You’re kidding, right?

Means-test Medicare, chained CPI, repeal medical device tax? That’s the “compromise”?

Robert Costa is said to have good sources inside the locked ward House Republican conference, but if he and his sources think they’re in a position to dictate terms such as cutting Social Security by jimmying the inflation calculation, means-testing Medicare, and repealing the tax on medical devices, they must be doing some private evidence-gathering on cannabis legalization. This alternative compromise proposal sounds much more realistic.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

46 thoughts on “You’re kidding, right?”

  1. “.. jimmying the inflation calculation, means-testing Medicare, and repealing the tax on medical devices..”

    Do you think any of these is not a good thing to do? The inflation inflator systematically inflates payments all through the government and removes them from legislative purview. Should Darrell Issa be eligible for Medicare? Bill Gates? The Koch bros? The tax on med devices is hurting the competitiveness of USA device manufacturers in world markets. Each of these is something which has a large constituency among wonks and centrists, and even a fair amount of backing in the progleft.

    You are falling into the George Allen trap of wanting to shove their soft teeth down their whiny throats.

    1. Yes, I think all those are not good things to do. When people are depending on government
      payments to be able to eat and pay rent and live with dignity, and the legislature is utterly
      paralyzed, then hell yes, they should get automatic increases and not be subject to
      “legislative purview”. And let’s face it, there was a time not so long ago when the Republicans
      controlled all three branches of government and had the votes to change Medicare and Social
      Security. What happened ? They wanted these policies, but they were too scared to do it
      themselves without cover from Democrats. This is the same damn thing again: they want to
      push through damaging, unpopular policies, but they want to be able to blame the Democrats.
      Screw that! If they really want this stuff, they should go out and convince the public,
      win some elections, and then pass it with their own votes the same way the Democratic party
      passed the ACA.

      1. I am confused by “means-testing Medicare”. High income retirees are charged a higher monthly bite from their Social Security. Isn’t that means testing?

    2. Anyhow, if you want to deal, let’s deal. There’s no way any agreement could be
      reached on Medicare or SS in the scant days before the debt limit is reached,
      so talk of changing those behemoths is just insane. You don’t like the medical
      device tax ? Well, I’m ready to deal on that, but of course we’re all concerned
      about the deficit, right ? So to replace the revenue from the medical device
      tax you can take your pick of a) reduced tax subsidies to oil and gas producers;
      b) increase in capital gains tax rate; c) lower limit on mortgage interest tax
      deduction. The increase in revenue must be at least $1 more than the loss of revenue
      from the medical device tax.

      This deal is about the government shutdown and budget issues only. The debt
      limit is insane and just has to be done away with forever: Congress has the
      power over taxes; Congress has the power over spending; the debt is the
      mathematical consequence of those other powers, and shouldn’t be available
      as an instrument of blackmail.

    3. Chained CPI would be a disguised benefits cut to social security. Basically, chained CPI is updated monthly instead of every other year. This allows it to track shifts in consumptions patterns better and reflect substitution effects. I.e. if the price of one class of goods goes up too much, consumers will shift to a different, cheaper type of product. At low income levels, that often means “inferior products”. E.g., McDonalds dollar meals instead of a balanced diet. Thus, chained CPI has been held to lead to a long-term decrease in standard of living.

      As for Medicare, it is already means-tested for part B and part D. The means-testing proposals that have been put on the table so far would ramp up part B contributions and especially have them start at a lower income level. This would likely affect predominantly middle class seniors. The idea is not per se unviable (the current minimum income beyond which you have to pay increased contributions is $85k per year), but the new proposed income thresholds may be dangerously low. But even if you think that more means-testing is a good idea, this would be a major change that you cannot reasonably expect to litigate within the next few days.

      Incidentally, a single payer system would be a superior long term solution to address the various and sundry issues with Medicare.

      Repealing the medical device tax is just pointless. The motivation seems to be simply that it’s funding for the PPACA, so Republicans want to get rid of it. But our tax base is way too low as is, so cutting taxes is about the last thing we can afford right now. Even if you disagree about the tax base, getting rid of the medical device tax would just lead to higher spending cuts right now.

      1. Chained CPI is one of the most misunderstood notions in public policy debates. It is just not true that,

        “if the price of one class of goods goes up too much, consumers will shift to a different, cheaper type of product. At low income levels, that often means “inferior products”. E.g., McDonalds dollar meals instead of a balanced diet. Thus, chained CPI has been held to lead to a long-term decrease in standard of living.”

        What chained CPI does is adjust for changes in consumption patterns caused by changes in relative prices. If steak goes up relative to hamburger, then consumers will eat less steak and more hamburger. But the opposite is also true. What chained CPI attempts to do is compenate for these shifts. It does not say, “Hey, hamburger is just as good as steak, so who cares.” It says, quite sensibly, that consumption shifts towards goods whose relative prices drop. Those might be expensive or cheap.

        This almost necessarily results in a lower measure of inflation than the standard CPI, which assumes no such shifts. The problem is that neither measure accurately measures inflation faced by Social Security recipients who, because of their, (well, our) age have consumption patterns that differ from those of the general population. Indeed, lower income recipients have even different patterns of consumption. The reasonable way to approach this problem is to use an index which reflects these patterns. The BLS actually has such an index, which seems to be in an experimental mode as of yet. http://www.bls.gov/opub/ted/2012/ted_20120302.htm. Would it make sense to use that?

        1. Chained CPI is being pushed by Bowles, Peterson, and the self-styled “Fix the Debt[sic]”. I think that tells us exactly what the Washington DC consensus thinks its effect on recipients will be.

          Cranky

        2. ¨The BLS actually has such an index …¨
          Or had, before it was shut down by the House GOP. The disappearance of economic data is a feature, not a bug.

        3. And if people thought beef and chicken, (Or chicken and Alpo) were interchangeable, this would be a reasonable view of the matter. But I think it’s not. The fact of the matter is that I would still, if I could, want to grill a steak over the weekend, and have pot roast on Wednesday, instead of eating chicken most of the time, with an occasional indulgence on pork. I don’t because they’ve all gone up in price, and I can’t afford beef anymore. And I’m not a particularly poor person, I’m well into the middle class. So, yeah, substituting chicken for beef in the market basket because people are eating more chicken is just a way of disguising inflation. We’re making the switch because they’ve BOTH gotten more expensive, and we can’t afford to not make the switch.

          And I fully expect Alpo, or something of the like, to start being substituted for chicken, when even chicken starts getting too expensive.

          1. Of course the point is that they are interchangeable, albeit not on a one-for-one basis. That is, a consumption basket that consists of one pound of each may change to 1.5 lbs of chicken and .7 lbs of beef when the relative prices change.

            Your problem is that the price of beef and chicken has gone up more than your income, which is a different matter.

          2. The point is that they’ve both gone up, and that’s inflation, and inflation is disguised by increasing the weight of the cheaper one as they both go up.

        4. Thanks for the correction, byomtov. This is where it shows that I’m a computer scientist and not a political scientist. 🙂

    4. There was a recent column by Paul Krugman in which he pointed out that the right wing was making two arguments about inflation as reported by the government.

      One, that the reported number was too high and that the inflation calculation had to be “corrected” to bring the number down and,

      Two, that the reported number was too low and that the FED had to immediately raise interest rates in order to keep it from running away.

      The common factor in both of these arguments is that the actual goal is to make life more difficult for working people by reducing the money they get and/or raising their cost of living.

    5. You ask – “Should Darrell Issa be eligible for Medicare? Bill Gates? The Koch bros?”, and the answer is, yes, absolutely. Every living, breathing human being in this country should be eligible to receive government-provided healthcare. It’s an entitlement! Obviously, at the same time, every wealthy human being in this country should be taxed, as much as necessary, in order to support the universal benefits to which we are all entitled.

      Just because you’re rich doesn’t mean you’re not entitled to receive what each and every citizen is entitled to receive. It’s just that if you’re rich, you pay more than the non-rich to support the system from which we all draw sustenance.

      Here’s an analogous question: should the rich be denied police protection, on the theory that they can afford private guards?

  2. = = = Should Darrell Issa be eligible for Medicare? Bill Gates? The Koch bros? = = =

    Yes, and both you and the Koch Brothers know very well the reason why. The day that Social Security and Medicare are not universal benefits they become “welfare”, open and shortly to be attacked by the Koch/Walton propaganda machine as an “unearned entitlement” that goes to the “undeserving lazy [skin color unspecified]”.

    US citizens are required to report their employment status to the Social Security and Medicare organization no later than age 67.5; they are not AFAIK required to accept any benefits or file any claims. The Koch brothers are welcome to pay full freight to the US’ absurd health care system (assuming they don’t travel to countries with more advanced medical care such as Switzerland or Germany for their major treatments), but they can leave well off the carefully-designed system that helps the rest of us survive.

    Cranky

    1. Won’t Issa and Gates get a bigger monthly charge for medicare taken out of their Social Security payment when they retire?

      1. “Means testing” usually implies that if your income is above a certain amount, you get bupkes. Which isn’t quite the same thing as “a smaller subsidy of your premium into a single-payer system.”

        1. Thank you but doesn’t it apply to some some things that are more steep slope than cliff. I thought there were programs where, if you earned another dollar your benefits went down by 50 cents.

          I think they don’t like the Medicare system since it is so discretely behind the scenes. I do not have to announce my wealth every time I go to the doctor.

  3. So every single dollar spent on social security and medicare is sacrosanct? There isn’t any wasteful spending going on with those programs, at all, in any way? Maybe modern day liberals would be taken seriously on fiscal matters if they could actually admit that not every single dollar spent by the government is precious and cannot be cut. Don’t you all realize how stupid that argument sounds – that not one dollar can be cut from social welfare programs. An argument that says we cannot cut any spending on any social welfare program is intellectually bankrupt and disingenuous, at best. Normatively speaking, the purpose of a universal basic income/social insurance regime is to help those who are actually poor and destitute — not confer benefits to people who don’t need them in any way. Can high liberals at least admit that much?

    1. There is a real value to having these programs being simple, predictable and non-invasive. How many bureaucrats would we need to examine each retirees status and decide that they did not really need that last dollar?

      My private annuity does not lower my payment because I can make do with less. Isn’t that the standard that we regard as desirable?

      1. wastefraudandabuse only, of course. But don’t disrespect our Warriors(tm)! Or touch the earned payments to uncle’s (12,000 acre) family farm.

        Cranky

        1. I’ve never understood why they don’t just strike the Waste, Fraud, and Abuse line items from department budgets.

          1. I am going to suggest a serious answer to your question. Eliminating Waste, Fraud and Abuse (I don’t put a comma before “and” – it’s un-American) costs time and money. It does not only cost the time and money of the wasteful department – it costs the time of others. Medicare does not pay doctors much but it does not have them jumping though hoops.

          2. To agree with bostonian, it has been said that the right amount of fraud (etc) in a system is never zero, because it costs too much and is unduly intrusive to root out every last dollar of it. I have read suggestions that the right number is about 3% – not a horrible burden on the system as it is intended to run, but not requiring an inhumane or overstaffed office to run it. That does not mean that the system cannot act against reported incidents or individuals who have not been caught by the system.

            Further, the original post was in the context of what could be done before the ‘debt limit’ is reached. A line-by-line review of welfare etc may be useful, and is done by various authorities from time to time, but the chances of a sensible agreement this month are nil.

            So no one, liberal or otherwise, is saying that there is No waste in the system. Reality-based commentators are saying that the debt limit issue has to be resolved separately, and the ‘liberal’ among them are saying that we should not throw an ax into the system without careful attention, and particularly one that seems to be aimed at, or at least will have the undoubted effect of, hurting people who can least afford the cuts.

    2. So every single dollar spent on social security and medicare is sacrosanct? There isn’t any wasteful spending going on with those programs, at all, in any way? Maybe modern day liberals would be taken seriously on fiscal matters if they could actually admit that not every single dollar spent by the government is precious and cannot be cut.

      I am not a liberal (at least not in the way the word is being used in the US as a synonym for proto-communist), but I’ll take a stab at that.

      In general, Social Security and Medicare benefits are on the low side. Too many Social Security recipients need to work after the age of 65 still to make ends meet or live in abject poverty; Medicare has some gaping coverage holes and we already need Medicaid to handle way too much long-term care. At the same time, Medicare is probably one of the most efficient ways to get health insurance in the US. This is really not up for debate in the reality-based world. It can negotiate better prices than other insurers due to its size, it does not have to turn a profit or pay for advertising, and its administrative overhead is very small. Similarly, Social Security is an extremely efficient program.

      If you want to eliminate a government program that doesn’t work well (or rather, replace it with something better), look at 401(k)s.

      If you think that richer people should contribute more to Medicare, I’d be in principle on board with that. The easiest way would, of course, be to make the income tax more progressive (much of Medicare is already being financed out of the general fund) rather than adding more administrative overhead to Medicare via more means-testing micromanagement.

      Note that this doesn’t mean that there is zero waste in Social Security and Medicare; just that I don’t see what alternatives would reduce that waste.

      An argument that says we cannot cut any spending on any social welfare program is intellectually bankrupt and disingenuous, at best.

      You will have to support this claim. US net social spending is one of the highest in the developed world, while public social spending is among the lowest (source). And we still get less out of it than other developed countries. The major problem is that we have too many people needing to ineffectively self-insure in a patchwork fashion while more effective public programs are being avoided or starved. If anything, US public social spending is too low.

      The logical conclusion would be to increase public spending (so as to bring private spending down) and to finance that through higher taxes.

      Normatively speaking, the purpose of a universal basic income/social insurance regime is to help those who are actually poor and destitute — not confer benefits to people who don’t need them in any way.

      This would be not entirely accurate. Welfare systems have a number of goals and you only name one of them, namely counteracting absolute poverty (and we already don’t do that well). Another goal is to prevent absolute poverty; effective measures are those that reduce volatility in cash flow (so that a sudden spike in expenses or drop in income due to child birth, unemployment, divorce, etc. doesn’t drop you down an economic death spiral) and affordable tertiary education (so that you have the qualifications to hold down a well-paying job). A third goal is the reduction of relative poverty and the reduction of the effects of inequality; even where people don’t starve, high inequality leads to social exclusion, stratification, segregation, and has a number of undesirable economic effects (such as reduced ability to pay for consumption in a consumption-based economy).

      At the moment, our social safety net is woefully adequate to deal with these issues; if we don’t do anything about it, the structural effects of poverty are going to come back to bite us a decade or two from now (not that we aren’t already suffering plenty of ill effects from it).

    3. “So every single dollar spent on social security and medicare is sacrosanct?”

      Set aside medicare for a second, how can you have waster money in Social Security? It’s a cash distribution system. Maybe you can print checks more cheaply or something, but it’s about the cheapest program you can imagine. All it does is right checks to people, who can then spend the money.

      Maybe you think the benefits are too high, but there’s no “waste” in the program.

      “An argument that says we cannot cut any spending on any social welfare program is intellectually bankrupt and disingenuous, at best.”

      Um, not it’s not. It quite possibly could be, but it’s certainly feasible that someone can run some analysis on both programs and come to the conclusion that any cuts to these programs would be detrimental to our country. Why should there be an automatic assumption that programs can be cut?

    4. If you mean that payments under, for example, Social Security are “wasteful” in the sense that they are excessively generous then my answer is that the goals of the Social Security program are integral to my vision of a more just state and thus are indeed precious and cannot be cut. Indeed, social security and welfare payments are actually inadequate and therefore should be increased. If, on the other hand and again using Social Security as an example, you are saying that significant numbers of people are falsely claiming to be of retirement age or that the program is administratively inefficient, as a liberal, I would be happy to hear about improvements if you would first point to studies identifying all of this “waste, fraud and abuse”. Social Security and Medicare are both undeniably better and more effectively run than any private insurance company. So, bottom line, please identify the “waste, fraud and abuse” you think is taking place and explain how you would recapture that money.

  4. = = = There isn’t any wasteful spending going on with those programs, at all, in any way? Maybe modern day liberals would be taken seriously on fiscal matters if they could actually admit that not every single dollar spent by the government is precious and cannot be cut. = = =

    Nice two-step there. Not that any reality-based person thinks there really is oceans of wastefraudandabuse in the now deeply-cut federal discretionary budget (otherwise Paul Ryan would be living in the Cheney Observatory), but (1) Social Security is a pure transfer program and is as close to efficient as possible; the children’s survivor benefits (that is, the benefits Paul Ryan used to pay for his college education) and SS Disability are rounding errors in the overall SSI program (2) Medicare is substantially more efficient than any other health care reimbursement system in the US (with only the VA – another gub’mint program – being close); no private health care payment system comes close in efficiency to Medicare and Medicaid.

    Cranky

  5. I am not sure if you are aware of this, but the House of Representatives is controlled by a fair margin by the Republicans, and that under the Constitution all revenue raising bills must come from the House, and thus is it perfectly and Constitutionally within their rights to do whatever they want about anything related to revenue raising. Thus they indeed are in a “position” to do the very things which you suggest, because they were elected by the American people to be put in that position and empowered by our governing documents to have the powers that go along with that position.

    Mark, you’re nothing new and nothing clever. You seek to suggest that any policy difference is a result of some sort of conspiracy by non-people (like the Koch Brothers or Jews) or that the people who suggest those policies are non-people in the sense that they are high or drunk or sub-intelligent. Your kind is found throughout history, deeming people who they disagree with as less than a person… so that later on when you steal property from them, make them work for you, enslave them, and eventually murder them, you feel justified in doing so. You’re one sick dude.

    1. = = = nd that under the Constitution all revenue raising bills must come from the House, and thus is it perfectly and Constitutionally within their rights to do whatever they want about anything related to revenue raising. = = =

      Strangely, the people who put this argument forward always forget to note that under the Constitution those bills introduced in the House must also pass the Senate and be signed by the President. Thus it is perfectly correct for the Senate and President to hold the radical minority-of-the-majority within the House responsible for their actions.

      But hey, let’s have at it: Speaker Boehner can simply introduce the amended Senate bill to the full house on a non-whipped vote and see if it passes. Deal?

      Cranky

    2. ¨ … the people who suggest those policies are non-people in the sense that they are high or drunk or sub-intelligent.¨
      I´ve just had an email exchange with Mark in which I drew his attention to Rep. Alan Grayson´s tempting theory (corroborated by a Politico reporter) that many GOP Congressmen are in fact drunk. I can assure you that Mark does not think this is the explanation for their voting behaviour.

    3. Mark, you stealin’, enslavin’, murderin’ son of a gun! Until our conservative teacher pointed it out, you may not have even realized how scary you are.

      1. Yes, as Bullwinkle says when he tries to pull a rabbit from a hat and gets a lion instead, “Don’t know my own strength.”

  6. As I understand it, revenue bills (that is, taxes) must originate in the House (Article I, section 8, clause 2). Appropriations (spending bills), no; both houses usually propose their own. This shutdown is a result of the House’s failure to pass a spending bill.

  7. There has been some great jazz created under the influence of cannabis, and it has been credited for deep philosophical thought, hilarious discussions, gourmet creations, relaxation, silliness, and much more. However, this is the first time I’ve heard it suggested that cannabis was somehow a useful tool for developing schemes to cut social security.

  8. You know, Mark, I’m actually starting to agree with the Republicans: the Democrats should start negotiating. I just have some minor disagreements about what the baseline of the negotiation should be.

    So far what’s happened is that the Republicans have presented some things that they want and said that they’ll blow up the economy if they don’t get them, and so they imagine that the negotiation will consist of Democrats picking some of things off their list of demands and handing them over.

    But why should only Republicans get to play this game? Surely they don’t want the economy to be blown up either. So let’s open the negotations! Chained CPI, means-testing Medicare, and repealing the tax on medical devices? Okay, here’s our counter-offer: absolutely none of those things. But in addition: a carbon tax, stricter regulation of financial firms, and an assault-weapons ban (I don’t even care about that one but why not!). Give us those things or we won’t raise the debt limit and the resulting chaos will completely wreck the economy.

    The other bonus to this is that it will end all those discussions about whether Democrats did something kind of like this thirty years ago. Now we’ll be doing the exact same thing, right now! So now conservatives can stop talking about hypocrisy and get to explaining how this is a total valid way for Democrats to pursue their policy goals.

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