Robert (no relationship to Paul) Samuelson declares that we must cut Soc. Sec. benefits. Golly gee - but then his claim is not even remotely true. We do have choices as to how to close the long-run fiscal gap. He's right that we have a long-run fiscal gap but he undermines his own messages with his straight jacket view of how it could be closed.

Uh oh (again)! Greg Mankiw links to yet another rightwing piece of idiocy (this Robert Samuelson nonsense) without critical comment. Why does Greg let his blog readers and students think this stuff is worth reading? Why can't someone as smart as Greg form at least one critical comment of such nonsense?

pgl

as far as i can guess, it is because the big boys have decided the way to free enterprise heaven is to roll back the new deal, even where it works well.

right now they are fairly desperate to save Social Security before it becomes obvious that it doesn't need to be saved.

there is only a "long term deficit" on the absurd assumption that we never raise taxes to pay for it. the tax raise that would be required under the Trustees intermediate projection amounts to one dollar per week each year from 2016 to 2036 (or from 2030 to 2050, depending on what you believe about the Trust Fund)... a time when the average wage will be going up ten dollars per week each year.

and of course they want you to foget that you will get the money back when you need it most.

It is definitely annoying that R. Samuelson lists something like three different ways to cut future social security benefits while only barely mentioning one fix for medicare, which does not involve improved efficiency. There seems to be a more general outbreak of this sort of "something must be done" crap about social security appearing right now, all of it with no recognition even for one second that, well, maybe nothing needs to be done, and certainly not during the next president's first term at a minimum.

As for health care, I suspect that politically, if we really want to get a decent health care system, we will have to do some massive buyout (or payoff) of the private health insurance companies. After all, they were the ones leading the successful charge against Hillary's Rube Goldberg proposoal back in 1993. They'll be at it again big time against anything really serious.

its a good thing that nobody pays any attention to print media anynore.

The current swamp that is medicare, assuming present cost growth rates into the future, busts our country in 10 years.

Social Security doesn't even come close in 40, unless one assumes the debt held by the Trust Fund won't be honored.

Robert Samuelson gets paid big bucks to write nonsense. How did I miss out? Maybe it's time to sign up for wingnut welfare.

While I admit I haven't read most of Orszag's analysis, in Box 1-2 he seems -- again, seems -- to be making a misleading distinction (which I assume would be unintentional) between projected health care costs and "demographics", dividing the driving forces of projected entitlement spending between (1) the number of recipients and (2) the medical inflation rate (or more precisely, the "excess cost growth"). Similarly, Dean here says, citing Orszag's analysis, that "the problem is health care, not aging." What seems to be lost in this analysis is the extent to which the aging retiree/recipient population CONTRIBUTES to this medical inflation rate (and "excess cost growth") -- if say, Medicare costs per capita for a 80 year-olds are greater than those 70 year-olds.

In the past I've asked (in vain) if anyone can please answer that question or direct me to the answer (perhaps even somewhere in Orszag's analysis) -- To what extent is the projected cost of Medicare driven by (1) and increasing number of recipients, (2) an aging recipient population and related higher medical costs for older recipients? All I got was a bit of snark from one of the usual suspects. Any chance anyone will help out this time? If no one else is able and willing to do so, Dean if you could answer I'd certainly appreciate it.

Another, related question is the degree to which changes that have been suggested (e.g., single payer) would, individually or in conjunction with other suggested changes, reduce projected Medicare spending (and in turn our long-term fiscal imbalance), assuming no change in benefits and eligibility.

Above (11:21PM) is me (forgot to put name)

We pre-Boomers and Boomers had better be ready to fight for our retirement benefits THAT WE PRE-FUNDED, at least partly. Since 1983, we've been paying in more than was needed to fund current benefit payments.

The fact that George Bush has given our FICA contribution surplus away to his campaign contributors doesn't obviate the fact the we have paid for our own retirement.

The shots across the bow are clear: right wingers are going to try to use a generational war to try to take our benefits away from us.

Carolyn Kay
MakeThemAccountable.com

Brooks,

Health care costs rose just as quickly in 70s and 80s when we weren't aging, so it's pretty hard to make the case that the excess increase in per person costs is attributable to the demand created by aging.

Single payer saves you a fortune on adminstrative costs (@$300-$400 billion ayear), but we will also need to have savings on drugs, medical equipment and also some doctors' salaries, especially for highly paid specialists.

Do you know that Cheney, Rumsfailed, Hadley, Pearle, Hadley, Feith etc. were allowed to keep their stock and options in defense related industries as they served in the government? See Naomi Klein. It's worse than I thought. No wonder our economic engine is running on war.

Dean- what percentage of health care costs and cost increase is attributable to high paid specialists? They do charge more but are less frequently used. My guess is that what doctors get paid accounts for very little and even less of the increases.

Dean,

Thank you for your reply, and your point re: the 70s and 80s is intriguing, but (1) are you saying that an aging retiree population is not a substantial contributing factor in the projected inflation rate (or excess cost growth) of Medicare? And (2) can you point me to some analysis that substantiates that point? (or, if that's not what you're saying, can you point me to some analysis that substantiates some other answer you may have?). I assume the retiree population is projected to age substantially, and I find it hard to believe (just intuitively) that older retirees don't require more costly healthcare per capita than younger retirees, so it would seem to be an oversight to simply separate the drivers of projected increases in Medicare costs into number of recipients and overall medical inflation for the population as a whole (i.e., retirees and non-retirees) and to imply that the latter is essentially independent of demographics -- or as you put it, that "the problem is health care, not aging."

As for solutions and their impact on costs, could you please point me to an analysis or analyses that:
(a) Demonstrates how much proposed policy changes would save, individually and in combination (i.e., with any synergies),
(b) Calculates the extent to which adverse second-order or other indirect effects of such changes would reduce the amount saved via first-order effects. For example, would a government-run, single payer system be less aggressive on cost containment (for better or for worse from a patient stantpoint) vs. private insurers?
(c) Considers the extent to which these policy changes would have other adverse effects. For example, to what extent would lowering fees paid to physicians reduce the supply of physicians (thus lowering availability of service, quality of service, and perhaps shifting many to a private out-of-pocket market)? To what extent would reducing patent protection for drug companies reduce innovation by them and result in fewer effective (and arguably cost-effective) drugs? etc., etc.

Brooks just asked for an analysis (see his #2 at 11:11AM). Brooks? See Dean's link to Orszag.

Brooks,

i may have misunderstood your question. I thought you were asking the extent to which the age adjusted rise in health care costs might be attributable to higher demand due to aging. In other words, how much more does it cost to treat someone ate age 75 because we have now have so many more people at age 75? My answer is that this does not seem to be a bog issue, since the cost was rising rapidly before we had many people at age 65.

But, I now think that you're answering how much more are health care costs rising because we have more people who are age 75, rather than 55. The Orszag piece answers this and shows that the bulk of the projected increase in costs is not due to aging.

As far as analysis of proposed reforms, there are a vast array of proposed reforms and a large body of research on their effects. If you are interested in this topic, the journal Health Affairs would be a good place to start.

Dean,

Thanks.

Re: " now think that you're [asking] how much more are health care costs rising because we have more people who are age 75, rather than 55. The Orszag piece answers this and shows that the bulk of the projected increase in costs is not due to aging."

Perhaps that will help me with my question, which was, more precisely and more relevantly, to what extent the aging of the RETIREE population (specifically Medicare recipients) is contributing to the medical inflation component (or excess cost growth component) of projected Medicare spending -- in other words, after breaking out the NUMBER of recipients as one factor and the increasing cost per recipient as the other, how much of the latter is due to the fact (I assume) that the age distribution of Medicare recipients will shift higher (older) and that healthcare costs for older Medicare recipients are higher than those for younger Medicare recipients.

Here's why the distinction is important. If this aging of the Medicare population is a substantial factor in the projected increase in cost per recipient (and in turn for the program) then the impact of proposed solutions may not be as great as they would be otherwise. To illustrate -- again folks, JUST TO ILLUSTRATE -- if, hypothetically, the projected medical inflation rate for those at any given age were under control (at a tolerably low level), and if this applied even to Medicare recipients (again, of a given age), but the projected increases in Medicare cost per recipient were driven mostly by the fact that the average recipient age were going to increase from 75 to 85 and that the average healthcare cost for 85 year-olds were 40% higher than that for 75 year-olds (just making up numbers to illustrate), then many of the solutions being proposed -- solutions aimed at bringing down our overall inflation rate for our entire population -- probably would not address the problem nearly as much they would if aging Medicare recipients were not the driving factor. If that were/is the case, and we were looking to reduce projected Medicare spending, we would have to either (1) find policies that somehow substantially reduce the difference in healthcare cost between, say, a 75 year-old and an 85 year-old, (2) reduce Medicare benefits (in one way or another -- lesser schedule of benefits, denial of coverage via "utilization management", etc.), or (3) reduce eligibility. Yes, anything that gets cost out of the entire healthcare system would help, but they wouldn't be focused on the key driver, the greatest contributor (or at least a very substantial contributor) to the problem.

See what I mean? I'd appreciate any further comment and suggested reading. I'd really like to get to get full, direct answer(s) to this important question. Is such an answer somewhere in Orszag's analysis? (I'm just guessing it's not, based on the framework he presented, per my earlier comment, but I could be wrong since I haven't read the whole thing)

Above (1:54PM) was me. Sorry, forgot to put my name again.

Brooks wrote, As for solutions and their impact on costs, could you please point me to an analysis or analyses that:...

If you look at cross-country comparisons, it's clear that single-payer is a freebie---it's simply a more efficient system, period. Probably would save us a few % GDP/yr, with the added benefit of insuring everyone.

As for "studies," on how these things impact quality of care, a group at Dartmouth has very convincing evidence that we waste lots of money on unneeded health care. (They look at regional variations in Federal medical spending, and the variation in outcomes isn't predicted by the variation in spending.)

Brooks wrote, In the past I've asked (in vain) if anyone can please answer that question or direct me to the answer (perhaps even somewhere in Orszag's analysis) -- To what extent is the projected cost of Medicare driven by (1) and increasing number of recipients, (2) an aging recipient population and related higher medical costs for older recipients?

Uh, Brooks? The link that Dean gives makes the claim that medical inflation is a much bigger effect than demographics. It took me less than 10 minutes to find a prominent reference there to another CBO publication, "The Long-Term Outlook for Health Care Spending", at
http://www.cbo.gov/ftpdocs/87xx/doc8758/11-13-LT-Health.pdf

The cover of that document has an "accumulation" graph breaking out the fraction they project to be due to medical inflation and that due to demographics. I haven't read the details, but maybe you could, you know, read it yourself, maybe?

Liberal,

Perhaps you could step away from the snark long enough to actually listen to what I was saying (and saying clearly, if I may say so myself). In the CBO document to which you linked (and in the chart to which you referred and its explanation in Box 2, page 14), as in the one I've been discussing, they equate demographics -- the "Effect of the Aging of the Population" -- with the increased number of people eligible (i.e., the growth in recipients of benefits), and separate this factor from projected medical inflation (more precisely, "Effect of Excess Cost Growth"), ignoring the fact that one "effect of the aging of the population" is aging of the recipient population, which in turn (I assume) contributes substantially to the "excess cost growth" projected for Medicare (and in turn, for entitlements as a whole).

If you didn't read and think about what I wrote previously on this thread, you really should do so before getting all snarky.

Alternatively, if you DID read and think about what I wrote, but simply lack the cognitive capacity to understand it, you should at least be aware enough of your limitations to think twice about getting snarky.

Liberal,

Let me express this in outline form so perhaps you'll understand it.

Those CBO reports seem to be expressing the projected growth in Medicare (and Medicaid) spending as a function of two factors:
1) Number of recipients
2) Cost per recipient

And the CBO reports (and Dean Baker) seem to be viewing #2 as simply a function of our projected overall medical inflation rate (i.e., for the entire population).

I'm saying that we need to make a further distinction among factors:
1) Increase in number of recipients
2) Increase in cost per recipient, as (at least roughly) a function of:
(a) increase in cost per recipient at each given age, and
(b) upward shift in the age distribution among recipients (again, I assume such a shift is projected and I assume that the average healthcare cost for an older Medicare recipient is greater than that for a younger Medicare recipient).

Get it?

Brooks I couldn't immediately locate the chart but the effects from increased recipients is on the order of about a fifth of the effect overall. You can find all the data in the 2007 Report available in PDF here.
http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2007.pdf
One indicator is shown in figure III.B3 which shows outcomes under Low Cost, Intermediate Cost and High Cost. Since there is not much demographic variation between the models to matter in any given year it looks like the impact from recipients varies from Income by about 1% of payroll in 2040 to 3% in 2085 translating to smaller amounts of GDP.

I believe I have pointed you to this source in the past, if not well here it is. I am not really in the business of doing the data extraction for others on demand and the ruder way of pointing this out would simply to say google 'Medicare Report'.

Brooks you have the worst habit of going negative early.
"Let me express this in outline form so perhaps you'll understand it."
That is simply insulting people for the sake of doing so.
"Get it!' is too.

Your act is getting real old. Nobody has a positive obligation to do your research for you. You don't just ask questions, instead you demand answers, and don't bother to analyze them in good faith when somebody bothers to give them.

If you think you are scoring big points by insulting liberal you have another thought coming. Liberal has a long and thoughtful posting history on the econoblogs. You on the other hand seemed to have sprang out of nowhere. You are piling up a pretty good record of insulting people who frankly are making a lot more contribution to the discussion than you are.

As to the substance of your post there simply is no basis a priori to accept the following:
"(again, I assume such a shift is projected and I assume that the average healthcare cost for an older Medicare recipient is greater than that for a younger Medicare recipient)."
Don't assume anything, find a source that has broken this out, or take the time to extract the data from the data tables in the link I provided.

From information I have gathered there does not in fact seem to be any basis for believing it costs more to treat the average 80 year old than the average 65 year old. Due to things like dementia the total societal burden may be higher, but the kind of custodial care is not covered under Medicare to start with.

Per the Medicare Trustees about a fifth or sixth of the projected gap is due to the demographics, your hypothetical is simply wrong in total and probably wrong in its components.

Regarding the question of whether the higher costs of dealing with more older retirees is driving the projections that have medicare expenses projected to rise far more sharply than are social security expenses, which also reflect assumptions about their being "more older people," these projections largely reflect the rising costs of medical care of all types for all gruops of the population. As noted by Dean, medical care costs have been sharply rising in the US for some time compared to other costs, even though we do not have all that many old people.

Indeed, nobody knows what will happen in the future, but the evidence of cross-country comparisons is striking. The US is not only tops in terms of per capita real spending on health care, at over $6,000, with Luxembourg now at just over $5,00o, and Norway and Luxembourg just over $4,000, with no other country above $3,000, but the US is even more dramatically the top in the entire world in percent of GDP spent on health care, at 15.4%, with "Occupied Palestinian Territories" second at 13.0%, and the only other high income countries above 10% being Germany at 10.6 and France at 10.5 (all these numbers coming from the latest UN Human Development Report, just out).

However, the US is tied for 29th in life expectancy in the world. All these other high income countries that are spending less per person and less per GDP than the US have more older people than does the US. The problem is our rising health care costs due to administration, drugs, malpractice insurance, overpaid specialists, and a bunch of other factors.

Ahh, Bruce, Old Reliable,

Re: "Brooks you have the worst habit of going negative early"

Thanks for demonstrating once again your blatant double standard, which, along with your very strong inclination to spew rhetoric and ridicule as a substitute for (and escape from) substantive debate, is one of your many fine qualities. I suppose you somehow -- emphasis on somehow -- missed the snarkiness with which Liberal began our dialogue.

Re: "Your act is getting real old. Nobody has a positive obligation to do your research for you. You don't just ask questions, instead you demand answers, and don't bother to analyze them in good faith when somebody bothers to give them."

LOL, you've got to be kidding. I asked for help in finding appropriate data/analysis related to what I see as an important question. Presumably that's part of the function and benefit of a blog community. Where exactly do you find me "demanding answers" here in some rude fashion? Where? Quote it? Just copy & paste from somewhere above. I know you know how to do that, albeit in a convenient, highly selective and unfair manner, but go ahead and present your evidence for such a bold criticism of my conduct. And no, you can't try to confuse the tone of my responses to Liberal with my requests for help/data/analysis regarding my question.

As for analyzing answers in good faith, again, your evidence that I have not done so? Because I pointed out to liberal that the exact chart and related point he was making -- and making with much snark -- not only did not contain the answer to my question, but was exactly what I was pointing to as the type of analysis that begged my question?

Re: "As to the substance of your post there simply is no basis a priori to accept the following:
"(again, I assume such a shift is projected and I assume that the average healthcare cost for an older Medicare recipient is greater than that for a younger Medicare recipient)."
Don't assume anything, find a source that has broken this out, or take the time to extract the data from the data tables in the link I provided."

First, thanks for the link. I'll look for the info there. I hope you understand my question well enough to have directed me to relevant data. But I don't see anything wrong (or deserving of criticism) about stating an intuitive assumption (that older seniors, on average, require more costly healthcare than younger seniors) and stating it explicitly as such while asking for help in finding data to quantify it -- which would also reveal it to be an invalid assumption if it were/is so. It certainly seems that, after being embarrassed in previous exchanges with me in which you were utterly unable to debate substantively and therefore offered only pathetic rhetoric and ridicule, all you have left as an ostensible basis for criticizing me (well, other than your double standard re: my tone and your constant reminder that I lack tenure on this site and that I am not winning friends here) is that I'm being lazy by asking if someone could direct me to data/analyses I'm seeking rather than finding it myself. Well, I guess if that's all ya' got, any port in a storm.

By the way, Bruce, when I stated in my initial comment that I had asked this question "in vain" in the past, I was doing you a courtesy by not mentioning that the only response I got was snark from you. But now that you've shown up here with more of your garbage, albeit this time with a link that might be helpful and with some relevant commentary -- a big difference which I do appreciate and which represents some possible progress on your part -- I think it's ok to mention now.

Re: "From information I have gathered there does not in fact seem to be any basis for believing it costs more to treat the average 80 year old than the average 65 year old. Due to things like dementia the total societal burden may be higher, but the kind of custodial care is not covered under Medicare to start with."

That seems quite counter-intuitive to me, but I look forward to seeing data supporting your contention (or not) if I can find them. I'll check that link, and hopefully it won't end up being like trying to find a needle in a haystack in which there isn't even a needle, although you claim there is (and that you've gathered the relevant information) but apparently won't or can't direct me more specifically to the data -- and I don't see it in figure III.B3 or in discussion thereof, but then again, you can just trot out your charge that I'm being lazy for not wanting to search through a large document for something you claim to have already found which may or may not really answer my question, your contention notwithstanding)

Re: "Per the Medicare Trustees about a fifth or sixth of the projected gap is due to the demographics, your hypothetical is simply wrong in total and probably wrong in its components."

Define "demographics" per that analysis. Is it being used synonymously with the number of recipients, as the CBO reports (and Dean) seem to be doing?

Lastly, again, thanks for (this time) at least making what I believe is a good-faith effort to actually address my question. Now if I/we can just try to sort out the relevant facts/analysis and lose the garbage, at least I'd be happy and perhaps you would, too (well, as long as no facts or logic challenge your contention).

Barkley,

Thanks for your reply. It seems, though, that most of the support you offer for your contention does not really fit. You discuss cost LEVELS while the question here pertains to cost TRENDS and the driving factors thereof. If I'm missing something (perhaps some implied link) please let me know and connect the dots for me if you don't mind. Otherwise, I'm still left with my question.

I haven't yet searched throughout the aforementioned documents -- yes (in case Bruce is reading this) I'm hoping someone will save me some time by pointing me to data/analysis that actually answers the question. If not, hopefully the link Bruce provided actually shows at least average healthcare costs (or better yet, average Medicare costs) for people at each age level (e.g., average Medicare cost for an 80 year-old vs. for a 70 year-old).

Bruce Webb,

I just linked to the document you provided, and the first thing I did was search on "average age", leading me in a grand total of about 3 seconds to the following on page 33:
"Moreover, as the average age of Medicare beneficiaries increases, these individuals will experience greater health care utilization and
costs, thereby adding further to growth in program expenditures."

While I thank you again for that link, doesn't the above directly contradict your contention? You wrote that "there simply is no basis a priori to accept" my (intuitively-based) assumption that average healthcare/Medicare costs for older Medicare recipients, , you encouraged me to "take the time to extract the data from the data tables in the link I provided", and you wrote that "From information I have gathered there does not in fact seem to be any basis for believing it costs more to treat the average 80 year old than the average 65 year old." Is that still your contention? While I'm not surprised that your contention is (apparently) wrong, I am surprised that you would have lectured me on doing my homework while directing me to a source that shows you to be wrong after just 3 seconds of research.

Typo correction:
"You wrote that "there simply is no basis a priori to accept" my (intuitively-based) assumption that average healthcare/Medicare costs for older Medicare recipients"

should be followed by "than for younger Medicare recipients"b

Bruce,

I scanned the document to which you linked and didn't catch the answer to my question (and I'm not sure you understand my question). All I did find was a direct contradiction to your assertion (see my comment above), that you were presumably basing at least in part on that document. So howzabout you do me a solid and point me to where on that document you think there is an answer to what you think is my question? Any chance? Please? Pretty please...with sugar on top?

I'll look for it in Orszag's document (to which Dean linked), too, but I hope it's not (another?) wild goose chase. Wish I had more confidence that my question is being understood.

Dean,

Just to follow up and check if my question is really being understood:

You wrote:
"I now think that you're answering how much more are health care costs rising because we have more people who are age 75, rather than 55. The Orszag piece answers this and shows that the bulk of the projected increase in costs is not due to aging."

I searched in the Orszag document and, while I didn't see the answer to my question, I did see repetition of the same type of categorization that fails to make the distinction I'm talking about and therefore is misleading about the impact of demographics by ignoring the longterm impact on cost-per-recipient of an aging Medicare population.

First, if you would be so kind (and I mean that to sincerely polite, not snarky), please see my reply here http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=01&year=2008&base_name=the_post_attack_on_social_secu&29#comment-6144271 and outline-format of my question (in response to someone else) here http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=01&year=2008&base_name=the_post_attack_on_social_secu&29#comment-6144305

Now, it's important to note that I'm talking about the aging MEDICARE population (Medicare recipients), not the aging population as a whole, AND important to note that it's quite possible that over the next decade or so the average age of Medicare recipients will actually go DOWN as the baby boomers retire, which means eventually it will rise again as those retired baby boomers age.

I just want to check to see if, when you said Orszag's document answers my question and gives the essential answer that you state in your comment, if my question is being understood correctly. Could you please confirm (or let me know if my question was/is unclear to you)?

Brooks,

Well, the point is that the cost increase projections in Orszag per age category are simply projections forward of what has gone on in the past. We have had rapid cost increases in the past, much more rapid than other countries, which is how we got to the current position, where we are spending more than any other country per person and in percent of GDP. There is no question that such trends into the future are unsustainable.

Brooks, let us be clear. The international evidence more than shows that this is not due to very high costs of caring for very old people. Virtually all of these other high income countries have both higher proportions of their populations over 65, and also they have even higher proportions of their populations over 85, very old in short, because they have both more slowly growing populations and longer life expectancies. They are keeping their basic costs for very old people far more under control than we are, and doing so in ways that lead to there being lots more very old people than we have, because our medical outcomes are so pathetically lousy.

The bottom line is that if we organized our health care system more like those countries organize theirs, we might also be able to take care of lots of much older people much less expensively than we do right now, much less having to worry about all kinds of fantastically through the roof projections of future cost increases, which are clearly only projections of the ridiculous and unique characteristics of our utterly inefficient and dysfunctional health care system. I mean, countries like Barbados, Costa Rica, and Cuba do as well or better than we do on basic medical care outcomes. We can do a whole lot better than we do regarding both costs and outcomes.

Brooks,

when CBO age adjusts they adjust for differences in the age of the medicare population, not just the additional number of beneficiaries in the population. that is standard methodology for age adjustment.

Dean,

Seems from your comment above that you don't have time to listen to and answer my question or direct me to the answer, which is fine. I don't presume you'll take the time to do so. I'll seek it on my own, or perhaps someone else will help, although it seems that, despite what I think are good intentions, no one is providing or directing me toward an answer.

Barkley,

I appreciate your attempt to provide information that you think answers (or helps answer my question), but the stuff in your comment doesn't bring me much (if at all) closer to an answer. My question is as clear as I can make it, expressed in prose and in outline form in comments above. To put it in the terms of my outline, as we look at long-term projections for Medicare spending (i.e., which I assume are based on our CURRENT healthcare system), I want to know how much of factor #2 consists of #2a and how much of #2b.

Do you understand what I've been asking? If you don't wish to continue on this, no problem and thanks again for what I assume has been a good-faith effort to respond to my question

Brooks,

No, I do not have the precise answer to your question as I have not dug through the Orszag report in detail. I am looking at the larger picture and inducing certain things from the broader trends and figures.

So, you yourself have noted that for some period of time the proportion of old folks will be not so old, and then later that proportion will go up. The US does happen to spend more than other countries trying to extend the life of people on the verge of death, which tends to push up our costs for the very old. So, somewhat further out, assuming that we continue to do this, that may well add some to those extra costs.

But the main part of it is simply this extrapolation forward of our past rapid trend of cost increases, which includes these extraordinary efforts at the end of life. Indeed, again, theses costs are projected to go up much more rapidly than increases projected for social security, even though the numbers of people involved are nearly identical. I do not have the exact answer to your question, but the issue here is that indeed there should be a focus on the especially rapidly rising components of health care, both for old people and for all of us.

Barkley,

I agree that we need to find ways to reduce medical inflation (while figuring out how to do so cost-effectively and how to best balance cost-reductino with humanitarian concerns), both for the population as a whole and for the Medicare (and Medicaid) populations. But regarding solutions to the latter, and Medicare in particular, we need to determine to what extent we can reduce the projected cost growth by means other than reduction in benefits and/or eligibility (i.e, via policies some have suggested such as single-payer, etc.) so we can consider those policy options along with all the other policy changes (in Medicare, other entitlements, discretionary spending and taxation) that could contribute to reducing our long-term fiscal imbalance. And to make this determination (this calculation) -- i.e, to assess the magnitude of savings that proposed policies can achieve -- I think it's important to distinguish among the factors I outlined (#1, #2a and #2b) for the reasons I discussed upthread http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=01&year=2008&base_name=the_post_attack_on_social_secu&8#comment-6144271 .

Perhaps it's possible to essentially dismiss #2b as a major factor on a theoretical basis or with some surrogate data that give some indication of its magnitude (i.e., the extent to which it is contributing to the projected long-term Medicare cost growth), but I'm far from comfortable with such an approach, at least not at this point. Or put differently, without being able to put any estimated potential savings from a set of policies in the perspective of total projected long-term Medicare spending and the assumed drivers of that projected growth, I think I'd have difficulty feeling confident in those estimated savings figures and in the degree to which they mitigate the problem.

So IMHO, it's important to know how much of the long-term projected spending is driven by my #2a, the aging (long-term) of the Medicare population and how much by #2b, assumptions, under our current system, for cost (and the growth in cost) per recipient at each age level. Of course, another question is healthcare cost per capita for Medicare recipients vs. for non-Medicare recipients, and the extent to which systemic changes would reduce Medicare costs (as opposed to reducing costs for the population as a whole), but MY, separate question, is also important as far as diagnosing (pardon the pun) the problem and estimating the effectiveness (savings) of various potential solutions. For example, if the average (i.e, per capita) Medicare costs for recipients at age 70, 80, and 90 were all about the same (making an aging Medicare population not a factor), and the bulk of the spending growth were driven by the same, high medical inflation rate for ALL Medicare recipients of all ages (which would perhaps be largely a reflection of our overall system and the overall medical inflation rate), then that is different problem, requiring at least somewhat different solutions, than if the bulk of the spending growth were due to an aging Medicare population combined with a long-term trend toward an average recipient age of 75 to 85 combined with much higher costs at higher ages.

Barkley,

Just a correction for any further discussion:

Above I mixed up (switched) my 2a and 2b. The components of my #2 per my earlier comment:

2) Increase in cost per recipient, as (at least roughly) a function of:
(a) increase in cost per recipient at each given age, and
(b) upward shift in the age distribution among recipients (again, I assume such a shift is projected and I assume that the average healthcare cost for an older Medicare recipient is greater than that for a younger Medicare recipient).

And actually, now that I think about it, 2a should be more precisely stated as projected cost LEVELS at each age.

Brooks wrote, Is such an answer somewhere in Orszag's analysis? (I'm just guessing it's not, based on the framework he presented, per my earlier comment, but I could be wrong since I haven't read the whole thing)

LOL!

Brooks wrote, I'm saying that we need to make a further distinction among factors:
1) Increase in number of recipients
2) Increase in cost per recipient, as (at least roughly) a function of:
(a) increase in cost per recipient at each given age, and
(b) upward shift in the age distribution among recipients (again, I assume such a shift is projected and I assume that the average healthcare cost for an older Medicare recipient is greater than that for a youngerMedicare recipient). Get it?

Of course I got it.

From the further CBO reported I cited above and suggested you read,

http://www.cbo.gov/ftpdocs/87xx/doc8758/11-13-LT-Health.pdf

on pp. 7--8:

The historical rates of cost growth that CBO used for Medicare and Medicaid remove the effect of growth in the number of beneficiaries. The calculation for Medicare also removes the effect of changes in the age composition of the population. For Medicaid, the computation removes the effect of changes in the composition of the caseload: the portion of beneficiaries who are children, disabled people, elderly people, and other adults.14

I'm estimating it took me less than 5 minutes to find that quote. It definitely took me less than 10.

Get it?

Liberal,

You seem to be making the same essential mistake again, although I'll have to try to deconstruct how you think your quote proves your point (e.g., are you saying that CBO's long-term Medicare projections do not take into account changes in the age composition of the MEDICARE RECIPIENT population and higher cost per recipient at higher ages?) another day (busy today), unless you care to try to spell it out for me. For now, here again is an excerpt from my response to you from upthread:

In the CBO document to which you linked (and in the chart to which you referred and its explanation in Box 2, page 14), as in the one I've been discussing, they equate demographics -- the "Effect of the Aging of the Population" -- with the increased number of people eligible (i.e., the growth in recipients of benefits), and separate this factor from projected medical inflation (more precisely, "Effect of Excess Cost Growth"), ignoring the fact that one "effect of the aging of the population" is aging of the recipient population, which in turn (I assume) contributes substantially to the "excess cost growth" projected for Medicare (and in turn, for entitlements as a whole).

"In the past I've asked (in vain) if anyone can please answer that question or direct me to the answer "

Brooks that is how you opened the discussion. The "(in vain)" being a gratuitous and kind of pissy accusation of bad faith against everyone else involved in the discussion. We directed you, you just wouldn't go down the path.

And then you follow up with:
"You seem to be making the same essential mistake again, although I'll have to try to deconstruct how you think your quote proves your point"
Where once again you claim to be judge jury and executioner on the question of rationality. The possibility that maybe your thinking is too rigid to actually understand the subtleties of the replies you get may be the source of your communication problems.

"But I don't see anything wrong (or deserving of criticism) about stating an intuitive assumption"
I know you don't. Which is why I have pointed you to Bryan Caplan's autobiography. Prof. Caplan is a vocal proponent of the idea that intuition is oh so more important than numerically based data. On that score not is only Prof. Caplan dead wrong, when he extends that to proposing policy positions he becomes outright dangerous. His claims about the relation between 'rationality' (as defined by him) and 'democracy' have led him dangerously close to the kind of Platonic Philosopher King fascism that Popper warned us about.

Your intellectual position is kind of curious. You never come outright and state your conclusion which seems to be that those who suggest that the solution to Social Security and Medicare shortfalls is a slash in benefits are on balance correct. Instead you seem stuck in some intermediate stage of the argument demanding/wanting/asking for others to accede to some logical assertion that will allow you to deliver the killing blow. "Ah Hah!! So you agree we need to slash benefits". Well no. I have been studying the financials of Social Security for over a decade now and in my considered judgement the proper course going forwards over the near term is to adopt a program of 'Nothing'. I have explained this at length not only on my relatively unvisited blog but on any econoblog that will tolerate me. In similar fashion Barkley and Dean have examined the issue of Medicare financing in relation to growth in the recipient base and convincingly argued that the problems are much more weighted to the medical inflation side. These cases have been made openly and are fully accessible to anyone who can spell 'Google'. Rather than venturing out and engaging these already made arguments and examining the data on which they are based you are demanding (and I use that word advisedly) that everyone re-explain their positions in the light of your largely unsupported assumptions.

Look the data is out there. Download and read the 2007 Medicare and Social Security Reports perhaps comparing Table III.A3 (Medicare Enrollment) of the Medicare Report to Table V.A4 of the Social Security Report (Cohort Life Expectancy) http://www.ssa.gov/OACT/TR/TR07/V_demographic.html#wp194031 and extract some numbers. Dean, Barkley, liberal and I have given you abundant pointers to the data sources as well as the conclusions we have drawn from our study of them. If you really think that the problems of Medicare stem more from growth in the numbers of recipients and increased costs of a more aged on average population then you have been given all the tools needed to make your case. Instead you insist that simple civility demands that we make that case for you.

"which in turn (I assume) contributes substantially to the "excess cost growth" "
Well that is the problem in a nutshell. You don't need to assume anything and you can precisely quantify 'substantially' by engaging with the data tables and objectively evaluating the assumptions that underlie them. Instead you seem to assume that all of this can simply be done from the top down on the basis of pure reason.

Well in the words of the song "It don't come easy". Sometimes you actually have to put in the time and actually research the numbers.

"unless you care to try to spell it out for me."
Hmm. Well no. Since you never seem to want to listen to past explications and accuse almost everyone of bad faith in undertaking those explications it is not clear why we should.

Brooks try making a straight up argument and back it with data points. What really are you proposing? What are your working assumptions? Because your current attempt at Pseudo-Socratic inquiry is just not advancing the argument in any substantive way.

Bruce,

While I'm not at all sure I want to get into another long, fruitless discussion of a discussion with you (as opposed to discussion of the topic), and I'm too busy today to refute the abundance of nonsense in your comment (WAY too much material to work with: obvious straw men, non sequiturs, baseless criticism of approach or tone -- all your usual silly, time-wasting garbage), I'll probably do so over the weekend or next week. You really are a piece of work. I couldn't come up with a better caricature (or character, from a literary perspective). You are quite funny, albeit inadvertently and obliviously.

Funny thing is that the end result of this generation of workers paying in more to S.S. than the generation which is now receiving benefits is that today's workers in their turn will receive more than we did when it comes to retirement (in accordance with the average wage growth adjustment).

This assumes that per capita income keeps on doubling every two generations (assuming Mars doesn't invade, today's workers are safe).

Brooks wrote,

In the CBO document to which you linked (and in the chart to which you referred and its explanation in Box 2, page 14), as in the one I've been discussing, they equate demographics -- the "Effect of the Aging of the Population" -- with the increased number of people eligible (i.e., the growth in recipients of benefits), and separate this factor from projected medical inflation (more precisely, "Effect of Excess Cost Growth"), ignoring the fact that one "effect of the aging of the population" is aging of the recipient population, which in turn (I assume) contributes substantially to the "excess cost growth" projected for Medicare (and in turn, for entitlements as a whole).

The CBO's methodology for this attempt at isolating demographics-independent cost growth is detailed in the section "Computing Historical Excess Cost Growth" of
http://www.cbo.gov/ftpdocs/87xx/doc8758/11-13-LT-Health.pdf

I'll let you yourself try to answer your own questions for once.

Not sure you'll be able to understand it, though; it involves "math".

Brooks wrote, You really are a piece of work. I couldn't come up with a better caricature (or character, from a literary perspective). You are quite funny, albeit inadvertently and obliviously.

Uh, that's not Bruce---you're looking at yourself in a mirror.

Liberal,

Some things I wonder: Do you have any idea what I'm asking? Do you have any idea what you're saying? Do you really see some connection between the two?

OF COURSE I assume that CBO is taking into account both my factors 2a (projected cost at each age level) and 2b (projected age distribution trends among recipients). They'd have to be grossly incompetent not to! What I've been seeking is a breakout of the impact of those two factors, to see how much of the projected Medicare spending due to their "excess cost growth" is due to one and how much to the other (2a vs. 2b), as opposed to their apparent lumping of the two together into the impact of "excess cost growth", which precludes important insights. Any chance you get it NOW?? Is there another language you speak?

I must say, your snark-to-getting-it ratio is large and growing by the day. OK, technically not, because the denominator was zero and still is zero, but that metric occurred to me and just seemed so fitting that I had to use it, with apologies to mathematicians.

OK, just to cover all possibilities, there is some small chance that you are getting it, but your comments are certainly indicating otherwise.

There is no reason for people in 2041 to take a 25% hit: the income tax that has been "cashing" government owned bonds will simply be reduced by the same proportion that the payroll tax (FICA) will be raised and the party will go on. The clunkiness will simply go out of clunky retirement collections.

The only sensible reason to have a Trust Fund for S.S. is to bridge a temporary shortfall in the payroll tax stream, until Congress raises it a mite (happened twice so far) -- meaning a (say 5 year) bridge should be maintained permanently anyway -- meaning FICA should take over even before the Trust Fund is completely depleted.
***************
S.S. is basically a reverse Ponzi scheme in which each generation get more than it paid in because of economic growth: if you start your work career at $50,000/yr, you should end doing $100,000 doing equivalent work, 40 years later.

I am sure the wages of my old Teamster buddies back in 804 kept up with per capita growth since I left them in 1970 (back problems). They had just gotten an increase of $18/wk over 3 years from a base of $120/wk ($95 increase on $640/wk in 2007 dollars). They recently raised their defined retirement benefit from $3300/mo to 3600/mo: to more then they were making in wages 38 years ago!

Meantime Chicago cabdrivers now earn half what they earned when I started there 28 years ago (wouldn't catch me cabbing in Chicago now): one 30 cent mileage raise between 1981 and 1997 -- at which 1990 midpoint Chicago began adding 40% more cabs (still adding) while cutting the business seemingly in half with trains to both airports and open limo licenses (the cream) and finally (the coup de grace) free trolleys between all the hot spots downtown (the bread and butter).

The difference between the two segments of labor is bargaining muscle, nothing else -- in the Teamsters supplied by excess testosterone. I remember our local president, Ron Carey, calling a "strike" shouting "I'm not saying there's a dollar there". There was, the very next day: $18/wk instead of only $17. I had the feeling as he called the strike it was just to get strike out of these very militant guys' systems -- with a wink and an nod from management.

Sector-wide labor agreements (as practiced around the OECD world) dispel with the need for testosterone overload and make things easier for employers (around the OECD world) too -- like the minimum wage really does by raising everybody's costs the same amount at the same time. Sector-wide is really the soft solution to the race to the bottom state side.

Get wages back to LBJ era distribution at today's doubled average income and all our poverty and S.S. problems would go away.

Brooks wrote, OK, just to cover all possibilities, there is some small chance that you are getting it, but your comments are certainly indicating otherwise.

No, you don't get it.

The report clearly breaks the growth in costs between demographics and non-demographics medical inflation.

The report further gives an explicit description of the formulae used in this breakdown.

Since you're unwilling to examine the formulae yourself, to either vindicate your "point" or concede, I have to conclude you don't have enough native intelligence to figure it out on your own, and instead just continue to badger your intellectual betters instead of conceding your own weakness.

Liberal,

If the report does show such a breakout, it certainly isn't in any part you've pointed to. In fact, the data you've pointed to show the opposite -- i.e., a lumping together of the two factors I wish to see broken out.

Let's try this approach to seeing if you are (at least at this point) getting what I've been saying. You say "The report clearly breaks the growth in costs between demographics and non-demographics medical inflation", (1) what are you defining as "demographics" in this case? And (2) any chance that, after pointing me to parts that do NOT show such the breakout which I've described and which I'm seeking, you will actually point me to some part in the report where such a breakout IS shown??

all

you might be interested in a book:

PHIL MULLAN The Imaginary Time Bomb: why an ageing population is not a social problem.

brooks

you would get more respect if you did not colonize a thread like an infestation of bedbugs.

make your point. shut up. if people don't get it. try to make it better next time. don't whine at them.

Coberly,

I realize you have a grudge (itself unwarranted) and would like to find some opportunity to criticize me, but next time at least try to offer a criticism that, to a neutral observer, might have some conceivable legitimacy in light of actual facts. I could explain why your criticism is downright silly, and perhaps will later, but for now my feeling is "why bother?".

For now, suffice to say two things: First, that it takes two to tango, and second, that the only one on this thread who made a criticism without even a semblance of offering anything potentially useful -- or put another way, the only one "whining" -- is...drumroll please...YOU.

Coberly,

To be precise, by "the only one on this thread who made a criticism without even a semblance of offering anything potentially useful", I mean with regard to the subject/question I had raised and my conduct in discussion therof, which you were criticizing. (I'm just trying to preempt convenient confusion on your part or anyone else's)

ah brooks

i can see why you thought i was criticizing you. i thought i was offering friendly advice. i don't have a grudge against you.

ah, Coberly,

I could explain further why your criticism was unwarranted and in fact baseless, but then you'd probably reply with more nonsense, and if I continue a back-and-forth with you, you'll end up criticizing me for "colonizing a thread like an infestation of bedbugs". Of course, it's quite surprising that you've started down that road, since your advice is "make your point. shut up. if people don't get it. try to make it better next time".

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