The State of Social Security
News Anchor: We come back with our panel Jerry Seib from the Wall Street journal, David Certner from AARP, and now we have Al Lewis with us from Denver, Colorado.
So Al, you know, they say and we have had a successful commission looking into Social Security at least once. Usually frankly, I don’t give much credence to commissions or committees. You know, the definition of a camel is a horse put together by a committee. Usually that happens, but there was in 1981, as Jerry reminds us, a successful one on Social Security. You think there is a chance to do that now?
Al Lewis: Well, obviously they have to do something. Nothing here is all that surprising, David. I mean we knew Social Security and Medicare were in trouble, they’ve been in trouble all of our adult lives and now all of a sudden there is a recession, there is rising unemployment and some numbers have gotten pushed down a little bit lower. That’s all. And actually that was to be expected too. When growth kicks back in, these numbers will rise back up. But you know, obviously these things are somewhat of a ponzi scheme and at some point they have to be addressed. Whether or not this will be the moment in time when these things get fixed remains to be seen. So far what I am hearing from Geithner here sounds like a lot of rhetoric capitalizing on the moment of this report.
News Anchor: David, is it an absolute that one way that we have to start approaching this is by raising the retirement age as people live longer than they used to?
David Certner: I don’t think raising the retirement age for Medicare is something that is going to make sense because people are having enough trouble getting health insurance right now. One of the biggest problem areas we have in this country is getting adequate insurance for people who have yet to reach Medicare eligibility age. So I don’t think raising the age is going to make sense for Medicare.
On Social Security issue the age is already going up and that maybe an issue that’s on the table as we look at long term solvency, whether or not we should look at that and increase it more. I think that is a fair issue to look and as we get into a bigger solvency debate that will be one of the issues on the table.
But for Medicare at this point of time I don’t think that makes sense. What we really do need to look at is holding down costs in the healthcare system because that’s really the big killer in the healthcare side of the equation right now, is that healthcare costs are outrunning inflation every year by several percentage points.
News Anchor: Well Jerry, how do you do that without price controls, and we know the problems you get when you get into price control?
Jerry Seib: Well, that’s going to be the great debate; not just about Medicare but about the healthcare system overall. You know, the industry worries about price controls, it worries about rationing. The reverse argument is that if you get actual universal coverage you pull people into a more efficient system, costs are down for everybody if everybody is covered and they’re not getting into the back door to the emergency rooms and that sort of thing.
I don’t think anybody knows the answer to the question though honestly. And what these numbers tell you is that while there is cost pressure on both Social Security and Medicare, it is obviously much worse on Medicare than Social Security. The political irony is that it will probably be easier to fix Social Security… a few tweaks on taxes and maybe raise the retirement age a little bit more and some benefit curbs… you can get there on Social Security. Medicare politically is a much harder nut to crack.
News Anchor: David, are you for price controls on medicines and other forms of health care?
David Certner: I don’t think we need price controls, what we need is to make the system much more efficient and do things in healthcare that change the way we deliver healthcare in the country. We need to rely more on health information technology. We need to rely more on preventive medicine. We need to do a better job dealing with the chronic care cases in this country that really cost the greatest amounts of money. We need to do better with follow up care for people who are transitioning from the hospital back to their home. All of these things could help save money.
News Anchor: But how David? How do you do it? I mean, presumably the people involved in health care in the private sector what their cost to be as low as possible so their profit could be as high as possible. Why aren’t they doing it now?
David Certner: Well, there was an interesting announcement yesterday, as you may have reported on, that many in the industry have reported that they think that they can hold down healthcare costs by 1.5 percentage points which can save hundreds of billions if not trillions of dollars. Now, there are no details about how they would do that and I think obviously we need them, but I think it was a really good sign, a good symbol that the industry players were saying, “We think that this can be done. We think there are savings in healthcare that we can achieve without reducing quality”.
And I think that’s going to be the key debate in the next couple of months: just how you put the details in place to reduce healthcare costs across the board. That will help not just employers and individuals, but the Medicare programs as well.
News Anchor: Al, let me just say something totally out of the box here, because it hasn’t always been like this. I grew up with my grandfather, he lived to be 92 years old even though he smoked and drank and did all the bad things he wasn’t supposed to do, but we grew up with him. It was a wonderful experience for the whole family. A lot of families, millions and millions of Americans used to do that. Now, it’s assumed that the government has to take care of all these problems. Is part of the problem that we’re experiencing now not economic but social? That is that individuals aren’t responsible for their parents and grandparents like they used to be?
Al Lewis: Well, certainly that’s part of the problem. I mean, nobody wants their mother-in-law moving in with them at age 80 anymore.
News Anchor: My wife doesn’t mind if my mother moves in. So there are some exceptions to that.
Al Lewis: You have a sweet wife, Dave. You have a sweet wife. I don’t know whether my wife would approve. But you know what, there’s a lot of waste in healthcare. First of all, if you have healthcare, you go to the doctor more often. I mean, there is no economic disincentive except for maybe a co-pay to go to a doctor. And so, you know people over-utilize the system when they are ensured. The second thing is there is a tremendous amount of waste on the administrative side of healthcare. I don’t think that these private insurance companies are any better at running a bureaucracy than the federal government. And a lot of the waste is on the administrative side. I do think there is a way to attack this and you’re right there is a generational change. We don’t have extended families, we don’t have our grandparents living with us anymore, and anyhow that’s part of the cost that we’re asking society at large to bear.
News Anchor: Well, Jerry, again I don’t want to be caught in the weeds of what to do right now, because frankly we’re not going to figure it out in the next couple of minutes. But what about that overall question: Does any politician have the gumption, the nerve to say, “Hey look Americans, we got to get back to taking care of our own”.
Al Lewis: Well, maybe so and let me suggest an alternative way of looking at this which I dealt with in a column I wrote last week which, which is you look at trillion dollar deficit this year overall and you look at some unattractive Medicare and Social Security numbers you have here. And that’s all a problem but maybe it’s also an opportunity. Because David, as you know, Washington doesn’t tend to deal with any problems except in a crisis. And maybe if you got a sense of fiscal crisis that compels the system to deal with it finally. If it’s not a crisis everybody will keep putting this whole issue of healthcare costs and Medicare and Social Security off for years to come. So maybe this is an opportunity.
News Anchor: You put off waterproofing until after the flood. It happens every time. Thank you very much Al Lewis, David Certner, Jerry Seib.
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I totally disagree with the comment that people with health insurance are running to the doctor for every little ache and pain. Granted, some people do, but for the vast majority of folks, the last person they want to see is a doctor. They’ll ride out the storm for as long as they can until it becomes critical. Thay, my friend, is a reality!!