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"unlimited for life with a fixed initial cost" products Interestingly, this is the same problem that bedevils Social Security and Medicare/Medicaid. Consider

by temphn 14y ago

"unlimited for life with a fixed initial cost" products Interestingly, this is the same problem that bedevils Social Security and Medicare/Medicaid. Consider the change in perspective that AA underwent when it realized how much these passengers were costing the company: Rothstein, Vroom and other AAirpass holders had long been treated like royalty. Now they were targets of an investigation. The same thing happened with Medicare. For any costly program that doesn't put financial caps on utilization, cost can ultimately be capped either by queues or by various kinds of fraud charges and investigations into the users of the program. This is why we have the Stark Law and Medicare fraud investigations: http://en.wikipedia.org/wiki/Stark_Law http://en.wikipedia.org/wiki/Stark_Law http://en.wikipedia.org/wiki/Medicare_fraud http://en.wikipedia.org/wiki/Medicare_fraud Some of the asserted frauds are actually crimes. Some of them are in a gray area and arguably abusive, like Rothstein. Some are really just attempts at innovative business models. Whatever the reason, though, if you are costing the government a lot of money, you are going to get hit with a Medicare fraud investigation. It doesn't matter if it's because your product is amazing and the cost is due to organic growth. All that matters is how much money it's costing the government.

Mz 14y ago
I do not know about medicare per se, but when social security was designed to support people 65 and over, I think life expectancy was around age 62. So it was designed to support a relatively small number of retirees in their extreme old age. Then people began living longer. Somewhat similarly, welfare was aimed at a tiny fraction of "the deserving poor" but was poorly worded/thought out and thus inadvertently changed the social contract and thereby actively grew the number of poor moms. At the time it was created, having a kid out of wedlock was strongly taboo. Poor single moms were thus mostly widows. The authors apparently could not imagine it becoming more socially acceptable to have children out of wedlock. I worked at bigco for five years. Similarly shortsighted wording for contracts and the like is pretty rampant from what I have seen.
- dkrich 14y ago
  > I do not know about medicare per se, but when social security was designed to support people 65 and over, I think life expectancy was around age 62. So it was designed to support a relatively small number of retirees in their extreme old age. Then people began living longer. This is true, but the real problems with Social Security began when Lyndon Johnson combined the Social Security fund, then entirely separate, with the rest of the federal budget. Instead of maintaining a very close eye on how much money was coming in and going out for Social Security, there was no longer any urgency to keep that money around. In other words, money taken out of paychecks for Social Security was spent on everything else, and Federal income taxes were paid out as Social Security.
  - Mz 14y ago
    From what I have read, it is complicated, probably too complicated for me to ever debate off the cuff. And I am especially not qualified right now. But thanks for contributing.
- nknight 14y ago
  The Republican-invented meme of social security insolvency because it didn't account for life expectancy increases is tired and worn out. The reality is that the architects of it were nowhere near that stupid, and they accounted for evolving life expectancies with a fairly high degree of accuracy. Had they not, the fund would have been bankrupt long ago. Even now, the system faces not a crisis, but a need for adjustments. In the 2030s, incoming taxes are expected to be at approximately 75% of payouts. If no changes are made, once the trust fund is exhausted, people will continue receiving at least 75% of their entitlement indefinitely.
  - shelf 14y ago
    Not being able to pay your outgoings is the definition of insolvency, friend. On the other hand, the government is not quite a 'corporation,' and isn't entirely subject to those kinds of notions, is it?
    - nknight 14y ago
      > Not being able to pay your outgoings is the definition of insolvency, friend. Didn't say it wasn't. Try not randomly reshuffling the words. You'll get a much clearer picture of what I actually said.
      - shelf 14y ago
        Only paying part of your outgoings is considered 'not paying,' or grounds for a default, typically? So that 'meme' is pretty much factual reality, if your statistics are correct? disclosure: non-American with no knowledge of your welfare scheme
        lolcraft 14y ago
        Not being able to pay something twenty years from now given current income is much different than defaulting. Specially given historically low tax rates and an economic depression, and a spenditure that has mostly not been made yet.
- lurker14 14y ago
  > I think life expectancy was around age 62 You are thinking of life expectancy at birth, which averages in childhood death. SS only pays people who worked for at least a few years, so life expectancy for people who reach age ~20 is much higher.
zackmorris 14y ago
I hear this argument all of the time here in conservative Idaho, that social security provides more of a benefit than what's been paid in. This is fundamentally NOT how social security works. It has always been self-funded, and if not for the manipulations of unscrupulous politicians who borrowed from it to pay for 30 years of wars, it would be doing just fine today Thank You Very Much. Most people my age (35 and younger) believe that they can't rely on social security for their retirement. It takes some meta thinking to go a step above and realize that this line of reasoning is leading to a self-fulfilling prophecy, meaning we are unlikely to fight for a system we think is doomed. All hogwash of course. Productivity is at least an order of magnitude or two higher today than it was in the depths of the Great Depression. Most staples like food, clothing, transportation and even shelter are cheaper now than they were 75 years ago, adjusted for inflation. We have no way to predict how high productivity will be in 2030, when social security will supposedly encounter "problems". This all dwarfs any increase in lifespan, desired affluence, or cost of medical care we are likely to encounter (once real progress and cures begin happening, instead of the phantom progress we are experiencing in tech bubbles). People complain more about the self-funding social security payroll tax of 6% than they do about the 3% rents charged by credit card companies. Heck some people spend more on their smartphone, cable and internet plans than they do on social security. I really worry for the future of our society, when we freely give up all of the gains made in the 20th century like 40 hour work weeks, rights to privacy, shared public land and other resources like the airwaves, immigration for the huddled masses, and most importantly shared sacrifice and that our society is only as strong as the weakest among us, all the things that Americans used to believe in. We think we are somehow better or wiser than the people some respectfully call the Greatest Generation, who survived the depression, then fought in WWII and died for the standard of living we enjoy today. We're better than this, especially here in such a mecca of ideas and enlightenment.
- temphn 14y ago
  People complain more about the self-funding social security payroll tax of 6% than they do about the 3% rents charged by credit card companies. Heck some people spend more on their smartphone, cable and internet plans than they do on social security. But I can choose not to use a credit card, buy a smartphone, or sign up for cable or internet. I can't opt out of Social Security. We have to be clear on whether it's supposed to be a great deal for everyone, or whether it's meant to be a redistributive program. If it's supposed to be a great deal for everyone, ok, well, I have a different opinion. Let me opt out. You can continue to use it. Alternatively, if it's supposed to be a redistributive program, well, then you might see why people complain about it. If it's redistributive, by definition some will pay in more than they get out, and others will pay in less than they get out. All that the rational critics of Social Security, Medicare, and Medicaid want is the ability to opt out, in the same way we can switch from AT&T to Verizon. Right now you can only opt out via the very high friction process of moving and giving up citizenship.

by temphn 14y ago

Mz 14y ago

I do not know about medicare per se, but when social security was designed to support people 65 and over, I think life expectancy was around age 62. So it was designed to support a relatively small number of retirees in their extreme old age. Then people began living longer. Somewhat similarly, welfare was aimed at a tiny fraction of "the deserving poor" but was poorly worded/thought out and thus inadvertently changed the social contract and thereby actively grew the number of poor moms. At the time it was created, having a kid out of wedlock was strongly taboo. Poor single moms were thus mostly widows. The authors apparently could not imagine it becoming more socially acceptable to have children out of wedlock. I worked at bigco for five years. Similarly shortsighted wording for contracts and the like is pretty rampant from what I have seen.

dkrich 14y ago
> I do not know about medicare per se, but when social security was designed to support people 65 and over, I think life expectancy was around age 62. So it was designed to support a relatively small number of retirees in their extreme old age. Then people began living longer. This is true, but the real problems with Social Security began when Lyndon Johnson combined the Social Security fund, then entirely separate, with the rest of the federal budget. Instead of maintaining a very close eye on how much money was coming in and going out for Social Security, there was no longer any urgency to keep that money around. In other words, money taken out of paychecks for Social Security was spent on everything else, and Federal income taxes were paid out as Social Security.
- Mz 14y ago
  From what I have read, it is complicated, probably too complicated for me to ever debate off the cuff. And I am especially not qualified right now. But thanks for contributing.
nknight 14y ago
The Republican-invented meme of social security insolvency because it didn't account for life expectancy increases is tired and worn out. The reality is that the architects of it were nowhere near that stupid, and they accounted for evolving life expectancies with a fairly high degree of accuracy. Had they not, the fund would have been bankrupt long ago. Even now, the system faces not a crisis, but a need for adjustments. In the 2030s, incoming taxes are expected to be at approximately 75% of payouts. If no changes are made, once the trust fund is exhausted, people will continue receiving at least 75% of their entitlement indefinitely.
- shelf 14y ago
  Not being able to pay your outgoings is the definition of insolvency, friend. On the other hand, the government is not quite a 'corporation,' and isn't entirely subject to those kinds of notions, is it?
  - nknight 14y ago
    > Not being able to pay your outgoings is the definition of insolvency, friend. Didn't say it wasn't. Try not randomly reshuffling the words. You'll get a much clearer picture of what I actually said.
    - shelf 14y ago
      Only paying part of your outgoings is considered 'not paying,' or grounds for a default, typically? So that 'meme' is pretty much factual reality, if your statistics are correct? disclosure: non-American with no knowledge of your welfare scheme
      - lolcraft 14y ago
        Not being able to pay something twenty years from now given current income is much different than defaulting. Specially given historically low tax rates and an economic depression, and a spenditure that has mostly not been made yet.
lurker14 14y ago
> I think life expectancy was around age 62 You are thinking of life expectancy at birth, which averages in childhood death. SS only pays people who worked for at least a few years, so life expectancy for people who reach age ~20 is much higher.

zackmorris 14y ago

I hear this argument all of the time here in conservative Idaho, that social security provides more of a benefit than what's been paid in. This is fundamentally NOT how social security works. It has always been self-funded, and if not for the manipulations of unscrupulous politicians who borrowed from it to pay for 30 years of wars, it would be doing just fine today Thank You Very Much. Most people my age (35 and younger) believe that they can't rely on social security for their retirement. It takes some meta thinking to go a step above and realize that this line of reasoning is leading to a self-fulfilling prophecy, meaning we are unlikely to fight for a system we think is doomed. All hogwash of course. Productivity is at least an order of magnitude or two higher today than it was in the depths of the Great Depression. Most staples like food, clothing, transportation and even shelter are cheaper now than they were 75 years ago, adjusted for inflation. We have no way to predict how high productivity will be in 2030, when social security will supposedly encounter "problems". This all dwarfs any increase in lifespan, desired affluence, or cost of medical care we are likely to encounter (once real progress and cures begin happening, instead of the phantom progress we are experiencing in tech bubbles). People complain more about the self-funding social security payroll tax of 6% than they do about the 3% rents charged by credit card companies. Heck some people spend more on their smartphone, cable and internet plans than they do on social security. I really worry for the future of our society, when we freely give up all of the gains made in the 20th century like 40 hour work weeks, rights to privacy, shared public land and other resources like the airwaves, immigration for the huddled masses, and most importantly shared sacrifice and that our society is only as strong as the weakest among us, all the things that Americans used to believe in. We think we are somehow better or wiser than the people some respectfully call the Greatest Generation, who survived the depression, then fought in WWII and died for the standard of living we enjoy today. We're better than this, especially here in such a mecca of ideas and enlightenment.

temphn 14y ago
People complain more about the self-funding social security payroll tax of 6% than they do about the 3% rents charged by credit card companies. Heck some people spend more on their smartphone, cable and internet plans than they do on social security. But I can choose not to use a credit card, buy a smartphone, or sign up for cable or internet. I can't opt out of Social Security. We have to be clear on whether it's supposed to be a great deal for everyone, or whether it's meant to be a redistributive program. If it's supposed to be a great deal for everyone, ok, well, I have a different opinion. Let me opt out. You can continue to use it. Alternatively, if it's supposed to be a redistributive program, well, then you might see why people complain about it. If it's redistributive, by definition some will pay in more than they get out, and others will pay in less than they get out. All that the rational critics of Social Security, Medicare, and Medicaid want is the ability to opt out, in the same way we can switch from AT&T to Verizon. Right now you can only opt out via the very high friction process of moving and giving up citizenship.