NEWSLETTER # 30 SUMMER 2003
● SAFE IN UNIQUE POSITION
To oppose AARP-DC● EMPHASIZE THE DIFFERENCE
Between AARP-DC & AARP Members● HEALTH CARE COSTS
U.S. spends twice as much for same life expectancy● OFFICERS
HAVE WE GOT A DEAL FOR YOU!
We always need more members. If you send $5.00 for a membership for someone you believe will want to remain a member, we’ll extend your membership for a year.
If someone sends their own $5.00 in and states that you recommended SAFE, we’ll extend your membership for two years.
SAFE IN UNIQUE POSITION
Among threats to the future welfare of the next generations, the Washington, D.C. office of AARP is at or near the tap. SAFE is in a unique position to help the next generations by opposing “AARP-DC”. Why is this?
Three large seniors’ organizations oppose the AARP-DC support of big government. They are United Seniors Association, The Seniors Coalition and 60 Plus. Their attacks have hit home – the February 2003 AARP Bulletin attacked the three organizations under the heading “Drug Industry Finances Nonprofit Groups That Claim To Speak For Older Americans”. That article might blunt the attacks of those organizations on AARP-DC.
The big government bias of AARP-DC needs to be attacked, and SAFE is in a unique position to do so. We are non-partisan. We are not beholden to any corporation or organization.
We believe we are unique in that we do not promote any benefits for seniors. We believe we are the only senior’s organization concentrating on protection of the future welfare of the next generations.
We are small. Unless we really go overboard, we can attack AARP-DC with impunity. Any response to a small organization would be tricky public relations for AARP.
For the benefit of the next generations, AARP-DC needs to be attacked. SAFE is in an excellent position to do so, and we plan to escalate our opposition to AARP-DC.
Here are three AARP-DC policies that we should oppose at every opportunity:
1. AARP-DC minimizes the seriousness of the Social Security problem by pretending that the Social Security Trust Fund can be used until 2042 to pay benefits. We all know the Trust Fund has no money and the problem will hit about 2017 when benefits start to exceed Social Security taxes.
2. AARP-DC not only minimizes the Social Security problem, they oppose Personal Retirement Accounts which are at least a partial solution to the problem.
Worst of all, AARP-DC continues to push for an even bigger federal government.
EMPHASIZE THE DIFFERENCE
The Washington, D.C. office of AARP is a cheerleader for bigger government while most of the members believe that federal government is already too big.
Most AARP members join for the discounts they receive as members, and are unaware that AARP-DC is lobbying for bigger government in their name.
There is a real difference in political philosophy between AARP-DC and the general membership.
Use of the name AARP-DC, which we originated, can highlight the difference. If the name AARP-DC goes into general use, the lobbying effectiveness of AARP-DC should decline. That could be the best contribution that SAFE makes for the future welfare of the next generations.
The term will be used repeatedly in Delaware. Members in other states can make an important contribution via letters to the editor or otherwise. We suggest that the first use be as follows:
“AARP-DC” (The Washington, D.C. office and its lobbyists). After the first use, drop the quotations marks and just write: AARP-DC.
Please, write a letter to the editor, referring to AARP-DC. Send us a clipping when it is published.
Thanks.
HEALTH CARE COSTS
Health care costs are out of control, and we’re not going to
take it any more!
Bill Whipple
U.S. health care expenditures have grown from 6% of our national output in 1965 (when Medicare was enacted) to about 14% of a much larger economy today. Absent corrective action, we could be spending one-fifth of our output on health care by 2020. I don’t know about you, but that sounds out of control to me.
Also, our country spends far more for health care than other major developed countries, but we don’t live longer than people in the comparison countries. So what does the extra money buy us?
Health Care Expenditures: 1998
% of GDP Per Capita Life Expectancy
At Birth Age 60Canada 9.5% $2,312 79
22 France 9.6 2,077 78 23 Germany 10.6 2,424 78 21 Japan 7.6 1,822 81 24 Netherlands 8.6 2,070 78 21 U.K. 6.7 1,461 77 21 U.S. 13.6 4,178 77 21
Nothing, some people say, so let’s emulate other countries and allow our government to run the health care sector too. Don’t buy this, however, unless you are ready for Government bureaucrats to ration medical services rather than allowing us to decide for ourselves how, when and by whom we want to be treated.
ROAD MAP FOR REFORM
Discussions of health care costs often remind me of Mark Twain’s comment about the weather (“no one does anything about it”), yet I believe we could make real progress by taking three steps.
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Combat the "free lunch" mindset
People consume more at an open bar than when they are paying by the drink, they overeat on cruises because the food has already been paid for, etc. Health care consumers act much the same way, it’s just human nature, if they perceive that someone else is paying the bill. As one journalist recently noted:
During times when they lacked insurance, more than 40 percent of people postponed visits to the doctor. Compared with children in families with insurance, those without are 70 percent more likely to suffer ear infections, strep throat and other miseries without medical attention.
The writer’s premise was that uninsured people who spend less for health care are being deprived. It’s equally plausible, however, that insured people consume more medical services and drugs than they really need.
In any case, none of us should expect to receive health care for free. Employers can pay just so much for employees (let alone retirees) health care and stay competitive. As for the Government, its only source of funds to pay for our health care are – you guessed it – the taxes and insurance premiums that we pay.
We can’t turn back the clock, and many people are relying on the Medicare/Medicaid laws now on the books. Similarly, employer health care promises should not be lightly broken. So how can we address the consumption/payment disconnect?
“When you’re in a hole, you should stop digging.” Accordingly, SAFE opposes adding a drug benefit to Medicare. The latest word from Washington is that Congress will probably pass a drug benefit this year, which some of our political leaders are hailing as the biggest expansion of Medicare since 1965, but don’t give up hope. If enough seniors let it be known that they don’t favor a drug benefit, Congress can readily repeal it before the 2006 effective date.
Further, we need to pay our health care providers directly for routine health care rather than having insurers pay our bills for us. This change can be accomplished by raising insurance deductibles. If insurance premiums are raised instead, which is the other way to shore up the financial solvency of a health care plan, participants will continue to reason that “I paid for the plan, so why not get all the benefits?”
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Reduce overhead
Consider the blizzard of correspondence between medical service providers, HMOs and/or the Government, and the patient every time you receive a medical service. Even with computers, it costs money to prepare these forms and mail them to everyone else, and heaven help us if anyone asks questions. Why did it cost so much for me to be in an outpatient clinic for two hours? Or, how did the Government negotiate a 50% reduction in that charge unless it was overstated in the first place so as to convince me that I couldn’t exist without “mediscare”?
Here’s more food for thought. The Government has issued over 100,000 pages of Medicare regulations (rivaling the output of the IRS) concerning the medical procedures people are supposed to receive and how much doctors, hospitals, labs, etc. are allowed to charge for them. It must be expensive to keep all these rules current, not to mention ensuring that the people concerned understand and comply with them.
What can be done to reduce administrative costs? Again, we need to have patients deal directly with their health care providers for most health care expenditures.
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Rein in the trial lawyers
Opponents of medical mal-practice reform say anyone who has been harmed has a right to sue, many malpractice suits fail, and large jury awards are often reduced on appeal. Granted, but remember that (a) it’s costly to defend lawsuits whether they succeed or not, and (b) a handful of multimillion awards will drive up the cost of medical malpractice insurance (forcing doctors to raise their rates).
Claimants (and their attorneys) win an occasional “jackpot” in the medical malpractice lottery plus a stream of settlements that often have more to do with the hazards of litigation than the merits of their claims. All of us pay the tab through higher health care costs. Per Yank D. Coble Jr., President of the American Medical Association, “litigation expenses are responsible for 8 of every 11 dollars spent to purchase a vaccine, one-fourth the cost of a tonsillectomy, about one-third the cost of a pacemaker.”
To level the playing field, we should limit pain and suffering awards in malpractice cases (a $250,000 cap proposal fell short in Delaware legislature this year, but will hopefully be reintroduced next year) and prohibit punitive damages (it should be sufficient to compensate “victims” for their injuries). These changes would discourage marginal claims, I believe, without impeding meritorious lawsuits.
A FEW SOCIAL SECURITY FACTS
The estimated average Social Security benefit is $895/mo.
Payroll taxes deducted from the employees wage in 2001 were 5.3% for “Old Age and Survivor’s Insurance” (OASI) and 0.9% for “Disability Insurance” (DI). This was changed from 5.6% and 0.6% in 2000; the 50% increase in DI could raise a question as to whether some DI recipients are working the system. The total of 6.2% is matched by the employer, taxing 12.4% that would otherwise go to the employee. This tax was paid on the first $84,900 of income in 2002 and is paid on the first $87,000 in 2003. Payroll tax also includes 1.45% each for employee and employer for hospital insurance. The total 2.9% is based on total wage.
In 2001, OASI + DI taxes were $529 billion and payments were $439 billion. The $90 billion surplus, 17% of the taxes, was spent on other government programs. Administrative expenses were $3.7 billion, or 0.7% of the income.
The 2002 Social Security Trustees report estimates that OASI + DI benefits will start exceeding taxes in 2017, and that the Trust Fund will last until 2041. The Trustees along with AARP-DC incorrectly pretend the Trust Fund means something. In contrast to AARP-DC, the Trustees don’t minimize the seriousness of the problem and don’t belittle Personal Retirement Accounts.
The Trust Fund contains $1.2 trillion of IOU’s which represent the surplus of payroll tax over benefits which has been spent for various programs. Interest on the IOU’s of about $70 billion per year is added to the Trust Fund (more IOU’s).
In the all too brief period when the deficit in other parts of the federal budget was not large enough to eat up all the Social Security surplus, the remaining surplus was used to pay down the federal debt owned by the public. This is excellent because it helps the next generations. It would be even better to use all the surplus to help finance a transition to Personal Retirement Accounts.
Part of the reason for the looming Social Security meltdown is the continuing increase in life expectancy. A partial correction has been made. For those born in 1938, full retirement benefits can be obtained at the age of 65 years and two months. The age for full benefits increases gradually until those born 1960 or later will receive full benefits at the age of 67.
The “number of workers per retiree” (per OASI + DI beneficiary) is now 3.4 and will decrease to 2.1 in 2030 and 1.8 in 2075.
Federal government employees are not covered by Social Security, but have an excellent Thrift Savings Plan. They have a choice of five highly diversified low cost mutual funds. No direct investment in individual stocks is allowed.
TID BITS FROM DICK REESE
How come. . . your hear he or she is a. . .good catholic? Have you ever heard. . .a good protestant?
Do you know the purple pill. . .if not, ask your doctor.
President
Barry Dorsch, Wilmington, DE
(302) 478-0676
Email:Treasurer
Ed Fasig, Wilmington, DE
(302) 999-0611
Email:Director, 2003-2005
Jerry Martin, Wilmington, DE
(302) 478-5604
Email:Bill Whipple, Wilmington, DE
(302) 376-7036
Email:Director 2003-2004
John Boughton, Wilmington, DE
(302) 475-6718
Email:Ed Fasig, Wilmington, DE
302-999-0611
Email:Director 2003
Orville Wetmore, Wilmington, DE
(302) 652-0107Dick Reese
(302) 478-4970