October 25, 2003
Social Security and Medicare
I e-mailed Kevin on his missing out on the Hospital Insurance and his reply is that he wants to consider just Social Security (SS). The problem with this approach though is that the two programs are connected.
First, the demographic problem with SS is present with Medicare. Max Sawicky claims otherwise, but this is untrue (I suppose if I were as nasty as Max can be at times I'd call him an intellectual pygmy). Basically, you can't increase the number of elderly by the degree that we are going to see without there being an increase in the cost of the programs supporting the elderly.
To be sure, part of the problem with Medicare is the acceleration of health care costs. Still, this does not mitigate that there would still be a problem with Medicare, it would simply be a smaller problem.
Another reason that Medicare and Social Security are connected is that Medicare subsidizes consumption of the very goods that are going to make the Social Security problem worse (in part). As medical technology and care improves in the future people will live longer. So the more medical resources people consume the longer they'll tend to live.
This reminds me of the problem with partial equilibrium analysis in economics (i.e., supply and demand analysis for a single market). It assumes that all other things are constant. They aren't. Change something in one market and it has implications for the markets of compliments, substitutes, and even unrelated goods (through the income effect of a price change).
Posted by Steve at October 25, 2003 02:37 PMThe only reason for Medicare is to keep people alive to collect Social Security. It really is that simple. The primary reason for escalating medical costs is 3rd party payment, whether its normal insurance or Medicare. No matter how high costs go, people will consume medical services until they are either well, or they place a greater value on other things (services and products). The greater the subsidy, the higher the underlying costs will be driven.To put it bluntly, the underlying premise is fundamentally flawed.
FWIW, both college and new cars are priced the same way, IMHO. GM prices its cars so that the median price is a fixed percentage of median income (and builds its cost structure on that basis). College costs will *always* rise faster than inflation and faster than the loans & grants targeted it college costs. The purpose is to provide an education to those bright enough to profit from it while absorbing the huge middle class surplus of those trying to emulate the bright ones.
Auto insurance
Cheap auto insurance
cheapest auto insurance
