) and have their own generators for electricity. Bodyguards and gated communities keep the dirty poor out of sight. Taxes are low and mass transit is non-existent. This is not the country I want to live in. Currently the wealthiest 1% of Americans have a greater net worth than the bottom 90%.

    We are currently paying a lower tax rate than any time since 1950. Why are we having this discussion over and over? It is distracting us from improving as a Nation.

    I hate the waste and bureaucracy of big government. But we already are shifting more and more of first dollar health coverage to the working class and we are seeing a decline in preventive medicine as people struggle to keep up. Privatization of Medicare would create more under-insured elderly, at a time when they need health care the most.

    I would like to see the debate switch from privatization to how can we best use the resources we have to provide basic health care to everyone from taxes (yes the ugly "T" word). Medicare needs reform. The waste and fraud and perverse payments for "doing more" needs to change. Start with funding primary care to make it uber-attractive as a specialty.

    And while we are at it...let's take a good hard look at our military budget and start getting leaner there. I'm not talking about benefits for veterans or pay for soldiers. I'm talking about "privatization" of the military and the billions we are spending on outside contractors and fraud and abuse.

    I know I'm mixing up a lot of topics but until we start dealing with the elephants in the room, I don't want to hear about cutting education, health care, social security.

  5. Comments appreciated all.
    @TB,all of us agree with the objective, it's the strategy that divides us. I don't support the taxpayers being the primary source to rescue Medicare. When Medicare was enacted,life expectancy was 70. Today, it's 78. As you know, there are much fewer workers today supporting our retirees. It is mind boggling that we haven't raised the Medicare eligibility age in response to these realities. Personally, I don't think we can tax our way out of this situation. The program needs to be restructured and the public's (and the medical profession's) insatiable appetite for every conceivable medical test or treatment must be addressed. Politically, this has proved impossible, as was demonstrated during the mammography revised guidelines issued by the USPSTF last year. Everyone supports 'reform' as long as he is not affected by it. And, of course, there is no brake on the system when patients are insulated from the costs of their care. I think the wasted $$$ from uneccessary medical care could provide coverage for the uninsured with plenty of cash left over. I see overtreatment and overtesting every day, and I am sure some of it originates in my own office.

  6. Michael Kirsch: Agree completely with all of your points.

  7. Michael, I wish you'd prohibit anonymous posters. Make them choose a clever moniker, at least.

    Anonymous, I'm absolutely dead-on serious. My comment was factually accurate. It's not my fault that the government is running a Ponzi scheme. I've paid a huge amount of money into the system. I want some of it back when I retire. If the government has spent the money already, then the productive generation is the only one who can show us the money.

    Talk about "unnecessary care" always makes me nervous. Unnecessary for whom? And who decides? Are we going to us some hideous monstrosity such as Quality Adjusted Life Years? Who will determine that? Obama's cabinet?

  8. @TB & Kirsch MD It's not the only ( or even main) solution but it does seem of late that there's a better and more sustained crackdown on Medicare fraud. Especially in states like FL where it's most needed. When you begin to learn about private corporations such as Walgreens defrauding Medicare to the tune of $35m (35 that we know of) it puts the level of widespread criminality pertaining to medicare into perspective. So measures taken to stop fraud and recoup when possible are imperative. 

    As TB mentioned making primary care more attractive and Mr. Kirsch talks about the enormous waste related to unnecessary testing/treatments (that perhaps costs the system as much as fraud?) - the medical home model comes to mind. It appears to be something that should inherently help contain Medicare spending where reimbursement would adjust fee- for-service payments.  
    With it's focus also being on primary care physicians working as team with specialists (consistently and always) one would imagine this could hugely impact unnecessary testing and the like. 

    Thanks - Kerry

  9. @A Bailey unnecessary medical care is when you have gas, and you decide to have a colonoscopy for gas or bout of diarrhea Bailey. The doctor should decide when/if you need that procedure. A better course of action might be to take gas ex or pepto bismol before undergoing an unnecessary, expensive, and invasive procedure. Kerry

  10. Just seeing how to put my name in instead of anon, because I wouldn't want to further upset Mr. Bailey :) No really it's because I'm a Luddite & don't know how to join the "things" in the profile list - so here goes...

  11. I'm laughing at anonymous' comment but he is certainly right. Right now there is no better way of securing ourselves but to do it ourselves by living a very healthy lifestyle till we grow old. That's the biggest point. If you don't want to get sick, then live a healthy lifestyle. Prevention is better than cure. Humana Walmart Preferred Rx Premium

  12. If the patient is healthy, over 50 and never had colorectal screening, colonoscopy is an appropriate test for someone complaining of gas.

    Stomping out "waste and fraud" is about as productive as "fairly taxing the rich". Say what you want, but the middle class will get stuck with higher taxes and innocent medical practitioners will be nailed by self-perpetuating regulatory agencies. Then people like Kenny will wonder why people are getting out of medicine.

  13. Oops. Kerry. I'm sorry.