The Social Morality of Individual Responsibility

FreeStuffby Cato   8/22/14
Consider this graphic closely.  Facts are stubborn things for conservatives as well as progressives.

CBO_Feb2013_chart6-crop

Not what you expected, is it?  Non-entitlement spending of all kinds, as a percentage of the US economy, has been dropping steadily since 20010.  This is the result of the budget collision resulting in the ‘sequester’ a few years ago.  Essentially all of our runaway spending is now located in Medicaid, Medicare and Social Security, the last including rapidly expanding disability roles.  And the vast majority of this runaway spending is in Medicare.

Now consider this blurb from a longer post here, a rant referring to senior entitlement rights being on the “chopping block”.

“Under Obama’s budget plan, beginning in 2017, new Medicare beneficiaries who purchase more generous Medi-gap plans would face a surcharge of approximately 15% of the average Medi-gap premium. Many Republicans support this idea and House Budget Chairman Ryan argues that Medi-gap premiums could be overhauled to “encourage efficiency and reduce costs.”

Now consider this affronted comment about that blurb from SS, a very good friend of long standing.

“If I am willing to pay for a more expensive (100%) supplemental Medicare policy, why should I be penalized for it?”  SS

Here’s my response to SS.  Those of you who deeply believe you have a right to all the over-promised entitlements we’ve lavishly voted ourselves in the last 40 years but have refused to fully pay for are not going to like this at all.  Fair warning given.

$$$$$$$$$$$$$$$$$

In August 2012 I wrote a series called “If I Were King” … a series in which I detail a radical plan to balance the federal budget … which included a fix for the deep problem of Medicare.  I said in that post that I’d reduce the basic Medicare coverage from 80% to 65% of cost, and limit Medi-gap policies to 20% of cost.  I would require the remaining 15% of cost to be paid out of pocket for every medical procedure, up to and including “the final year” costs and hospice.  I had written previously, in October 2011 (“Limits“), that I thought Medicare and Medicaid eventually would be merged into a seamless means-tested system, so that if one had no money to cover that 15% the care would be delivered, but under Medicaid, not Medicare.

The 15% in the current Ryan-Murray plan, the 15% in Obama’s 2014 budget, and the 15% in my proposal from almost two years ago arises from the same source.  People with 100% coverage, no matter how that total coverage is acquired, tend to access medical care more frequently and for lesser, often trivial, issues.  It’s the difference between the way we approach an all-you-can-eat fixed price buffet and an ala carte menu at a restaurant.  We will eat more at the buffet to “get our money’s worth”.  We are far more price conscious in the ala carte restaurant.

Once we’ve paid the Medicare premium through our Social Security check, and paid the 100% coverage Medi-gap premium, we approach medical care as an all-you-can-eat proposition, because there is little or no additional cost to each additional medical contact.  The 15% cash out of pocket in my post, and the 15% Medi-gap surcharge (which is a far less effective method in my view) are intended to reduce the marginal demand for medical services by imputing a direct cost to each individual for each demand.

100% coverage = buffet mentality.  SS’s willingness to pay for 100% coverage is not the deep problem.  “Skin in the game” = price awareness and a much needed personal restraint regarding trivial medical issues, that is the deep problem.  Unrestrained demand is the deep problem.

The Loud Left wants access reduced by bureaucratic review and approval.  Individual restraint induced by an irreducible 15% cash out of pocket and seamlessly merging Medicare and Medicaid is a better idea.

The Medicare system is essentially on a death march.  5 years from now you will see demand for services rejected; arbitrary rejection of bureaucratically-determined trivial and unnecessary medicine … and some non-trivial and necessary medicine as well, since bureaucrats are stupid beasts.  10 years from now you will see the system implode completely. That or a system that results in individual self-restraint.  Choose your poison.

And if you want a broader view of entitlements, read my blog series “Phoenix World” … a series detailing the rebirth of the US and radical overhaul of 80 years of progressivism.  Therein I cover the other half of the evolution of Medicare and of all entitlements for that matter: means-testing for net worth that pushes the cost of all entitlements directly back onto the positive net worth recipient.

This system does not tax Peter’s wealth to pay Paul’s bills.  It requires that Peter use his wealth to cover Peter’s entitlements to the extent Peter is able, focusing available money on Paul’s legitimate needs.  Essentially all of the over-promised entitlements Peter is due will be paid to him, but with this new approach to means-testing there will be no guarantee Peter will get to keep them.

I recently finished delivering a four week course at Collin College on Phoenix World in which I built the core of my thinking on a phrase I coined:

“the social morality of individual responsibility”

I argued that the ultimate social immorality is unnecessary dependence on the commons, on the state.  Social Security and Medicare, for ‘the rich’, are unnecessary.  And in this idea lies the seeds of a conservative revolution.  Those who can be must be individually responsible.  Starting today.  Ending never.

Think about the implications of that phrase a bit, in light of the wealthy being means-tested for all of their personal entitlements … in light of the idea that the next few generations WILL NOT submit to becoming entitlement slaves to pay for the over-promises we’ve voted ourselves in the last 40 years, the cost of which we’ve refused to cover by taxing ourselves, the cost of which we’ve shoved forward upon the next few generations … and it’s true meaning, and the politics we need to embrace today, and the nature of Phoenix World as well, becomes clear.


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8 Responses to The Social Morality of Individual Responsibility

  1. Timothy Lane says:

    I think the key to developing responsibility in medical costs is through deductibles. Small deductibles aren’t even cost-effective since insurance companies (or welfare programs) assume they’ll be used up and have to allow for paperwork and other transactional costs. Large ones are much better, and also encourage a sense of responsibility for the spending.

    Another crucial aspect is transparency in medical costs. Someone getting an operation should know in advance what the costs (barring unusual emergencies) will be — the total cost. Instead, when I had an anal fistulectomy in 1987, I was given a preliminary charge that proved to be incomplete, and then received many bills from other sources whose legitimacy I had no way of establishing (which is why I never paid $900 of them). It would have been even worse if I’d let them put me in a room (I insisted on outpatient surgery, which in fact worked quite well enough). This would also encourage hospitals to be honest in their charges, which isn’t the case now.

    • Kung Fu Zu Kung Fu Zu says:

      This would also encourage hospitals to be honest in their charges, which isn’t the case now.

      Years ago, I had some x-ray work done. Before I went into the actual room with the machine, I asked exactly what the costs would be if I paid cash. The attendant pulled out a folder, looked up some information and told me the total would be $200. I asked if that was everything and he said yes. I paid the amount and had the x-rays taken.

      Less than a month later, I received a bill from the hospital demanding another $70.

      To make a long story short, I refused to pay it even though the hospital said they could discount the price, etc., etc.

      Shortly after this, I asked my CPA about this and how it would effect my credit rating. His reply was, “probably not very much, as hospitals have a very bad reputation for dishonest charges.” And it turned out he was right.

      Like so many other businesses in America, honest dealing has gone out the window. The problem in the health industry is that it deals with a large number of people who are using services because they are vulnerable.

      • Timothy Lane says:

        In my case, I paid $850 up front, then another $560 later; I decided that they hadn’t actually said the $850 was all there was (though I had certainly thought so). In addition, I received a bill for $660 from some other company which claimed it did billing for them — but when I called the hospital, they didn’t recognize the name, so I never paid the bill. I also received 3 bills for $90 or so from some other outfit, which after a few months I paid. Then they sent a new bill for $240, which I never paid. (Both of the companies whose bills I never paid said they would go to bill collection agencies. I suppose they did, but they never got any results if so.) This has led me extremely dissatisfied with medical billing practices.

  2. glenn fairman says:

    Judgment begins in the House of the Lord. In order to test one’s first principles, a gentle squeeze is all it generally takes.

  3. Kung Fu Zu Kung Fu Zu says:

    Your proposal is an interesting one and given your reasoning, I think it can be sold as “fair” which is something the Left constantly hammers at.

    Do you have any idea how the numbers would be effected if simple office visits were not covered by Medicare?

  4. NAHALKIDES NAHALKIDES says:

    Social Security and Medicare, for ‘the rich’, are unnecessary. And in this idea lies the seeds of a conservative revolution. Those who can be must be individually responsible. Starting today. Ending never.

    This approach is very much like Paul Ryan’s (I call it the “green eyeshade approach” to getting the welfare state under control), and has the same moral and practical drawbacks.

    Here’s the moral problem with your idea, Cato – you are still accepting the premise that a man is responsible for his neighbor’s retirement and health care, that one man’s need entitles him to a claim on another man’s life, and that it is the job of the government to steal from the second to give to the first. These are decidedly un-conservative ideas. “Those who can” be responsible are in fact every adult American – that is the true morality of social responsibility. It should never be forgotten that while a decent society will have a social safety net, in a truly decent society, that net will be in the form of private charity.

    Second, and less important, are the practical difficulties: government cannot be trusted to run any kind of business, and Congress cannot be entrusted with money as, for instance, the social security fund, which they promptly spend every year.

    Morally, the answer is clear: Social Security and Medicare must be gradually privatized, in such a way that people don’t get scared. We would have to keep the brand names while gradually replacing these programs with private insurance. For Medicare, the model might be Medicare Advantage. And as usual, the moral is also the practical: the free market will provide good-quality health insurance just as it did before Obamacare. The details are difficult but could be worked out.

    Medicaid is more difficult because the poor may have trouble buying health insurance. A long series of de-regulations will be necessary to reduce insurance costs, beginning of course with the repeal of Obamacare. Ideally, the poor should rely on private charity; since that is not politically possible at the present time, probably the best answer would be state subsidies for private insurance, strictly needs testing.

    And your needs-testing idea is fine – in fact, I can’t imagine being able to transition away from public to private control without it. Of course, the wealthy are going to get screwed, frankly, and while that is not o.k. with me it’s still all the fault of the Progressive Left, who brought these government entitlement programs down on us in the first place.

    • Timothy Lane says:

      As a practical matter, Social Security and Medicare cannot be eliminated. No politician will propose such an idea because no politician who supports it could be re-elected. Now, if you had a government controlled by conservatives who were all retiring, you might be able to accomplish something. So reforms that can be acceptable enough to voters for politicians to consider them are all we can hope to do for the foreseeable future.

      • NAHALKIDES NAHALKIDES says:

        Yes, I understand that. The only way we’re going to eliminate them is to reform them by gradually privatizing them. We would then have two programs called “social security” and “medicare” that would bear no real resemblance to what we have today because they would be fully privatized.

        We don’t have to say (and shouldn’t at the beginning, for the reason you stated) that we’re going to get the government out of these programs, but that should be our goal nonetheless.

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