Re: [Pen-l] Means Testing Medicare

To: Progressive Economics <pen-l@xxxxxxxxxxxxxxxxxx>
Subject: Re: [Pen-l] Means Testing Medicare
From: "Max B. Sawicky" <sawicky@xxxxxxxxxxx>
Date: Mon, 21 Jul 2008 08:24:09 -0400
User-agent: Thunderbird 2.0.0.14 (Windows/20080421)

The threat in question re: Medicare and Medicaid is that they grow to absorb about ten percent of GDP. On top of everything else, that would propel the U.S. from the bottom of OECD countries to closer to the top, in terms of total taxes as a share of GDP (around 40%). Taxes have never been higher than about 30%. YOu couldn't finance the expansion with debt because debt & interest would blow up.

The downside of spending that much is that much of it would be wasted, going by current evidence. Problem is that cutting waste can entail cutting worthwhile spending too. The most interesting finding floating around, coming from a few liberal and conservative econs (Robert Hall and David Cutler), is that for all the waste the extent of health care spending is worthwhile in terms of health/longevity benefits, and the sticky point, aside from filtering out unnecessary treatment, is how it gets paid for.

Michael Perelman wrote:

Tyler Cowen is my favorite conservative. Sometimes I actually agree with -- not very much, but sometimes I do. Today in his New York Times article he advocates means testing for Medicare. He acknowledges the possibility that means testing will make Medicare a welfare program, causing it to lose support -- but he suggests that things are so dire we do not have another choice he does not seem to take seriously Mark Thoma's suggestion that single-payer could create substantial cost savings.

I am not sure how big a threat Medicare really is. Any sane political system would find massive savings in the defense budget, but sanity is a scarce commodity. Taxes on the very rich and taxes on purely speculative activities could go a long way to supplement Medicare. Unfortunately, such policies will not be discussed outside of third-party politics.

http://www.nytimes.com/2008/07/20/business/economy/20view.html?em&ex=1216699200&en=79692570ab41cad4&ei=5087%0A -- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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Follow-Ups:
- Re: [Pen-l] Means Testing Medicare
  - From: Gar Lipow

References:
- [Pen-l] Means Testing Medicare
  - From: Michael Perelman

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Thread context:
- Re: [Pen-l] Wall Street awaits the new RTC, (continued)
- [Pen-l] Means Testing Medicare, Michael Perelman Mon 21 Jul 2008, 04:01 GMT
  - Re: [Pen-l] Means Testing Medicare, Max B. Sawicky Mon 21 Jul 2008, 12:05 GMT
    - Re: [Pen-l] Means Testing Medicare, Gar Lipow Mon 21 Jul 2008, 15:37 GMT
      
      Re: [Pen-l] Means Testing Medicare, Max B. Sawicky Mon 21 Jul 2008, 16:17 GMT
      
      Re: [Pen-l] Means Testing Medicare, Gar Lipow Mon 21 Jul 2008, 18:33 GMT
  - Re: [Pen-l] Means Testing Medicare, Laurence Shute Mon 21 Jul 2008, 15:22 GMT

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