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How could someone possibly run a pension like social security? How could they run a health insurance system like Medicare? Seriously. Can you tell me how anyon

How could someone possibly run a pension like social security? How could they run a health insurance system like Medicare? Seriously. Can you tell me how anyone could do what those entities do, release the same financial statements, and not a) be in jail, and b) deserve it?

jbooth 17y ago
Medicare is more efficient than the overwhelming majority of private insurance companies. Social Security also has super-low overhead, less than most funds (although lower returns than many funds as well). The federal government is actually better at pure administration than the majority of private companies, because they're constantly under the threat of getting the axe and have a mandate to do their job rather than take paychecks home. The lower salaries don't hurt, either. (EDIT: by pure administration I mean simple administrations like SS -- money goes in, money goes out, the administration is a miniscule share of the budget. No way a private company provides a service like that without demanding a bigger chunk for themselves) Lots of problems with the government.. if you're looking for wasted money, I'd suggest looking at military procurement. But pure administration of simple tasks, they actually do pretty well. If you're ideologically opposed to the existence of even a perfectly run Medicare and SS, of course, that's a different story..
- byrneseyeview 17y ago
  Medicare is more efficient than the overwhelming majority of private insurance companies. Insurance companies would operate very differently if they could charge prices based on what their customers would cost them. It would also help if employer-provided health plans didn't have such huge tax advantages. And Medicare provides a different set of services. It would be as if the government mandated that 1) instead of buying meals, you had to buy the right to eat at a restaurant--but the restaurant could not charge different people different amounts based on how hungry they were or what they liked to eat, and 2) companies could buy food for employees at a tax-advantaged rate. If that were the case, food would suck, and one could imagine free government-run cafeterias that provided cheaper, better service. Social Security also has super-low overhead, less than most funds (although lower returns than many funds as well). Their return is zero, minus administrative costs. When you invest money in a mutual fund, they buy stocks with it; they don't use it to pay off the previous investors, and spend the rest on their pet projects. That's illegal. The federal government is actually better at pure administration than the majority of private companies, because they're constantly under the threat of getting the axe and have a mandate to do their job rather than take paychecks home. I would like to meet some of these government employees who actually fear losing their jobs. Where did you find them? The lower salaries don't hurt, either. http://economix.blogs.nytimes.com/2009/12/21/private-vs-public-sector-pay/ http://economix.blogs.nytimes.com/2009/12/21/private-vs-publ... Government workers make vastly more than private sector workers. If you're ideologically opposed to the existence of even a perfectly run Medicare and SS, of course, that's a different story... It's clear from the data that I don't need to be.
  - kalvin 17y ago
    - Do you think people should receive necessary medical treatment based on ability to pay? That's the alternative universe where health insurance companies charge based on cost. - Should the government should try to hire younger, less educated, part-time employees to bring pay down? Your chart links to an actual explanation: "In 2008, only 14 percent of federal workers were on part-time schedules, compared to 26 percent in the private sector. Federal workers were far older on average: 55 percent were between the ages of 45 and 64, compared to 36 percent of private-sector workers. Furthermore, 45 percent of federal workers held a college degree or higher educational credential, compared to 29 percent of private-sector workers. Federal workers are more likely to receive employer-paid health benefits than private sector workers — 77 percent compared to 56 percent." ... "The biggest difference between private and federal employment, illustrated in the graph above, lies in the proportion of jobs paying less than $25,000 a year. In 2008 more than 43 percent of private-sector workers earned less than $25,000 a year. Most federal employees fell squarely in the middle earnings brackets, making $25,000 to $75,000 a year."
    - anamax 17y ago
      > Do you think people should receive necessary medical treatment based on ability to pay? Do you think that someone who has paid (via taxes) for other people's medical care should be denied govt-funded medical care? That's the reality of govt systems. Which reminds me, what's "necessary"? Seriously. Does it include pacemakers for 95 year olds? How about yearly mamograms for 40 year-old women? There will be govt "death panels" in the US, just like there are in every other "national health system". That's why the bill has 2k pages.
  - jbooth 17y ago
    If you're ideologically opposed to the existence of any social welfare systems, then that's a philosophically consistent position -- one that about 80% of americans disagree with, but it's consist and you're entitled to your own opinions. You are not, however, entitled to your own facts. FACT: Medicare's payout rates have nothing to do with their administrative costs. You're thinking balance sheet. Administrative costs for Medicare and the VA are far, far lower than any insurance company. It's a fact. And that's before you consider that the insurance companies are taking out profits on top of that. This isn't an indictment of the ideas of markets in general -- this is more a statement that insurance companies aren't in anything resembling 'markets' and have no accountability to anyone. Who else gets away with 15-20% yearly rate hikes for a decade? They're getting less efficient. Similar story for SS. Per dollar managed, they're orders of magnitude lower in fees than any organization on the planet, because they process a ton of money through a dead-simple operation. Any inherent differences between "public and private" are noise compared to those fundamentals. It's not about public and private. If you want, you can argue that they should be doing more complicated things instead.. but then I think about my parents' impending retirement, their 401k recently, and am pretty glad that they kept it simple. So anyways -- you're entitled to your own philosophical opinions about whether things like medicare and SS should exist -- but factually, they're much more efficient at what they do than any private sector equivalent. Also, what they do would most likely never be done by the private sector on it's own. If you think it just shouldn't be done, that's a coherent position of course.
- bd_at_rivenhill 17y ago
  I haven't looked much at medicare from an accounting perspective, but Social Security is a textbook case of the sort of off-balance-sheet entity that blew up Enron earlier in the decade and some of the banks more recently. SS currently takes in more money than it spends, but the excess is then "borrowed" and spent by the rest of the government. It has tremendous future liabilities but the assets consist of IOUs from the Treasury. If I ran a pension fund like this, the administration could be perfectly efficient in terms of processing incoming and outgoing payments, but I'd still be guilty of conducting a Ponzi scheme. The difference between the government doing this and a private entity doing this is that the government will just change the rules to make the problem go away when they get into trouble, while the administrators of a private entity would go to jail.
  - jbooth 17y ago
    "IOUs from the treasury", otherwise known as T-notes, are, according to everybody, including "everybody in the private sector", the safest interest-bearing investment on the planet. Where do you think they should put their short term surplusses to offset the long term obligations? Cash under the mattress? Honest question -- where else should they keep that money?
    - bd_at_rivenhill 17y ago
      They shouldn't keep the money, they should return the excess back to the taxpayers or they should convert it into on-balance-sheet debt to reflect the fact that an IOU to yourself does not really represent an asset. Treasury debt is certainly the safest interest-bearing investment on the planet from the perspective that if the instrument says you will get X number of dollars every few months and Y dollars at maturity, then that is exactly what will happen. The problem comes in due to the fact that the Fed has a great deal of control over the real value of those future dollars and they might not be worth as much as you hoped when you eventually receive them. When it comes right down to it, the people in charge when the debt gets too big to manage would have to be galactically stupid to choose explicit default/repudiation over inflation. Given that the government must already borrow from sources outside the Social Security trust fund in order to meet its expenses, what do you think will happen when social security outflows exceed payroll tax inflows? The following answers seem to cover all cases as far as I can tell: 1. Raise payroll taxes to cover the excess. 2. Raise general taxes and use the extra money to redeem the special treasury bonds from the trust fund. 3. Cut spending in the rest of the government and use the excess to redeem trust fund bonds. 4. Borrow money from external sources to redeem trust fund bonds. 5. Cut benefits down to a level at which they are covered by payroll tax inflows. Any way you slice it, the trust fund is an accounting fiction and eventually taxes will need to be raised, more money borrowed, or spending or benefits cut.

jbooth 17y ago

Medicare is more efficient than the overwhelming majority of private insurance companies. Social Security also has super-low overhead, less than most funds (although lower returns than many funds as well). The federal government is actually better at pure administration than the majority of private companies, because they're constantly under the threat of getting the axe and have a mandate to do their job rather than take paychecks home. The lower salaries don't hurt, either. (EDIT: by pure administration I mean simple administrations like SS -- money goes in, money goes out, the administration is a miniscule share of the budget. No way a private company provides a service like that without demanding a bigger chunk for themselves) Lots of problems with the government.. if you're looking for wasted money, I'd suggest looking at military procurement. But pure administration of simple tasks, they actually do pretty well. If you're ideologically opposed to the existence of even a perfectly run Medicare and SS, of course, that's a different story..

byrneseyeview 17y ago
Medicare is more efficient than the overwhelming majority of private insurance companies. Insurance companies would operate very differently if they could charge prices based on what their customers would cost them. It would also help if employer-provided health plans didn't have such huge tax advantages. And Medicare provides a different set of services. It would be as if the government mandated that 1) instead of buying meals, you had to buy the right to eat at a restaurant--but the restaurant could not charge different people different amounts based on how hungry they were or what they liked to eat, and 2) companies could buy food for employees at a tax-advantaged rate. If that were the case, food would suck, and one could imagine free government-run cafeterias that provided cheaper, better service. Social Security also has super-low overhead, less than most funds (although lower returns than many funds as well). Their return is zero, minus administrative costs. When you invest money in a mutual fund, they buy stocks with it; they don't use it to pay off the previous investors, and spend the rest on their pet projects. That's illegal. The federal government is actually better at pure administration than the majority of private companies, because they're constantly under the threat of getting the axe and have a mandate to do their job rather than take paychecks home. I would like to meet some of these government employees who actually fear losing their jobs. Where did you find them? The lower salaries don't hurt, either. http://economix.blogs.nytimes.com/2009/12/21/private-vs-public-sector-pay/ http://economix.blogs.nytimes.com/2009/12/21/private-vs-publ... Government workers make vastly more than private sector workers. If you're ideologically opposed to the existence of even a perfectly run Medicare and SS, of course, that's a different story... It's clear from the data that I don't need to be.
- kalvin 17y ago
  - Do you think people should receive necessary medical treatment based on ability to pay? That's the alternative universe where health insurance companies charge based on cost. - Should the government should try to hire younger, less educated, part-time employees to bring pay down? Your chart links to an actual explanation: "In 2008, only 14 percent of federal workers were on part-time schedules, compared to 26 percent in the private sector. Federal workers were far older on average: 55 percent were between the ages of 45 and 64, compared to 36 percent of private-sector workers. Furthermore, 45 percent of federal workers held a college degree or higher educational credential, compared to 29 percent of private-sector workers. Federal workers are more likely to receive employer-paid health benefits than private sector workers — 77 percent compared to 56 percent." ... "The biggest difference between private and federal employment, illustrated in the graph above, lies in the proportion of jobs paying less than $25,000 a year. In 2008 more than 43 percent of private-sector workers earned less than $25,000 a year. Most federal employees fell squarely in the middle earnings brackets, making $25,000 to $75,000 a year."
  - anamax 17y ago
    > Do you think people should receive necessary medical treatment based on ability to pay? Do you think that someone who has paid (via taxes) for other people's medical care should be denied govt-funded medical care? That's the reality of govt systems. Which reminds me, what's "necessary"? Seriously. Does it include pacemakers for 95 year olds? How about yearly mamograms for 40 year-old women? There will be govt "death panels" in the US, just like there are in every other "national health system". That's why the bill has 2k pages.
- jbooth 17y ago
  If you're ideologically opposed to the existence of any social welfare systems, then that's a philosophically consistent position -- one that about 80% of americans disagree with, but it's consist and you're entitled to your own opinions. You are not, however, entitled to your own facts. FACT: Medicare's payout rates have nothing to do with their administrative costs. You're thinking balance sheet. Administrative costs for Medicare and the VA are far, far lower than any insurance company. It's a fact. And that's before you consider that the insurance companies are taking out profits on top of that. This isn't an indictment of the ideas of markets in general -- this is more a statement that insurance companies aren't in anything resembling 'markets' and have no accountability to anyone. Who else gets away with 15-20% yearly rate hikes for a decade? They're getting less efficient. Similar story for SS. Per dollar managed, they're orders of magnitude lower in fees than any organization on the planet, because they process a ton of money through a dead-simple operation. Any inherent differences between "public and private" are noise compared to those fundamentals. It's not about public and private. If you want, you can argue that they should be doing more complicated things instead.. but then I think about my parents' impending retirement, their 401k recently, and am pretty glad that they kept it simple. So anyways -- you're entitled to your own philosophical opinions about whether things like medicare and SS should exist -- but factually, they're much more efficient at what they do than any private sector equivalent. Also, what they do would most likely never be done by the private sector on it's own. If you think it just shouldn't be done, that's a coherent position of course.
bd_at_rivenhill 17y ago
I haven't looked much at medicare from an accounting perspective, but Social Security is a textbook case of the sort of off-balance-sheet entity that blew up Enron earlier in the decade and some of the banks more recently. SS currently takes in more money than it spends, but the excess is then "borrowed" and spent by the rest of the government. It has tremendous future liabilities but the assets consist of IOUs from the Treasury. If I ran a pension fund like this, the administration could be perfectly efficient in terms of processing incoming and outgoing payments, but I'd still be guilty of conducting a Ponzi scheme. The difference between the government doing this and a private entity doing this is that the government will just change the rules to make the problem go away when they get into trouble, while the administrators of a private entity would go to jail.
- jbooth 17y ago
  "IOUs from the treasury", otherwise known as T-notes, are, according to everybody, including "everybody in the private sector", the safest interest-bearing investment on the planet. Where do you think they should put their short term surplusses to offset the long term obligations? Cash under the mattress? Honest question -- where else should they keep that money?
  - bd_at_rivenhill 17y ago
    They shouldn't keep the money, they should return the excess back to the taxpayers or they should convert it into on-balance-sheet debt to reflect the fact that an IOU to yourself does not really represent an asset. Treasury debt is certainly the safest interest-bearing investment on the planet from the perspective that if the instrument says you will get X number of dollars every few months and Y dollars at maturity, then that is exactly what will happen. The problem comes in due to the fact that the Fed has a great deal of control over the real value of those future dollars and they might not be worth as much as you hoped when you eventually receive them. When it comes right down to it, the people in charge when the debt gets too big to manage would have to be galactically stupid to choose explicit default/repudiation over inflation. Given that the government must already borrow from sources outside the Social Security trust fund in order to meet its expenses, what do you think will happen when social security outflows exceed payroll tax inflows? The following answers seem to cover all cases as far as I can tell: 1. Raise payroll taxes to cover the excess. 2. Raise general taxes and use the extra money to redeem the special treasury bonds from the trust fund. 3. Cut spending in the rest of the government and use the excess to redeem trust fund bonds. 4. Borrow money from external sources to redeem trust fund bonds. 5. Cut benefits down to a level at which they are covered by payroll tax inflows. Any way you slice it, the trust fund is an accounting fiction and eventually taxes will need to be raised, more money borrowed, or spending or benefits cut.