It has long been known that our entitlement programs will be insolvent because of structural issues within the program itself. Republicans and Democrats alike now fully acknowledge that these programs are unsustainable and the longer nothing substantial is done the worse the problems will get.

Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing, and will require legislative corrections if disruptive consequences for beneficiaries and taxpayers are to be avoided.

The financial challenges facing Social Security and Medicare should be addressed soon. If action is taken sooner rather than later, more options and more time will be available to phase in changes so that those affected can adequately prepare.

-2011 Social Security and Medicare Boards of Trustees

Social Security is currently running a deficit. Some have wrongly stated this as the central problem, when it is only a component of the larger picture. Krugman rightly points out that Social Security has a rather large trust fund, which the program can eat away at for a while. Taken with the interest gained from the fund, we have until 2036 when “trust fund reserves are exhausted.” You can probably read a different number from different people in difference places, but this is straight from the trustee report.

Responding to claims made by GOP 2012 candidates, Mr. Klein tries to put the shortfall of Social Security into context by showing the deficit relative to GDP. While his are right, his point does not defuse the fact that these programs are broken and the too often cited “solutions” to make Social Security are not solutions at all. But he knows this. He said it himself.

It’s underfunded, ill-designed for certain features and facts of the modern world, and — probably most important — overused. Beyond Social Security, America’s retirement system is, in general, patchy and insufficient, which leaves retirees too reliant on Social Security. They then learn the hard way that the program is not what they’d hoped. We should do better. And we can.

Klein also made a post about Social Security that admitted that it is “stingy and getting stingier” and that we ought not to “‘solve’ the Social Security problem” by approaching it as a budgetary question. Yet, that’s exactly what he and Krugman do when they provide a list of tax raises and benefit cuts that are precisely tailored to the addressing the estimated deficiency, or when they try to make the program’s problems look manageable by comparing it to GDP. The relative comparison provides what is certainly is a low number and most people probably cannot conceptualize the meaning of an estimated .7% of GDP shortfall over 75 years. (It translates into $106,390,200,000 or $106.3902 billion. For context, all of Massachusetts runs off of roughly $34 billion each year.) That is, of course, if you choose to believe an estimate like that will at all reflect reality.

But the volume of our Social Security problems pail in comparison with the problems of Medicare and Medicaid. These programs’ sheer size and direct involvement with our healthcare industry makes leaves no question as to the connection between rising costs in prescription drug and medical costs and our entitlement programs. Obamacare was an attempt to resolve some of many problems with the government’s hand in health care, but I am unconvinced that it was as much as a game changer as was purported.

I think it is time we all get on the same page about the severity of these problems. Because of our entitlement programs the single largest part of our budget is structurally unsound, unsustainable and has not been changed to meet the challenges of the modern world. The huge lists of small fixes are laughable. The whole notion of continuing to reduce already problematically low benefits is just ridiculous and they are based on estimates that will likely be wrong. The program already does not provide real security to those retiring. If it did, we would not have “do not rely on Social Security” as the first and last point made by retirement advisors across the country. Already, benefits are too low and they are getting even worse. Klein is right – Social Security is ill-designed for the modern world. The entirety of our entitlement programming needs to be reconsidered and redesigned to meet the needs that we have today. It is time to let go of the brands of “Social Security,” “Medicare,” and “Medicaid.” We need a new approach to social welfare. A new program ought to respect market efficiency at all times and set strict (some might say ‘draconian’) guidelines as to what is covered so Republicans know tax dollars are not going to waste. It should be means tested and the taxes that support it should be progressive.

The political reality is that this will not happen. Our government will continue to sputter along until a moment of real crisis, or we will get by on small tweaks or moderate changes that dont replace the most problematic parts of the system (like Obamacare). Rather than blame it on Republican obstructionism or Democrats being socialists I think that this is a simply a good lesson in big democratic government really works. The inertia of our current system makes the implementation of the changes that should have been implemented 10 years ago, and desperately need to be implemented now, a pipe dream. The bigger the government, the bigger the problems and the harder they are to solve.

Blitzer: Let me ask you this hypothetical question. A healthy, 30-year-old man has a good job, makes a good living, but decides, “You know what, I’m not going to spend $200 or $300 a month for health insurance because I’m healthy, I don’t need it.” Something terrible happens, all of a sudden he needs it. Who’s going to pay if he goes into a coma, for example?

Paul: In a society that you accept welfare-ism and socialism, he expects the government to take care of it.

Blitzer: Well, what do you want?

Paul: He should do whatever he wants to do, and assume responsibility for himself. My advice to him would be have a major medical policy. But not forced—

Blitzer: But he doesn’t have that. And he needs intensive care for six months. Who pays?

Paul: That’s what freedom is all about. Taking your own risks. This whole idea that you have to prepare to take care of everybody.

Blitzer: But congressman, are you saying that society should just let him die?

Crowd: [Yeah! Yeah! Laughs. Let him die!]

It will cost $15 to ask Rep. Paul Ryan (R-Wis.) a question in person during the August congressional recess.

The House Budget Committee chairman isn’t holding any face-to-face open-to-the-public town hall meetings during the recess, but like several of his colleagues he will speak only for residents willing to open their wallets.

Ryan, who took substantial criticism from his southeast Wisconsin constituents in April after he introduced the Republicans’ budget proposal, isn’t the only member of congress whose August recess town hall-style meetings are strictly pay-per-view.

Rep. Ben Quayle (R-Ariz.) is scheduled to appear Aug. 23 at a luncheon gathering of the Arizona Republican Lawyers Association. For $35, attendees can question Quayle and enjoy a catered lunch at the Phoenix office of the Snell & Wilmer law firm.

And Rep. Chip Cravaack (R-Minn.) took heat in Duluth this weekend for holding private events in his district’s population and media center — including a $10-per-head meeting hosted next week by the local chapter of the National Federation of Independent Businesses, which on its invitation notes that the organization “supported Chip in his stunning upset over long time Congressman Jim Oberstar in the 2010 election.”

It’s no secret why members of Congress would shy away from holding open town hall meetings – it’s no fun getting yelled at by angry constituents or having an uncomfortable question become an unfortunate YouTube moment.

By outsourcing the events to third parties that charge an entry fee to raise money, members of Congress can eliminate most of the riffraff while still – in some cases – allowing in reporters and TV cameras for a positive local news story.

This should not really come as a surprise because the last time Paul Ryan held a town hall event he reportedly had to escape constituent outrage by tiptoeing out of a backdoor and jumping into an escape vehicle.

Short of divine intervention, the economy isn’t going to get turned around in four weeks. So closing the enthusiasm gap is the only realistic hope Democrats have of salvaging the midterm elections.

It’s my personal belief that a major cause for the enthusiasm gap — if not the major cause — was the way health care reform was thoroughly mishandled, for months and months, resulting in a bill that was a pale shadow of what it might have been.

That includes how a single-payer system was taken off the table right at the outset, preemptively, as it were. It includes the extended and perfectly pointless game of political footsie Max Baucus was allowed to play with Chuck Grassley and assorted Senate Republicans for months and months (and months), when we continued to negotiate with them long after many of them had actually made public statements to the effect that they were not negotiating in good faith, that they were only trying to drag out the process and dilute the end product, and that they would vote against the final product they ended up negotiating. This charade not only dragged on for months, but the provisions of the bill did indeed keep getting diluted every step of the way. And the long-drawn-out negotiations provided the Republicans world enough and time to mount their determined campaign of deliberate lies to subvert popular support for health care reform.

And we not only ended up with weak and watery dishwater, but we were told over and over again that we should loyally celebrate it as chicken soup for the soul. Because it was such a milestone accomplishment, because so many previous presidents had tried and failed, or wanted to try but not even taken up the task.

And I think that’s the context in which Tom Daschle‘s quickly retracted admission yesterday is going to play out.

This was the admission:

Former Senate Majority Leader Tom Daschle (D-SD)’s new book Getting It Done: How Obama and Congress Finally Broke the Stalemate To Make Way for Health Care Reform comes out next week, but this morning he spoke to me about some of the concessions the administration made to pass reform and the shortcomings in the Affordable Care Act.

In his book, Daschle reveals that after the Senate Finance Committee and the White House convinced hospitals to to accept $155 billion in payment reductions over ten years on July 8, the hospitals and Democrats operated under two “working assumptions.” “One was that the Senate would aim for health coverage of at least 94 percent of Americans,” Daschle writes. “The other was that it would contain no public health plan,” which would have reimbursed hospitals at a lower rate than private insurers.

I asked Daschle if the White House had taken the option off the table in July 2009 and if all future efforts to resuscitate the provision were destined to fail:
DASCHLE: I don’t think it was taken off the table completely. It was taken off the table as a result of the understanding that people had with the hospital association, with the insurance (AHIP), and others. I mean I think that part of the whole effort was based on a premise. That premise was, you had to have the stakeholders in the room and at the table. Lessons learned in past efforts is that without the stakeholders’ active support rather than active opposition, it’s almost impossible to get this job done. They wanted to keep those stakeholders in the room and this was the price some thought they had to pay. Now, it’s debatable about whether all of these assertions and promises are accurate, but that was the calculation. I think there is probably a good deal of truth to it. You look at past efforts and the doctors and the hospitals, and the insurance companies all opposed health care reform. This time, in various degrees of enthusiasm, they supported it. And if I had to point out some of the key differences between then and now, it would be the most important examples of the difference.

Despite being “taken off the table” as a result of the “understanding,” the White House continued to publicly deny claims that it was backing away from the provision even as it tried to focus on other aspects of the bill. “Nothing has changed,” said Linda Douglass, then communications director for the White House Office of Health Reform in August of 2009 and many times thereafter. “The president has always said that what is essential is that health insurance reform must lower costs, ensure that there are affordable options for all Americans and it must increase choice and competition in the health insurance market. He believes the public option is the best way to achieve those goals.”

And this is the not-entirely-convincing retraction:

In describing some of the challenges to passage of the public option in the health reform bill, I did not mean to suggest in any way that the President was not committed to it. The President fought for the public option just as he did for affordable health care for all Americans. The public option was dropped only when it was no longer viable in Congress, not as a result of any deal cut by the White House. While I was disappointed that the public option was not included in the final legislation, the Affordable Care Act remains a tremendous achievement for the President and the nation.

This was a written statement. Daschle made no attempt to even try to explain how or why he could have said the exact opposite in the interview (at such great length) if the truth is that the public option was dropped only when it was no longer viable in Congress.

In any case, the book is supposed to be out next week. And, according to Igor Volsky‘s account, the book contains the same account of the public option’s demise as the interview. In fact, Volsky offers what purports to be a direct quote from the book.

If the book comes out next week and contains that quote — or if the book launch is inexplicably delayed — I think Tom Daschle may have single-handedly dashed whatever faint hope there might have been of closing the enthusiasm gap in the next four weeks.

Expect to see John Boehner wearing an unusually wide grin today.

It’s early days still, but this month all the smart money is likely to be on North-Dakota-based Discovery Benefits. According to them, Discovery Benefits is not only “a national leader in employee benefits administration”, but it its mission involves “transforming the complexity of employee benefits administration with innovative solutions and extraordinary customer service delivered by empowered and knowledgeable employees.”

Keep that in mind as you read this story from The Colorado Springs Gazette:

La Rosa Carrington has more than enough to worry about. She’s a single mother with two teenage daughters, she’s fighting a type of leukemia that requires five days of chemo a month for four months, and she lost her job in May.

So the last thing she needed was news that her health insurance benefits would be terminated because she hadn’t paid her premium in full. The shortfall? One penny.

“My medical bills are coming in like locusts, and you’re holding up my benefits because of one red cent?” an incredulous Carrington said from her hospital bed last week as she recalled her conversation with a customer service rep at Discovery Benefits, an employee benefits administrator based in North Dakota.

The problem started after Carrington, 52, lost her job as an admissions representative with Alta Colleges and COBRA kicked in. Under the federal COBRA law, people who lose their jobs under certain circumstances can temporarily keep their group health insurance from their employer, but they have to pick up a larger share of their premium — in her case, a little over $471.87 a month.

However, under the 2009 American Recovery and Reinvestment Act, those who meet the eligibility requirements pay just 35 percent of the full COBRA premium. Because Carrington had not yet received a bill showing what her payment would be with the discount, she whipped out a calculator, figured out that she owed $165.15 a month and sent a check for that amount to Discovery Benefits.

But Discovery Benefits determined she owed $165.16, and last week, she received a letter from the company telling her she was short on her premium and her coverage “has not been reinstated with your insurance carrier(s).” The letter, however, did not tell her how much she owed. She called Discovery Benefits and was aghast when she heard the amount.

“I said, ‘Are you kidding?’ How am I going to pay you a penny’”?

Carrington said she talked twice to a customer service representative, who told her it was policy that the penny be received before the benefits could be reinstated. Write a check or send a money order, Carrington said the representative told her.

“‘I’m in the hospital receiving chemotherapy; I can’t get you a money order,’” Carrington said she told the rep. “If this is how you treat people, you need spiritual training.”

Carrington then asked to speak to a supervisor, who reiterated the company’s policy and wouldn’t budge on the penny. Carrington also threatened to take her case to the media, and that’s why she thinks the supervisor called her back with some good news: The supervisor had pulled out her own calculator, done the math — and determined that Carrington was correct.

The source of the problem is that Discovery Benefit’s software is programmed to round up every fraction of a penny. So, unlike everywhere else in the real world, when their computers compute 35% of $471.87 and come up with $161.1545, that becomes $161.16 instead of $161.15. Because they need to squeeze every fraction of a penny out of their customers in order to pay their executives the fat salaries they richly deserve for their innovative solution to the complex problem of fractional pennies.

Discovery Benefits, by the way, is disputing La Rosa Carrington’s account. Specifically, the part about the supervisor reiterating the company’s policy and refusing to budge on the penny until well after Carrington threatened to take her case to the media:

Suzanne Rehr, executive vice president for Discovery Benefits, offered a slightly different account. She wrote in an e-mail that COBRA software rounded up from $161.1545 — which is 35 percent of $471.87 — while Carrington rounded down, and said that “our staff member reached out to her supervisor and immediately received approval to pay the penny … due to the rounding difference.”

I guess readers will just have to make up their own mind about whose version they find more credible. But here’s a little question worth pondering. La Rosa Carrington is supposed to pay 35% of the $471.87 premium. The remaining 65% is being kicked in by some government agency under the 2009 American Recovery and Reinvestment Act. How much do you suppose they are being asked to pay?

I’ll bet you a whole penny that when that notorious COBRA software is asked to compute 65% of $471.87, and it pauses to ponder the figure of $306.7155, it doesn’t hesitate for one nanosecond before it spits out a demand for $306.72. So for every customer whose COBRA premium is subsidized under the ARRA, Discovery Benefits has carefully set up their systems to double-dip that fractional penny, to collect an extra penny per customer per month. An extra penny of pure profit. Per customer per month.

One thing’s for sure. Mere mortals can never hope to understand the corporate mind of the scavengers who operate on the fringes of the health insurance business.

The Commonwealth Fund has updated its 2007 study which compared the US system to that of six other developed countries. And the results are just as embarrassing.

The short version is: “Americans spend twice as much as residents of other developed countries on healthcare, but get lower quality, less efficiency and have the least equitable system”.

The United States ranked last when compared to six other countries — Britain, Canada, Germany, Netherlands, Australia and New Zealand, the Commonwealth Fund report found.
[...]
Previous reports by the nonprofit fund, which conducts research into healthcare performance and promotes changes in the U.S. system, have been heavily used by policymakers and politicians pressing for healthcare reform.
[...]
The current report uses data from nationally representative patient and physician surveys in seven countries in 2007, 2008, and 2009. It is available here (sic)

In 2007, health spending was $7,290 per person in the United States, more than double that of any other country in the survey.

Australians spent $3,357, Canadians $3,895, Germans $3,588, the Netherlands $3,837 and Britons spent $2,992 per capita on health in 2007. New Zealand spent the least at $2,454.

This is a big rise from the Fund’s last similar survey, in 2007, which found Americans spent $6,697 per capita on healthcare in 2005, or 16 percent of gross domestic product.

“We rank last on safety and do poorly on several dimensions of quality,” (Cathy Schoen, one of the authors of the report) told reporters. “We do particularly poorly on going without care because of cost. And we also do surprisingly poorly on access to primary care and after-hours care.”
[...]
The report looks at five measures of healthcare — quality, efficiency, access to care, equity and the ability to lead long, healthy, productive lives.

Britain, whose nationalized healthcare system was widely derided by opponents of U.S. healthcare reform, ranks first in quality while the Netherlands ranked first overall on all scores, the Commonwealth team found.
[...]
Every other system covers all its citizens, the report noted and said the U.S. system, which leaves 46 million Americans or 15 percent of the population without health insurance, is the most unfair.

“The lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it also fails to meet the needs of the average citizen,” the report reads.

Let’s hope that three years from now, the post-reform US healthcare system will show some improvement.

Meanwhile, I find it hard to buy the report’s claim that the increase in per-capita health spending in the US from $6,697 in 2005 to $7,290 in 2007 represents “a big rise“. Elementary ‘rithmetic reveals that to be an increase of only 4.3% per year. Which actually comes as a rather pleasant surprise. I thought our health spending was supposed to be galloping along at a much faster clip.

What is all the more striking is that the annual rate of inflation for this two year period is 3%. Health spending didn’t really rise that much faster than inflation. Who would have thunk?

That model of free universal health care just took a gunshot wound to the shoulder:

An unemployed Michigan woman who was unable to afford medical treatment for a searing pain in her shoulder took matters into her own hands last week, shooting herself in the shoulder in a last-ditch effort to get into the ER.

Kathy Myers, 41, said she was pushed to the brink of desperation Thursday night because she was “crazy in pain,” and the local hospital emergency room would give her no more than a handful of anti-inflammatory pills.

“Pain will make you do silly, crazy things,” the 41-year-old Niles, Mich., woman said in a YouTube.com interview with News 8 in Grand Rapids, Michigan. “I knew they wasn’t going to do anything, again. They said if it wasn’t life-threatening, no health insurance, you can’t get no help.”

Whatever else he does, President Scott Brown will have to replace the individual mandate by the chicken mandate. Because the barter approach to containing healthcare costs simply doesn’t work unless all doctors are required to accept payment in kind. Allowing doctors the choice of chickens or cash would impede, obstruct and otherwise cripple the march of progress.

The chicken mandate will, of course, necessitate a whole slew of concomitant changes in The Way Things Work. Many of them you can easily figure out for yourself, but here are a few hints to help you channel your thoughts.

Banks will have to accept deposits of chickens, because doctors can’t keep accepting chickens if they’re just going to pile up in the waiting room. Once the idea of depositing chickens in the bank — and receiving eggs as interest — catches on, everyone will want a chicken account. (Organic gardeners would have the option of receiving interest on their chicken deposits in the form of what can be delicately described as chicken deposits.)

Banks will draw the line at accepting deposits of chicken deposits.

Doctors will actually start writing prescriptions for chicken soup.

A system where only live chickens are accepted as payment obviously won’t be very efficient. Apart from anything else, how do you make change? People will have to start carrying around fresh or frozen chicken parts. Following its standard business model, Microsoft will take over the first mover in the refrigerated fanny pack industry, and then ruthlessly force out all competitors.

Vegans and vegetarians will have to move to Europe or India or something.

The acute worldwide shortage of chickens will spur massive government funding of a crash research program that will marry stem cell research to cloning technology.

At some point, there will be another outbreak of avian flu. That will trigger The Mother Of All Great Depressions, but only in America and China (whose production economy will be shattered and foreign exchange reserves decimated, leading to The Mother Of All Great Revolutions). The bad news is that the American economy will never recover; the good news is that all the illegal immigrants will return home. (Lou Dobbs will be left without a reason for living, and will find solace in the arms of Tom Tancredo.)

Goldman Sachs, having astutely bet against the American economy, will make trillions in just the first week of The Mother Of All Great Depressions. Its profit for the quarter will dwarf American GDP. In an extraordinary shareholder meeting, the proposal that America is too big to fail will pass by a show of hands, and Goldman Sachs will bail out America by taking it over, and turning it into the first corporatocracy in the world.

But that was before she began to spell out her views on how the American health care system can be improved. Ten days ago, she said she believes that the way to hold down medical costs is to move from the current system of paying doctors with cash, check or credit card to a barter system:

And I would have suggested, and I think that bartering is really good. Those doctors who you pay cash, you can barter, and that would get prices down in a hurry. And I would say go out, go ahead out and pay cash for whatever your medical needs are, and go ahead and barter with your doctor.

That statement elicited a certain amount of ridicule, and a certain amount of sheer disbelief (“she couldn’t have really meant barter, she probably meant bargain“). So this week Lowden clarified that she meant exactly what she had said:

I’m telling you that this works. You know, before we all started having health care, in the olden days our grandparents, they would bring a chicken to the doctor, they would say I’ll paint your house. I mean, that’s the old days of what people would do to get health care with your doctors. Doctors are very sympathetic people. I’m not backing down from that system.

It’s all very well for chicken farmers, but what’s a blogger to barter with?

Or a politician? I can see Lowden going to the doctor next week, and going: “How about you give me credit now, and once I’m elected, I’ll repeat on the Senate floor any five lies of your choice?”