America's Largest Newspaper Launches a Nasty Attack on Grandma and Grandpa
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Let's pause for a reality check. It's true that, according to the Urban Institute (which adjusts for inflation), Cogan's average two-earner couple will receive $882,000 in combined benefits over their golden years. But we need to disaggregate that figure; the average monthly Social Security benefit for retirees this year is $1,179 per month. Multiply that by two, and you don't exactly end up with Lifestyles of the Rich and Famous.
Of course, it doesn't matter what an “average” two-earner household pays in and takes out; lots of families aren't average, and the only thing that matters is the system's overall solvency. And the Social Security administration has taken in more than it's paid out for all but two of the last 30 years. It's run significant surpluses, and hasn't added a single penny to the deficit. This year's surplus is projected to be $113 billion.
Cogan says we “can't afford” these benefits. But in the United States, while people who work until age 65 will see only 40 percent of their incomes replaced by Social Security, the average replacement rate among the 31 countries in the Organization for Economic Cooperation and Development (OECD) – the “rich countries club” – is 57 percent. The U.S. ranks 27th out of 31 in that measure, and by 2030, the average income replaced by Social Security will fall to 32 percent. Cogan never bothers to explain why we “can't afford” benefits that are far stingier than those enjoyed by the citizens of Portugal, the Slovak Republic or Poland – all countries with significantly less wealth than we have.
While Social Security's finances are sound and will remain so for the foreseeable future ( and possibly forever), Medicare is a different story, which is why mendacious granny-bashers always conflate the two programs.
Like every corporation in America that offers its employees private health insurance, Medicare faces spiraling costs. But despite an aging population adding a lot more beneficiaries, health-care costs have grown significantly slower in the Medicare system than it has in the private sector over the life of the program, as this data from the Congressional Budget Office illustrates:
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Cogan paints the rise in costs as a product of feckless politicians bowing to their greedy and all-powerful constituents. He complains that “Medicare premiums paid by senior citizens once covered half of the cost of physician and related services. They now cover one-fourth. Copayments once covered nearly 40% of these services' costs. They now cover only 20%.” Premiums haven't decreased; the smaller share reflects the fact that a good portion of those rising costs haven't been passed on to seniors.
Cogan wants to do something about that. Rather than offer suggestions for getting health-care costs under control, he proposes shifting them onto the backs of grandma and grandpa.
To fix Medicare, we must move away from the current system of fee-for-services and low copayments. First and foremost, copayments should be increased significantly. Medicare recipients need to have more skin in the game if they are to become cost-conscious medical consumers.
The proposal echoes the GOP's budget plan, under which the Congressional Budget Office says seniors would end up paying almost twice as much out of their own pockets even while the total cost of insurance would end up being higher.
The idea is based on some old-fashioned right-wing boilerplate – turn patients into “consumers,” and the free-market fairies will lower health-care costs with their magic pixie dust. But as Paul Krugman noted, the notion of the savvy consumer falls apart because making health-care “decisions intelligently requires a vast amount of specialized knowledge.”