These tiresome stories are typical of the ultra-nationalist bias of the corporate media, cheered on by the yahoos in the backwoods. A policy somewhere else didn't happen here, so it must be bad.

I live in Japan. I've been covered by health care here for nearly 2 decades, aware that I'm in part paying for older people. It's insurance as well as the sinews of community.
I've been in the States. With all due respect, sure wouldn't want to live there.

We get a lot of this in the debate about our own system. I think it is powerful because people like to think that poor health is the fault of the person in poor health. It gives us a sense of power over our health and mortality. In reality this is true for a small minority of medical conditions. Any one of us can have bad luck and every one of us will get old if we don't die first.

Wealth is an abundance of valuable resources or material possessions

adam smith wrote "the wealth of nations"

banks changed trust management into wealth management

the political right has devised the concept of "wealth transfer" to denigrate social programs

calling social programs "wealth trnasfer" implies that what you have is going to be taken from you and given to someone else

just the kind of thing to heigthens fears

after the headline made me choke on my breakfast, on reading i think maybe this is close to unraveling the big mystery. could it be the wapo can't see the housing and credit bubbles because they don't understand fractional-reserve banking? i mean this could also explain their intermittent concerns with deficit spending. they're worried whether their money is "all there."

If people are to be allowed to build up their own wealth, a rational system would probably go light on younger workers. Their earnings are not near maximum, they are trying to start families, etc. But a small amount invested at the age of 25 usually turns out to be a lot more at retirement than a large amount invested at the age of 55. Older people often begin to realize that they are not immortal, can see the value of health insurance and would not resent higher taxes or premiums so much.

Of course the system is not rational and neither taxes nor premiums are age-based. Premiums may be aged based, but only as age directly correlates with actuarial risk.

In the case of health insurance, I would say you could speak of wealth transfer. A poor, old person gets a pacemaker. 30,000 euros, just for the pacemaker, thankyouverymuch. Where did the wealth go?

I think people should be helped, not punished, when they're in trouble. I guess that makes me un-American. And even though I'm not an economist (and don't even do simple arithmatic in my head anymore), I do understand the principle of insurance. I have coverage through my job but want health care for all. That's the purpose of society--shared risk and shared advantages.

Keep up the good work, Dean.

Mich:
And your solution is to let the poor, old person die? Why? Because he is poor and old?
Nice sentiment.

I guess Dean is looking for any basis, however thin or non-existent, to ridicule WaPo. It's not at all clear that that quote ("More than one-third of the workers' premiums are used to transfer wealth from the young, healthy and rich to the old, unhealthy and poor") is intended as a criticism. The context is a description of a system that the article says "mixes socialism with individual responsibility and market forces" and then details. Quantification of the redistributive component is an appropriate part of such a description, and could imply something good, bad, or neither per se.

Re: This is the basic concept of insurance. It protects people from bad events, transferring money from people who don't have bad events to those who do.

Yes and no. Yes, that statement is true, but no, it's not the same as, say, young people and old people paying the same premiums (let alone wealthy paying more than less wealthy). There are two concepts involved here: (1) expected value (magnitude X probability), the quantity that is the most likely outcome, in this case the most likely costs to an insurer for a given profile of an enrollee for the segment in which he is categorized (e.g., age group) and (2) volatility, or risk levels for various degrees of deviation from the expected value of an enrollee's segment. If there were no such segmentation, and an insurer (auto, life, home, healthcare, shipping, etc.) had a single premium rate for everyone, and everyone were enrolled with that insurer, enrollees in what could be defined as lower-cost segments would be paying not only for protection against their own, more precisely assessed, individual level of risk (deviation from that segment's expected value), but are also paying to subsidize those in higher-cost segments. In other words, they are not just paying to protect against risk of adverse deviation from their expected costs, but are also expected to have their wealth transferred to those in higher-cost segments. Alternatively, the more narrowly one is profiled (underwritten) and grouped into a particular segment, the closer insurance comes to its role of protecting against an individual's risk and the less expected redistribution of wealth across segments occurs.

So yes, "the basic concept of insurance" is to "protect people from bad events, transferring money from people who don't have bad events to those who do", but the basic concept of insurance is not for all 25 year-olds to pay the same life insurance premium (for the same level of coverage) as all 80 year-olds, or for someone insuring a home on a hurricane-prone coast to have the same level of flood-insurance as someone whose home is inland.

I do realize, by the way, that, particularly with regard to health insurance, one can find his "profile" significantly changed (now having some pre-existing condition) and would face higher premiums to the extent that premiums reflect this factor (if regulations so permit under a given system), but the distinction I've made above regarding the nature of insurance still applies.

The basic concept of insurance is protection against one's downside risk, not a combination of that plus a subsidy from those with lower expected cost to those with higher expected cost.

Even Brooks, albeit immature now, will eventually fall into the elderly group, at which time he shall uderstand the point of Baker's post.

The major entitlement programs in the U.S., Social Security and Medicare, definitely and intentionally transfer wealth from young workers to old non-workers. There is not much transfer from rich to poor - they were deliberately designed not to do that. Medicaid does transfer money to poor people. So all these programs are not strictly insurance. Insurance itself is supposed to spread risk, but when properly designed it should also minimize risky behavior through higher premiums. Health insurance currently does some risk minimizing, for example in lower premiums for non-smokers, but for the most part health is not under the control of the insured. Making old retired people pay much more for health care would not accomplish much in terms of optimization of health-care services, unless you think care should be rationed for older people. If you want to receive the health care you need throughout your life, it makes sense to pay for it during your life as you are able, not according to your actuarial risk by age.

There is no particular reason why health care must be run on free-market principles of insurance. Free markets are supposed to serve society, not the other way around.

Joe Mazzilli, as always, offers no argument, only ad hominem. Because he has no argument, ever. If anyone wishes to see an example of my asking him repeatedly to back up his ad hominem (and his assertions that I've made invalid arguments), and his childish evasion of this request, check out http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=fox_on_15th_aka_the_washington_2#comment-6287405

As always, Joe, I ask: If you think I've said something invalid, say why it's invalid. I don't mind your ad hominem, but it's pretty pathetic for you to offer it in lieu of argument, and your habit of doing so makes it quite clear that you simply lack any substance to back up your big mouth.

I suppose now you'll just say the same thing a child says when he can't do something but insists on boasting that he can: "I could, but I don't wanna".

Skeptonomist,

I think what you've said is very sensible.

Like Brooks says at length, it is both a redistribution scheme and an insurance scheme.

Mr Ikegami's quote simply describes the way in which the Japanese health care system works. For example it charges different premiums depending on income.

That accounts for the rich to poor transfer, and for the old to young transfer, assuming that the average wages of older retired people is Japan is less than the young.

The sick to healthy transfer, as Dr Baker points out is normal insurance, however normal insurance will adjust the premiums depending on the risk factors.

For example, smoking [In Japan] which kills more than 100,000 people per year and is responsible for one in ten deaths. (Daily Yomiuri 8/9/2008)

So perhaps the Japanese premiums do not charge more for smokers, thus accounting partially for the transfer from healthy to sick.

Anyhow, thanks to Dr Baker for alerting us to a interesting article.

Andrew,

That should be "As Brooks says at length"

Just ribbing you back (assuming the "at length" was a criticism of writing style).

Ok, as you say.....

"skeptonomist" is mostly wrong when stating that Social Security has "not much transfer from rich to poor.".

In fact your social security benefits are calculated on average monthly earnings modified by the PIA formula.

The PIA formula discards up to 85% of higher, 68% of medium and only 10% of lower incomes. So Social Security is highly distributive.

For example, for 2009 two people with average monthly earnings of $774 and $1548.

They have their earnings adjusted to .9*774= 696, and 696 + (774 *.68 ) = 1222.

Note that 100% more income results in 58% more social security payments.

Source:
http://www.socialsecurity.gov/OACT/COLA/piaformula.html

Andrew,

I agree and I was going to offer similar disagreement with Skeptonomist on that point, but didn't because I don't think it was the crux of his arguments, which I see as the ideas that (1) it may be better to have citizens pay some universal premium over the course of one's life rather than have it age-adjusted (much as folks now start paying premiums for insurance such as long-term care insurance at younger ages so the premium will stay low), and (2) market forces and the efficiency they bring are not the be-all, end-all of choosing healthcare policy.

AndrewDover wrote, "skeptonomist" is mostly wrong when stating that Social Security has "not much transfer from rich to poor.".

Completely false. While there is a transfer as you describe, it's hardly from the "rich".

I make more than the SS earnings cap, and am in no way "rich."

You are right, "rich" is a measure of wealth whereas social security operates only redistributes wage income below a cap.

Andrew / others,

Social Security benefits are, in effect, means tested currently based on the recipient's income (via income taxation). This probably correlates strongly with wealth, and eventually we probably will (and should) have more explicit means testing, perhaps based (in part or completely) on assets and/or net worth, such that a wealthy retiree with little income (particularly labor income, if that's what is currently the key factor in taxation of SS benefits) wouldn't get full (or any) SS benefits.

I say "should" because, given the level of sacrifices we'll all have to make to solve our long-term fiscal imbalance problem, I'd rather not see people in the middle class and lower have to pay even more in taxes and forgo even more federal spending that benefits them in order to provide SS benefits to wealthy retirees. Obviously "wealthy" is subjective and how much money would be saved depends on where the line is drawn, but that's the trade-off and the principle.

Oh and please, echo chamber hyperpartisans of the left, please don't make the nonsensical, bogus argument that it wouldn't take much to provide full, long-term SS "solvency" and thus it's not contributing much to our long-term fiscal imbalance so we shouldn't consider reductions in projected SS spending. I've explained numerous times how absurd and conceptually confused that argument is, not as a matter of opinion, but as a matter of simple algebra.

I agree with the right wing nut jobs above there is far too much transferring of resources.

Take our wars for example, the wealthy start a war and transfer the risk to our non-wealthy citizens. Statistically a person from the top 20% of the nation is 50 times less likely to serve in a frontline combat unit. If we take the top 10% of the nations wealthiest then they are 200 times less like to see combat and the top 1% almost 700 times less likely to see combat. That is an enormous transfer of resources to the wealthiest sliver of society...and of the most important resource we have. Life itself.

All this redistribution must stop, the top 20% need to serve multiple tours in combat unit the numbers even out. And the beauty of it...all those above who oppose transferring of resources will support this. I look forward to the above posters calling for the involuntary service of the wealthiest citizens until the maiming and deaths are brought back into balance. Granted this may take centuries but since those who oppose the transfer of resource like WaPo, NYT & the right wing nut jobs above are sure to be big supporters I am sure this correction will take forthwith. Ummmm...but if doesn't happen then we know the above mentionare full of poop...the clock is ticking?

I should add that the above numbers factor in proportion to population so it is not one in 700 combat deaths come from wealthiest backgrounds. That would only indicate that the wealthiest were shirking duty by a factor of 7.

Nobody in this blog said there was too much transfering of resources.

So S Brennan is pretty angry and confused.

S Brennan,

Although your silly, hyperpartisan presumptuousness ("right wing nut jobs") indicates you're probably not one to be taken seriously, I'll address your comment anyway.

I believe in a military draft for exactly the reason you mentioned. My assumption is that a very disproportionately small number of children from households in the upper-middle class and higher join the military, because they usually have better options. I realize there can be an economic argument for such a situation, but it's more important that everyone face the risk that if we go to war, they or their children or grandchildren may end up dead. If a war is worth fighting it's worth everyone taking that risk, and if it's not worth everyone taking that risk, it's not worth fighting.

Sorry for exploding your convenient, emotionally self-serving presumptuousness and pigeon-holing of others if that doesn't fit. I guess if you really, really want to stick to your silly categorization of people, you could call me a right wing nut job for wanting anyone to be in the military. Feel free, if you're emotionally dependent on viewing people thus.

Wow, this is a dog bites man story.

Brooks, your confusion here is rooted in your continued failure to understand how Medicare is a subsidy for the Insurance companies. The risky years are all thrown onto public dole while the low hanging younger years are used to pay for all the private profit.

Our social security and entitlement taxes all go to the aged. Not many retired are paying relative to the young. Considering this money isn't sent into a saving account in our name, but is used to cover current costs this is a wealth transfer from the young to the aged.

Scott,

I've said it before and I'll say it again: I just haven't seen from you an explanation of this supposed subsidy that I can make any sense of. If you'd like to provide another explanation, perhaps spelling out your reasoning a little more clearly and connecting the dots, I'll be glad to consider it.

As I've said before, the simple fact that Medicare covers a higher-cost segment does not mean that Medicare is subsidizing the profits of insurance companies for non-Medicare enrollees. It would be a subsidy if insurance companies were pricing premiums just as high without those seniors in the pool as they would with them, thus pocketing extra profit, but that's not the case. So if you actually have a valid point, you might want to present a clearer explanation of it instead of continuing to repeat the same supposed explanation that is inadequate for reasons I've given.

Many hospitals, in particular, receive a huge percentage of their income from Medicare, and most would go out of business without Medicare income.

AndrewDover wrote, You are right, "rich" is a measure of wealth whereas social security operates only redistributes wage income below a cap.

Thanks for your kind response to my remark.

You make a very important point, which is apparently lost on most people: "rich" reflects wealth, and wealth is a measure of income.

...of course, I meant to say "measure of assets, not income."

Liberal,

Re: wealth is a measure of income

No, wealth is a measure of net worth (assets minus liabilities). Or to put it in accounting terms, wealth is a balance sheet calculation, not an income statement calculation.

On the whole, entitlement programs do a fair amount of class-wise redistribution among lower-income people, but because of caps and lack of progressive tax rates they are not socialist "rob-the-rich" programs. But the whole idea of SS and medicare is to subsidize old and disabled people at the expense of young workers (not capitalists - there is no SS/Medicare tax on dividends or capital gains, though Medicare taxes are being considered). Should people who are too old to work or are disabled be left to starve or have no medical care? Universal medical care will also be subsidizing low-income workers and unemployed, as Medicaid does now. As it looks now, it will also be subsidizing insurance companies.

Brooks blithered, No, wealth is a measure of net worth (assets minus liabilities)...

Uh, Brooks, if you can read, I corrected my obvious mistake at 8:39, 3 minutes after my original post, and more than an hour before your "correction."

Of course, we already know you can't read...

Liberal,

I must have responded to from an open window without refreshing the page. My mistake.

I would point out to you, though, that although you're arguably closer to right, I still think you're wrong, at least as far as a useful definition in an economic sense. As I said, a more meaningful and useful definition of wealth is net worth (assets minus liabilities), not assets in isolation. If I buy a home with no money down (all debt), would you say I am wealthier than I was before? I wouldn't. If someone else owns a home of equal value, but he owns it free and clear (no mortgage debt), would you say that, other things equal, he and I are equally wealthy? I wouldn't.

Apparently you saw my comment but missed my very clear, simple point, since you didn't even address the discrepancy in your reply, let alone justify it. To borrow your words, "Of course, we already know you can't read".

"to transfer wealth from the young, healthy and rich to the old, unhealthy and poor" is a good thing. When you care about other people in your community and broader society you must set up ways of making sure that everyone is taken care of.

It's a sad commentary that anyone would think this is a down side of Japan's system.

"Just passing by",

Re: It's a sad commentary that anyone would think this is a down side of Japan's system.

Who said it was a downside?

How an insurance system is designed is a very important social policy issue.

If you imagine that someone has payed for health insurance their entire life (as will be true with a mandate system) it is very unfair to penalize them for pre-existing conditions when at some point they may be required to get a new policy (such as after becoming unemployed). In fact, in general, using preexisting conditions to set premium charges (or excluding eligibility) is very socially destructive as it prices sick people out of the market. Only in the US and 3rd world countries is this even allowed. Using factors such as race are socially unacceptible too, though insurers were happy to use such factors when they were legal.

Now observe that our very own Medicare system taxes the young and healthy to pay for the old and sick. But since the Medicare tax is a percentage of capped income, the young pay less naturally as young people tend to earn less. So it ends up being more fair than a fixed payment would be.

But note that young healthy Japanese actually get the insurance too, which they might use, while they are still young, whereas US citizens have to wait until 65 to get the insurance, and meanwhile face all the risks of losing their insurance.

I wonder how their premiums compare to our Medicare (HI) tax, I suspect it's not much higher.

Charles,

Re: your first paragraph, you make a very reasonable point. I would add that it seems to me that, practically speaking, getting rid of the pre-existing conditions problem would:

1) need to be accompanied by guaranteed issue (because rather than cover those pre-existing conditions without being compensated through higher premiums, insurance companies would just reject or avoid such applicants), and in turn,

2) require universal coverage via an individual mandate (because otherwise many/most individuals wouldn't buy insurance until they needed healthcare that cost much more than the premiums, thus exploding the insurance business model), and therefore,

3) would require a substantial amount of incremental federal spending to subsidize some of the currently uninsured who would have difficulty paying premiums, which means substantially worsening our already unsustainable long-term fiscal imbalance and necessitating even greater eventual sacrifices to solve that problem.

Of course, doing #3 also has the benefit of providing insurance (via subsidy) to many of the uninsured and making it more affordable to others (by enabling them to, in effect, get a group rate and also avoid the higher administrative costs associated with individual insurance). But the trade-off is that, sooner or later, most Americans are going to have to sacrifice substantially for the benefits of our own economic security and of helping the currently uninsured.

By the way, if I'm missing something in my reasoning (#1 through #3) above, I'd like to know.

Brooks Insurers are able to externalize costs by rescission. Once someone undergoes this often arbitrary judgment, though only when their costs become something the Insurer would rather not carry--the burden then falls onto Medicaid, or if they have a chronic though less than acute condition they may make it to the Medicare (age 65) mark taped and bandaged together like a haggard jalopy. Again, the gov't absorbs this externalized cost.

Externalized costs are subsidies. This is basic economics going back to Adam Smith. Where are you confused?

Scott,

Oh, so you are referring to private insurers kicking out enrollees who turn out to have high healthcare costs, and those folks ending up covered by Medicaid or Medicare -- right?

Wish you had clarified that earlier.

But I would still say that insofar as such occurs (and I'd be interested in some quantification of it, which presumably you can offer since it seems you are saying it's a big factor in our healthcare spending and healthcare waste problems), it reduces insurers' costs, and as insurers compete to provide value in terms of coverage per dollar, to at least a significant extent (the extent to which there is competition, albeit imperfect and not as smooth as with most product categories), such rescission would be reflected in lower premiums than would otherwise be offered for a given level of coverage (and as a note, all expenses plus profit are only 12% of premium revenues for the health insurance industry, and profits of $13 billion in 2007 (per factcheck.org) would only come out to 1.7% of 2007 premium revenues of $775 billion. Higher administrative cost for individual insurance, though.).

So any subsidy resulting from this externality would seem to be (at least mostly) a subsidy of taxpayers to enrollees in private health plans (who benefit from higher coverage per premium dollar as these [ugly] savings are passed on to remaining and new enrollees in lower premiums, ceteris paribus), not a subsidy to the insurance company (at least not over time as competitive adjustments are reflected in pricing).

Give up Brooks, as I noted earlier, I know who you are and who pays you to try to discredit Baker. But we all know you're mired in minutiae, but never see or are not allowed by your patrons to proclaim the big picture. As I said earlier, I have nothing to prove to idiots such as you. You have merely to read healthcare posts of Krugman and Reich to find your pitiful points more than adequately refuted.

Joe Mazzilli, as always, offers no argument, only ad hominem. Because he has no argument, ever. If anyone wishes to see an example of my asking him repeatedly to back up his ad hominem (and his assertions that I've made invalid arguments), and his childish evasion of this request, check out http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=fox_on_15th_aka_the_washington_2#comment-6287405

As always, Joe, I ask: If you think I've said something invalid, say why it's invalid. I don't mind your ad hominem, but it's pretty pathetic for you to offer it in lieu of argument, and your habit of doing so makes it quite clear that you simply lack any substance to back up your big mouth.

I suppose now you'll just say the same thing a child says when he can't do something but insists on boasting that he can: "I could, but I don't wanna".

(Oh, and so consistent and predictable is Joe's lameness per the above, that all I had to do is copy & paste my comment from another thread...and just as I predicted in the last paragraph, he's now saying "I could, but I don't wanna".)

Obviously Brooks thinks he has something to prove to Baker and everyone here. How's that working for you, Brooks? I attacked you only after seeing you unrelentingly attack many others for ridiculous reasons over a prolonged period of time. You're a first class A** and an idiot; not so brilliant it borders on madness (as you believe in your sick mind), but merely the opposite--so mad it borders on brilliance.

Anonymous,

As I say to others, if you think I've said something invalid, just say why.

It's pretty pathetic for you and some others to just childishly insist that I'm wrong or that I am some sinister bogeyman or engage some other form of ad hominem without presenting any argument or question that refutes or even calls into question the validity of anything I've said.

I would think folks would sense that they are embarrassing their own partisan "side" when they can't formulate any argument or even a sensible, relevant question, but keep screaming "You're wrong. And your an A**!" But I guess, given that hyperpartisan echo chambers attract mostly such people, and you guys provide each other a sort of group therapy, that sense of embarrassment doesn't occur.

Anyway, feel free to offer something substantive sometime. Or you could just keep holding your ears and screaming that I'm a big poopy-head (joined, no doubt, by others here).

Anonymous,

I forgot to mention, re:
I attacked you only after seeing you unrelentingly attack many others for ridiculous reasons over a prolonged period of time.

That's another typical characteristic of the oblivious hyperpartisan: a blatant double standard. Like a referee (or fan) who only sees the fouls by the team he doesn't like. You might want to see a discussion of scientific experiments on such bias in http://www.amazon.com/True-Enough-Learning-Post-Fact-Society/dp/0470050101 But then again, hyperpartisans are the least likely to read something like that and the most likely to reflexively dismiss it if they do read it.

Here's something weird -- and unless I'm missing something, a big, legitimate target for Dean:

From tomorrow's (technically today's) WaPo editorial:
If, as many proponents maintain, this government entity would compete on a level playing field -- not using its public status to underprice the competition -- then its presence would be mostly irrelevant. If it would underprice, it would drive private firms out of business, leaving the United States with a British-style national health service, which most Americans say they do not want.

Unless I'm greatly mistaken, the British system doesn't just provide single payer insurance, but is actually a national system of healthcare providers, and unless WaPo is making some between the lines, dubious implication about single payer leading inevitably to a national healthcare system, the WaPo editorial board deserves to have egg on their faces for this one.

Brooks wrote, As I said, a more meaningful and useful definition of wealth is net worth (assets minus liabilities), not assets in isolation.

Of course I meant net assets.

Brooks wrote, Unless I'm greatly mistaken, the British system doesn't just provide single payer insurance, but is actually a national system of healthcare providers, and unless WaPo is making some between the lines, dubious implication about single payer leading inevitably to a national healthcare system, the WaPo editorial board deserves to have egg on their faces for this one.

Yes, they blurred insurance and medical care.

Liberal,

Pretty weird -- and I would think, very embarrassing -- mistake by them (WaPo editorial board). I'm surprised Dean hasn't jumped on it.

"Give up Brooks"

That is hilarious. Brooks is a bulldog. Once he has his teeth in your leg your chances of shaking him off are vanishingly small. He has been dogging (sic) Dean and Liberal from time immemorial. At least it seems like forever.

At my shared blog it took more than spraying him with a metaphorical hose to beat him off. Brooks has a point to make or maybe a couple of points and by God he is going to make them.

I don't give him points on any policy issue but he ain't no quitter.

Ahh, Bruce Webb. Always ran from my attempts to get him to engage substantively. Always offered nothing but ad hominem, obvious straw men, blatant evasions, utter non sequiturs, and gross mischaracterizations of arguments I've made and of past exchanges with him and with others. He even twice invited me to debate him on his own blog, both times promising not to edit or delete my comments or the thread, and then, upon being shown to have no refutations of anything I was saying and no valid argument of his own...you guessed it: Deleted both threads. Over time he also vacillated between (1) insisting that a particular point I was making (which proved invalid the basis for pretty much everything Bruce has always contended regarding the implications of Social Security "solvency") was clearly completely invalid, and (2) claiming it was obviously valid but "trivial", offering no argument as to how he could possibly see it as trivial, given that, as I explained, it invalidated the very foundation upon which he built all his nonsensical policy arguments.

And every once in a while he posts some comment like the one above with nothing but ad hominem, never any substance, never any argument that something I've said is invalid, irrelevant or unimportant.

Only thing I give Bruce credit for (as I have in the past) is this: he knows his audience. He throws around all his bullsh*t in hyperpartisan echo chambers where he knows that few, if any, will actually question it enough to realize that it's built on utter nonsense and complete conceptual confusion, because all everyone on such blogs wants is some argument -- any argument -- that seems to support the policies they prefer.