Medicare

Ending Entitlements for Billionaires: Harder Than You Might Think!

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Last month, Richard Posner wrote the following about means-testing entitlements: "Perhaps some politician will be bold enough to advocate that all entitlements programs, including social security as well as Medicare, be means-tested, as Medicaid is." But, he lamented, the political will to do so doesn't seem to exist.

He gets tears in his eyes just thinking about it.

Or does it? Bold is not a word I usually associate with either Republican House Speaker John Boehner or Democratic House Minority Whip Steny Hoyer, and it's an open question whether the term really applies to politicians who propose to cut back on taxpayer-funded entitlement handouts for millionaires and billionaires. But this week both Boehner and Hoyer have given thumbs up to reducing federally paid-for health benefits for gazillionaires by means-testing Medicare. Here's what Boehner said earlier this week at an event moderated by billionaire Pete Peterson, as reported by Brian Beutler:

"Pete, I love you to death, but I don't think the taxpayers ought to be paying your Medicare premium," Boehner said. "And under Paul Ryan's plan, what it says is, let's allow the American people to decide which health care plan fits their needs. And if you're middle-income, lower income, we are going to pay, just like we do today, for the cost of those premiums. But for people of means, there's no reason why we should subsidize Pete Peterson's premium. I'm sorry. He ought to pay the full cost of his premium to be in Medicare."

That sounds like means testing to me! And here's Hoyer with a far more qualified, but still kinda-sorta-possibly positive, response:

"Generally speaking, we do, as you know, have certain means testing in both Medicare and SS at this point in time. … I think clearly we're going to have to make both of those programs sustainable over the long run, and I think to some degree it would be clearly appropriate to look at—without endorsing any specific proposal—the insuring that the least well off are protected and to do that look at the best off … in terms of what level of support they get."

Is that the stink of bipartisan consensus in the air? Probably not: Democratic Rep. Henry Waxman, for example, isn't having any of it. "Medicare is a social insurance program where you get back for paying in, whether you are middle class, poor, or rich," he said in a statement. "If Mr. Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code." So it's not acceptable to reduce publicly subsidized benefits for wealthy seniors, but it's perfectly fine to ask seniors to pay more in taxes in order to keep providing them with health benefits they could be purchasing themselves?

Obviously there's no clear plan here to pass judgment on: GOP Rep. Paul Ryan's budget proposal would arguably make both Medicare and Social Security more progressive, but Democrats have shown approximately zero interest in supporting it. (Indeed, they've tended to hiss and recoil from any proposal to means test middle class entitlements.) One frequent objection to means testing is that programs targeted for the poor lack political influence, while programs for the middle and upper class tend to be more popular, and thus better protected. But that's a hard line to sustain with a program headed for collapse. Back in 2004, economist Mark Pauly, writing in Health Affairs, noted Medicare's onrushing fiscal troubles and made the point that means-testing the program could provide a way to avoid arbitrary rationing schemes. As Tyler Cowen wrote in 2008, "A more modest program, more directly aimed at those who need it, might prove more sustainable in the longer run." A modest, sustainable entitlement system? Seems unlikely. But it might be bold.

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  1. If Mr. Boehner and Mr. Reid wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.

  2. A modest, sustainable entitlement system? Seems unlikely. But it would certainly be bold.

    I am completely lost as to the libertarian argument for means testing Social Security and Medicare. I have been forced to pay into these programs my entire working life. Whatever wealth I have today is more the result of a lifetime of modest living, not a reflection of how much I earn.

    The immediate behavior change from means testing will be to encourage people to save even less than they do today during their working years. The efforts people will take to reduce their “means” when it comes time to be “tested” will be substantial. I have already envisioned the plan where I begin moving money on paper to my children.

    1. Whatever wealth I have today is more the result of a lifetime of modest living, not a reflection of how much I earn.

      That’s what they all say.

    2. I am in complete agreement with swilfredo. There is no libertarian argument whatsoever to put in means testing for social insurance programs.

      Not only is there no libertarian argument for it, but there isn’t even an intelligent one. Means testing would require complicating the system – which puts it more into the realm of political horse-trading which will never make a system more sustainable.

      Means testing is a just plain STUPID idea for insurance, period. If you don’t want billionaires making claims on the insurance system, don’t let them into it in the first place. But of course, you want the billionaires goddamned premiums, you just don’t want to pay any of his claims. The proper word for that is FRAUD.

      Hard to believe but Henry Waxman actually makes a much better libertarian case than Suderman.

      1. Means testing is a just plain STUPID idea for insurance

        No, what’s stupid is that you are your brother’s keeper (and his brother’s and her brother’s, etc), whether you want to be or not.

        If you don’t want billionaires making claims on the insurance system, don’t let them into it in the first place.

        How do you do that wtihout means-testing?

        1. How do you do that wtihout means-testing?

          Allow people to opt in or opt out?

          1. Allow people to opt in or opt out?

            That’s a fine solution, one I endorse for all incomes, but not one we have today.

            The question is how to keep billionaires out of the system. Under current rules, the only way to do that would be to means test.

            1. How many billionaires are there as a percentage of population?

              How much extra overhead would be created to exclude how many people?

              There would likely be more new government employees than excluded billionaires, costing more than they save.

              This is government we’re talking about here.

              Not exactly the model of efficiency.

              1. How much extra overhead would be created to exclude how many people?

                Zero, if the problem is fixed by tweaking the existing formula’s bend points and coefficients, which is what Bowles-Simpson proposed.

                I realize that you’re not entirely arguing against a straw man, but I’ve yet to see an argument against the formula tweaking that is what Bowles-Simpson and Paul Ryan’s plans actually do.

                1. Formula tweaking has such a good track record…

                2. Actually, I think YOUR argument is a straw man. Maybe it isn’t, but simply put, formula tweaking and means testing have all been tried numerous times under different names and the solvency of the programs continues to exist. Somebody smarter than me once said something about doing the same things over and over again expecting different results.

          2. Because means testing would have to be based on wealth and not salary, what if you could opt out if you demonstrate a certain level of wealth?

            You could keep paying in, “just in case” you lose your wealth and need it. Or, you could stop paying and opt out for good.

        2. How do you do that wtihout means-testing?

          I suppose it’s possible that in the history of mutual societies means-testing had been done in an instance or two to keep the rich OUT, but I’m willing to bet that the only mutual societies that survived actually did their means testing to kiss the asses of the rich while keeping those WITHOUT the means out.

      2. It’s not insurance, it’s an entitlement program. Means testing for social security it no different than means testing for welfare.

        1. It’s not an entitlement program, it’s insurance.

    3. I have been forced to pay into these programs my entire working life.

      But you haven’t been “paying into” these programs your entire working life. These aren’t true insurance programs or anything like a pension. They’re direct wealth transfer/welfare programs. There’s no SS account where your money has been invested and building up or, in the case of Medicare, any policy you’ve been paying to keep active, nor priced based on any actuarial data.

      That money has been taken from you, through coercion, and given to someone else to whom it doesn’t not belong. Full stop. When you die, that money doesn’t go to your heirs, it just goes back to the (negative) balance sheets.

      I have a retirement accounts to which I contribute. That money is mine (for the time being) and will go to my heirs when I die.

      1. There’s no SS account where your money has been invested and building up or, in the case of Medicare, any policy you’ve been paying to keep active, nor priced based on any actuarial data.

        I understand how OASDI and HI work; that is not really the point. If these programs are eventually means tested the end result will be a diminished incentive to save for the future and a greater incentive to game the system. Social Security and Medicare will remain the greatest destroyers of wealth ever conceived regardless of any crafty “solution”. The only way to fix them is to destroy them.

        1. If these programs are eventually means tested the end result will be a diminished incentive to save for the future and a greater incentive to game the system.

          You honestly think that the “gamesmanship” will be more costly, either in direct costs or in “wealth destruction” than the current state of affairs? If you take one look at Medicaid you will see that a means-tested safety-net program can work: Medicaid practically demands that you liquidate just about everything before you go on it. I do not think that “means testing” is going to cause so many more people to liquidate their wealth just to take advantage of Mother Government.

          1. If you take one look at Medicaid you will see that a means-tested safety-net program can work

            Are you actually suggesting that Medicaid works??? I’m speechless.

            1. Insofar as it is a means-tested program that does in fact provide health care to low-income people and families…yes. Medicaid is relatively “cheap”, with Federal outlays at about 200 billion (not sure what the state slice of that is). Just imagine if you could get Medicare and Social Security down to “only” 200 billion dollars per program.

              1. Medicaid is relatively “cheap”

                Medicaid spends over $6,500 per participant in Florida, a state where 1 in 6 people are on it. That is not success, that is a looming disaster.

                1. “6500 per participant” tells me absolutely nothing. What am I supposed to derive from that number?

                  If we are going to sling about “per participant” figures, what do you suppose the outlay for your average Social Security recipient is? I bet it is a hell of a lot more than 6500.

          2. You honestly think that the “gamesmanship” will be more costly, either in direct costs or in “wealth destruction” than the current state of affairs?

            Abso-fucking-lutely.

            Look at how municipal employee pension systems are gamed and subsequently insolvent. The end result of the gamesmanship is tax increases (aka wealth destruction).

            Remember- the billionaires will only be the FIRST ones to be means tested out of claims. YOU will be next.

        2. If these programs are eventually means tested the end result will be a diminished incentive to save for the future and a greater incentive to game the system.

          As to the first part, I disagree. I know *now* that SS won’t be anything more than tip money when I retire, so I’m banking retirement money as fast as I can today. Knowing that your return will be inversely tied to your wealth is a greater incentive to save, not lesser.

          As to the 2nd part, gaming the system, how is that any different from the situation today?

          1. so I’m banking retirement money as fast as I can today. Knowing that your return will be inversely tied to your wealth is a greater incentive to save, not lesser.

            Sucker! They’ve already got their eyes on your retirement money!

            Whatever you saved isn’t going to be enough, especially if you encourage the practice of means testing.

        3. Social Security and Medicare will remain the greatest destroyers of wealth ever conceived regardless of any crafty “solution”. The only way to fix them is to destroy them.

          No argument there. Good luck with that.

          I was at the Capitol yesterday with my son’s class and there were a bunch of geezers walking around with “Save our Healthcare” t-shirts on. I SO wanted to yell, “What? Save our handouts? Is that what you want?” but I figured the teacher would frown upon such a bad example.

        4. Now, this is an incentive to not save for retirement.

        5. If these programs are eventually means tested the end result will be a diminished incentive to save for the future and a greater incentive to game the system.

          Not necessarily, but it depends on what you mean by “means testing.”

          If you mean that “seniors who have money when retired get less out,” then yes, you’re right.

          However, what Paul Ryan, Bowles-Simpson, and others are proposing is “adjusting the payout formulas so that people who paid in more get less out.”

          The latter complicates the system not at all, it’s a simple tweak to an already complicated formula (whether Social Security benefit formula or Medicare premimums.)

          It also increases the incentive to save, rather than punishing it.

          I completely agree with you that punishing savers is bad. That’s why I distinguish the “tweaking the benefit formulae” solutions from means testing.

          Consider four people:

          1) A made upper middle class money and saved,
          2) B made upper middle class money and spent it all,
          3) C was working class and saved,
          4) D was working class and spent it all.

          I’d much prefer a system that lowered the benefits of B than lowered the benefits of C. Doing so would encourage B to save; doing the the other would encourage C (and A) to spend.

          1. But we only sorta want to encourage savings. Don’t we define much of the success or failure of the economy as consumer spending going up or down?

            The doubletalk of SPEND! SAVE! is a mixed message. Most people don’t know a fuckwit about saving money. A good first step would be to make 401k-style plans opt-out instead of opt-in.

            1. Don’t we define much of the success or failure of the economy as consumer spending going up or down?

              Lose the we. Other people define it that way, I don’t.

              Some of us like to encourage saving and investment, unlike the vulgar Keynesians.

              1. We don’t understand what you mean. Prosperity is a mortgage, a car loan, and no less than three stacked credit card balances. Saving is for the lazy.

          2. However, what Paul Ryan, Bowles-Simpson, and others are proposing is “adjusting the payout formulas so that people who paid in more get less out.”

            Explain to me how an insurance company that applied that same logic would stay in business.

            I understand the arguments of treating these things as welfare systems. The only thing worse than a welfare system is MULTIPLE welfare systems.

    4. The govt lied to you.

    5. As another commenter pointed out, you have not “paid into” anything. What you are saying is that no government welfare programs should be means-tested because you pay for all of them.

      Means-testing = reduced costs = less taxes to fund the program. The added bonus is that the money only goes to the “needy” (not that I think their current state creates a demand on others, but some do).

  3. I would agree that there are no social insurance programs, no redistribution programs, none of that in libertopia.

    Sadly, libertopia is but a distant dream. Here and now, elimination of these programs ain’t gonna happen. The question we have is whether means-tested (which is to say, smaller) programs are more or less libertarian than universal (which is to say, bigger) programs.

    I think they are. We should encourage means-testing, and encourage limiting these programs only to the most needy. It may be only incremental progress, but I think it still counts as progress.

    1. Then you won’t mind filling out this form. We estimate it will take at most 45 minutes.

      1. I have no objection to asking someone who wants taxpayer money to fill out a form. Those who are able to take care of themselves without seeking taxpayer money would avoid the form and the means testing procedures.

        1. We will not idly stand by while people refuse to fill out the form.

    2. What is the means-test based on? Assets only? Net worth? Current income?

      Where would you draw the line? Poverty level? Some small multiple of poverty level?

      I think excluding a lot of people who have 15%+ taken from them — lock box, trust fund, PAYGO, Ponzi scheme, or whatever — their entire working lives is going to be a tough sell. I think excluding a lot of people who saved a lot of money and have a portfolio that sounds large but really supports a much less impressive annual draw-down amount is going to be a tough sell, especially if that means the jackass across the street with the boat and expensive vacations but with similar lifetime income isn’t excluded.

      1. I know it will be a tough sell, but let’s all be realistic here.

        These programs will all be means-tested, if they survive at all, when the bond vigilantes arrive. The problem with avoiding tough sells until ruination occurs is that, well, ruination occurs.

        1. Oh, I get that. Jumping out of a burning building is a tough sell until the fire gets to you and the calculus changes.

          If you were Philosopher King, how would you implement the means testing?

          I think that a gradual scaling down of the programs, with a corresponding scaling down of the “contribution” that is taken out of each check, even if the shortage needs to be filled by general tax revenue, might be more palatable and sustainable than means-testing. Or maybe not.

          1. If you were Philosopher King, how would you implement the means testing?

            Probably a pretty high liquid asset test as a threshold (if you’ve got $2MM in liquid assets, you aren’t eligible), combined with an income test for a sliding scale of welfare payments.

            1. Probably a pretty high liquid asset test as a threshold

              Forget that. Then you are facing the situation where those who bought a responsible house get suckered into paying for the guy who bought irresponsibly. Make ’em sell their homes.

              1. You also run into the AMT issue where the Fed can be used to inflate dollar-denominated assets and more people get caught by the means testing.

                All you’re really choosing is ripping people off by stealth as opposed to ripping them off openly. Essentially, more of the same.

                Rip people off openly and they can plan their futures more easily, rip them off by stealth and by the time they figure out they’ve been gypped it’s too late to plan.

            2. See this formula? Tweak the bend points and the coefficients.

              It’s the only approach that entirely avoids the spenders v. savers problem.

          2. If you were Philosopher King, how would you implement the means testing?

            Based on lifetime earnings/contributions paid into the system. Decrease the benefits for people who made more money over their life.

            No reason to punish the savers compared to the spenders.

            1. Something like that would be a lot nicer. The guy with the boat chose current over deferred consumption, the saver didn’t. That works for me.

        2. These programs will all be means-tested, if they survive at all, when the bond vigilantes arrive. The problem with avoiding tough sells until ruination occurs is that, well, ruination occurs.

          I’d prefer the ruination. Then we don’t have to leave the winners and losers up to legislative horse-trading sessions.

      2. I think excluding a lot of people who have 15%+ taken from them — lock box, trust fund, PAYGO, Ponzi scheme, or whatever — their entire working lives is going to be a tough sell.

        Whenever I get a chance, I send people to the Social Security Administration’s own website, where it says:

        The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.

        That 15% is as gone as all your other taxes. You don’t see most people demanding they “get back” what they paid in say, military funding, do you?

        1. That’s why I said “lock box, trust fund, PAYGO, Ponzi scheme, or whatever.” I understand that those “contributions” are being sent out as fast as I send them in, more or less.

          However, rightly or wrongly (wrongly) I think enough people see SS/Medicare as specific contributions for a specific reason and that those contributions are supposed to inure to their benefit when the times comes.

          I think you will see most people demanding that they get back what they paid in, at least, even if they don’t make that demand with regard to other programs.

          1. Sure, but how well do people understand the current benefit formula for Social Security, with its multiple inflection points? What Bowles-Simpson proposed was tweaking that formula so that people at the higher end got a somewhere worse return for their money.

            People already don’t get back what they put in; there’s an effective tax on lifetime earnings. You get a better return on contributions the lower your lifetime earnings are.

            Tweaking that already complicated formula slightly wouldn’t make things any more complicated.

            1. They could also base it on price inflation not wage inflation which, as I understand it, would cut significantly into the problem. Insert disclaimer re: government’s definition of inflation here.

        2. You don’t see most people demanding they “get back” what they paid in say, military funding, do you?

          I don’t know about you but I don’t get a statement from the DoD every year itemizing my military funding. I do, however, get one from the U.S. Social Security Administration itemizing my “contributions” and anticipated benefit.

          1. I think you will see most people demanding that they get back what they paid in

            Anyone talking about “getting back” what they “paid in” still does not get it. People need to be disabused of the notion that taxes that are paid for the welfare and social benefits of others are somehow “theirs” to “get back”.

            I do, however, get one from the U.S. Social Security Administration itemizing my “contributions” and anticipated benefit.

            Just because government persists in treating you like you are stupid does not mean you have to live up to those expectations.

            1. Anyone talking about “getting back” what they “paid in” still does not get it.

              And they are unlikely to get it. But they are not unlikely to vote, especially if “their” SS payment is on the chopping block.

              I plan for retirement based on $0 in SS but that doesn’t mean I believe that a sufficient number of people are going to be won over to the “you fucked up, you trusted us” view of SS.

          2. I do, however, get one from the U.S. Social Security Administration itemizing my “contributions” and anticipated benefit.

            And do you know the exact formula for how they calculate that anticipated benefit from your contributions? If that formula were tweaked and your contributions corresponded to a slightly smaller anticipated benefit, would you know, or notice?

            1. I would.

              I realize 99.9% wouldn’t, but I’ve also never extolled any virtues upon democracy.

              Look, since the day I started working at age 16 I EXPECTED to get ripped off of anything paid into FICA. But that doesn’t mean I should therefore ENCOURAGE the practice.

    3. I would agree that there are no social insurance programs, no redistribution programs, none of that in libertopia.

      What about charities?

      1. Charities are voluntary, and not what I have in mind when discussing government-enforced redistribution.

        Libertopia will be chock full of charities. Because nobody likes the view from their limousine cluttered by smelly poor people panhandling.

        1. I always give them a quarter for polishing my monocle.

        2. redistribution nonetheless. Get used to reframing libertoid concepts in words liberuls understand.

    4. RC, IIRC you work for a hospital. If so, then you know the problem isn’t WHO they’re playing claims for, it’s HOW MUCH and for WHAT.

  4. Means testing would have to be based upon wealth, not income.

    It’s not like we don’t already punish productivity through a progressive tax system. That’s not enough.

    We must further punish responsible people by forcing them to pay for the medicaid and ss benefits of those of similar income who chose to spend, spend, spend, instead of saving for retirement.

    Productive responsible people are chumps.

    1. Holy shit, he’s right!

      I don’t want to be a billionaire anymore, what a ripoff. Lower class for me all the way, that’s where the real incentive is. If I do it right, I can get the government to pay for my trailer and Froot Loops. Billionaires are such suckers!

      1. You think it would be limited to billionaires?

        Come on.

        Have you contributed to a 401K?

        Oopsy. No SS or Medicaid for you.

        1. Have you contributed to a 401K?

          Oopsy. No SS or Medicaid for you.

          You say that like it is a bad thing.

          1. You’ll still have to pay into it while your neighbor with similar income who chose a more lavish lifestyle than you gets to send their retirement and medical bills to Uncle Sam.

            Chump.

            1. No, the one with a similar income can be on welfare, and otherwise get no better benefits than someone who was poor all their lives.

    2. Means testing would have to be based upon wealth, not income.

      Means testing could be based on lifetime earnings, the information we already have from lifetime contributions.

      We must further punish responsible people by forcing them to pay for the medicaid and ss benefits of those of similar income who chose to spend, spend, spend, instead of saving for retirement.

      Basing it on lifetime earnings would completely address your objection here.

      1. But lifetime earnings would not be a test of means at all.

        Means is an ability to pay.

        If you squandered all your earnings then you have no ability to pay.

        It must be based upon net worth.

        1. If you squandered all your earnings then you have no ability to pay.

          Your objection applies not at all to Social Security benefits, nor to the level of Medicare benefits provided under a voucher system.

          Social Security is also being discussed on this thread. Can I take it that you at least agree that it’s possible to reform the Social Security benefit formulas in such a way to not penalize savers?

          It must be based upon net worth.

          No, you’ve completely failed to show that. If people who were working class all their lives can live on a certain level of Social Security benefits, then so can people who were upper middle class and upper class and failed to save.

          I must insist that you’re setting up a straw man, attacking plans that are entirely unlike the ones actually proposed by Bowles-Simpson or Paul Ryan. Granted, the type of means testing you’re discussing is proposed by other people, and I think it’s important to distinguish between the two.

        2. You had the means. You chose current consumption over deferred consumption.

          If two people have $1 million and one buys a $50,000 car (which immediately is worth less than $50,000) the car buyer should be treated as having lower means?

          1. You had the means. You chose current consumption over deferred consumption.

            WTF? You are proposing a economic morals clause that doesn’t exist presently. Realistically, such a clause has about as much chance of being enacted as the dissolution of OASDI.

    3. Productive responsible people are chumps.

      If you’re very rich, you’ll be fine, because you’ll have the resources of your great wealth.

      If you’re poor, you’ll be covered by the taxpayer.

      If you’re neither, if you’re solidly middle-class, you’ll be hosed.

      The middle class needs to rise up before it’s too late, but the “tea parties” need to be just the beginning, not the end.

  5. So it’s not acceptable to reduce publicly subsidized benefits for wealthy seniors, but it’s perfectly fine to ask seniors to pay more in taxes in order to keep providing them with health benefits they could be purchasing themselves?

    To progressives? Absolutely. Reducing benefits allows wealthy seniors to make their own decisions. Taxing and providing lets the government control what the seniors get. It’s for the elderly children.

  6. “Medicare is a social insurance program where you get back for paying in, whether you are middle class, poor, or rich.”

    Unless, you have Huntington’s. Jus’ sayin.

  7. How much does means-testing cost, exactly? And what metric will be used to judge? Means testing means you need two things: a test, and testers. Will the test be lifetime income? Total savings? Family wealth? Average income? Who will be tested, and how often, and on what grounds?

    Moreover, you now need testers. You need someone to evaluate the claims, hear complaints, listen to appeals, etc. That isn’t free.

    So now, where do you draw the line so that you:

    1. Pay for the cost of means testing.
    2. Achieve significant savings on top of #1.

    Has anyone done this analysis?

    1. Here is the current Social Security benefit formula, with its bend points and coefficients. If you and others continue to insist that it would be horribly expensive to change the .15 coefficient to a .12, and so on, as Bowles-Simpson has proposed, I will continue to laugh.

    2. Social Security already has means testers, because its disability provisions are means tested. Medicare could just be rolled into Medicaid, at least administratively.

  8. Means testing is an unacceptable solution. Allow young people to opt out now, we already have to pay for this preposterous debt.

  9. I am somewhat astonished that soi-disant libertarians are opposed to means-testing and would prefer to keep the current system, which has even larger transfers of wealth than a means-tested system would, and transfers that wealth from the poorest age cohort (the young) to the richest (the old).

    Yes, yes, it incentivizes the wrong way. So does the current system. I don’t think you will see changes in behavior. Those who save for the future will continue to do so, and those who don’t, won’t. Very few people who are saving now are going to stop so they can cash welfare checks later. Everyone who wants a retirement of cashing welfare checks is already not saving.

    1. Woo hoo! More government!
      A whole new department dedicated to nosing about your accumulated wealth in addition to nosing about your income!
      A whole new set of rules and regulations to determine what means is counted and what is not, and the associated lobbying!
      Think of all the jobs!
      A whole new class of accounting!

      This is awesome!

      1. A whole new department dedicated to nosing about your accumulated wealth in addition to nosing about your income!

        Only if you want welfare. Which doesn’t bother me nearly as much as certain fiscal disaster.

        Which is the alternative, you realize.

        1. Alternative?
          Don’t you mean inevitable?

    2. Very few people who are saving now are going to stop so they can cash welfare checks later.

      Those aren’t the ones who’s behavior we are talking about.

      It’s the next generation who’s behavior will be very different from their parents. And that generation is the one that will accept further erosion of liberties in other areas just to “save” some rotten “future payments” system even further. Much like the current generation of 30- and 40- and 50-somethings has accepted erosion of liberties that their parents never would have accepted.

  10. On the right (and often at Reason) the party line is that there are very few truly “rich” people. If that’s the case, would ending their entitlements even make a dent in anything?

    Do we have the political will to leave entitlements intact for 99.5% of the population?

    Probably, but would it matter?

    1. Yes, it would matter. Remember that income tax originally applied only to the richest 1% of the population.

  11. There may not be a specifically libertarian argument for means testing, but there certainly is a basic justice argument for it.

    If there is one thing more repulsive than government redistribution of wealth accomplished at the barrel of a gun, it’s government redistribution of wealth accomplished at the barrel of a gun going from the poor to the rich.

    There are people out there right now having FICA taken out of their minimum-wage paychecks to pay for Warren Buffet’s Medicare.

    As libertarians we should find the Medicare system oppressive and expropriatory.

    As human beings we should find the specific instance of minimum-wage workers paying for Warren Buffet’s Medicare a kick in the nuts for justice.

    And I think you guys missed one important part of the article:

    One frequent objection to means testing is that programs targeted for the poor lack political influence, while programs for the middle and upper class tend to be more popular, and thus better protected.

    This is actually true. Means testing the program puts us in a better position to kill it long-term. The Democrats know this. Why don’t you?

    Why aren’t you also delighted to place the Democrats in a position where they by their own admission will have to fight for handouts for millionaires today in order to secure a purely political advantage in a theoretical policy debate we may or may not have in the future?

    1. I think there is a libertarian-ism argument to made in favor of means-testing. Our overarching concern is the use of force and the expropriation of wealth.

      When contemplating a war, libertarians have high standards for what constitutes justification for that war. Government has to demonstrate extraordinary circumstances to kill and maim people.

      In contemplating domestic issues, libertarians have high standards to justify interfering in private relationships. Governments must demonstrate extraordinary circumstances to punish sexual activity or outlaw drugs, for example.

      When government wants to engage its coercive machinery to take food from one person to give it another, government should have to demonstrate (and the person asking for the food should have to provide) extraordinary circumstances why that expropriation just had to take place.

    2. There are people out there right now having FICA taken out of their minimum-wage paychecks to pay for Warren Buffet’s Medicare.

      No.

      Warren Buffet paid into his own medicare already.

      1. No, he didn’t.

        He paid into the previous generation’s Medicare.

        1. A distinction without a difference.

          1. That’s absurd.

            Anyone who knows anything about how social security and Medicare are funded knows that they are paying for current retirees and that it will be necessary for future retirees to pay for them in turn.

            You’re trying to take popular misconception and ignorance about the nature of these programs and make those misconceptions and that ignorance elements of a contract, and that’s just ridiculous.

            1. Legislation is the same thing as a contract. I know the legislation can be undone, but until its undone it’s essentially enforceable in a court of law. If the SSA decided to just implement means testing without legislation, then it would be challenged in court and the SSA would lose.

              Yes, Congress can go back on its promises by passing legislation. It has, and it will continue to do so. Apparently for you this behavior should be encouraged.

              If you look back at the lifespan of OASDI you can clearly see that it has always been insolvent and there have been around 40 congressional attempts to “increase here, cut there” to get it solvent. And none of them worked. They’ve been nothing more than kicking the can down the road to be dealt with later. Means testing is just another can-kicking attempt at a temporary “fix” that will ultimately solve nothing.

              In other words, means testing and formula tweaking have already tried dozens of time and have proven to not work. Only a bureaucratic mind would suggest to keep applying the same fixes until they work. The only things that change are the words used to describe the same damn thing.

              I know these silly attempts at saving an un-savable system are inevitable, I’m just surprised by some of the normally thoughtful people supporting such attempts on this thread.

          2. “My dad hit me, and when I grow up I’m going to hit him back” is justice. It’s also (in the non-metaphorical case) impossible.

            “My dad hit me, and when I grow up I’m going to hit my kids” is compounded injustice. It’s also how retirement entitlements work.

    3. As libertarians we should find the Medicare system oppressive and expropriatory.

      Yes. And means-testing will only solidify its presence, and possibly encourage the introduction of additional similar systems; it will do nothing to discourage its existence whatsoever.

      1. That’s completely false.

        There are routinely lots of votes available in the Congress to cut, say, AFDC spending or WIC spending.

        How often are there votes around to cut social security? How many times has eligibility for social security been reduced in our lifetimes?

        What program has the higher anticipated rate of program spending growth in the next 25 years? SNAP or Medicare?

        We can gradually drill down on a means-tested program by whittling on its edges, AND if we increase the overall wealth of the system fewer people will qualify for these programs naturally.

        If when social security was first passed in the 30’s eligibility had been restricted to people below the poverty line, the program would not exist today in its current form.

        Means-tested programs are positively ephemeral compared to universal entitlements. The way to break the spine of the program is to gradually reduce the number of people who benefit from it. Every person kicked off the rolls of an entitlement program is one less person to vote for Congressional support for that program in subsequent Congresses.

        1. that blows the moral hazard argument out of the water right off the bat.

          But you already blew it out of the water. If it’s either or, then the system shouldn’t exist, period.

          But if it’s a matter of degree, I’m just saying that your proposal is more morally hazardous than mine.

        2. There are routinely lots of votes available in the Congress to cut, say, AFDC spending or WIC spending.

          How often are there votes around to cut social security? How many times has eligibility for social security been reduced in our lifetimes?

          Part of the reason for the track record you claim is BECAUSE of the nature of the systems – some are pure welfare systems while others are insurance systems.

          To answer you question, SS has been reduced at least twice in the last 30 years, but there is actually a covert reduction that is too often ignored.

          During Regan’s terms full SS benefits were delayed to age 67 (on a graduated scale). Also, SS benefits were subsequently subject to income tax, sort of a back-door means testing.

          The covert reduction is in the gamed (aka, understated) CPI.

    4. This is actually true. Means testing the program puts us in a better position to kill it long-term. The Democrats know this. Why don’t you?

      Why do YOU miss the point?

      There are some decent mathematical and welfare-based arguments that say there should be a floor on FICA contributions (while still allowing “benefits”) and a higher ceiling on contribution limits.

      And those are being completely ignored for the fraudulent concept of means testing.

      1. Well, if you want to exempt some people from taxation to fund the system while still paying them benefits, that blows the moral hazard argument out of the water right off the bat.

        So we can now safely ignore all arguments in this thread that in any way revolve around moral hazard, or around incentivizing people to not be productive.

        With that set of arguments dispensed with, the bottom line becomes this:

        Every person arguing against means testing is arguing for the state sending a monthly welfare check to millionaires.

        These are not savings programs. They’re pay-as-you-go welfare payments.

        Why not put all millionaires on SNAP, too? After all, “they paid into the system all this time, they should get the benefits they paid for”, for SNAP just as well as for Medicare. Right?

        I do not want welfare checks sent to millionaires every month. Full stop. No other consideration really is important.

        1. “I do not want welfare checks sent to millionaires every month. Full stop. No other consideration really is important.”

          If that’s the only importatnt consideration, then your argument is based more on class resentment then on any sort of fiscal reality. The entire populace was defrauded by what the government claimed SS and MediCare to be, including the millionaires. Singling them out to get hosed is not just, however pragmatic it might be.

  12. Also, the best way to deal with the “But I paid into the system” objection is simply to call these programs what they were presented as in their enabling legislation: social and medical insurance.

    If we all buy earthquake insurance, and no earthquake ever hits my house and I never collect any benefit, while an earthquake does hit RC’s house and he collects a benefit, am I RC’s “chump”?

    No, I am not. Because what I was buying with my premiums was security in the event of misfortune, and not a guarantee of a payment.

    So we just say that the social security taxes and Medicare taxes you’ve been paying were premium payments. If you retire rich, you don’t have a benefit claim.

    Yes, that rewards people who engage in risker behavior. That is definitely true. But the only way we can ever solve that is to get rid of the programs entirely. That should be the goal, but means testing is a waypoint towards that goal.

    1. Because what I was buying with my premiums was security in the event of misfortune, and not a guarantee of a payment.

      You are guaranteed a payment if you have a legitimate claim. What you are suggesting is that some 100% legitimate claims from claimants who paid into the system should not get paid. Aka, FRAUD.

      What other contract law should we ignore?

      1. Social security and Medicare aren’t contracts.

        I do not have an individual contract with the state to receive a social security or Medicare payment.

        These benefits are creatures of legislation entirely. What legislation makes, legislation can unmake.

        1. First you say they are insurance, then you say they aren’t contracts.

          If they aren’t contracts, then they really aren’t insurance. Make up your mind.

          You wouldn’t have to twist the meanings if your argument made sense. I understand you want to perpetuate the system, but your solution says it is OK to further rip off money from select people because they have the means to be ripped off. That’s like saying you are all for free speech but within limits.

          We have decades of evidence showing what eventually happens with legislation that only affects people “of means” and that history is all we need to know that it doesn’t work.

          The idea that we’ll end up with worse consequences if these systems crash and burn versus trying to save them with further transfer payments is absurd. We have the history of Japan’s financial system/government over the last 20 years, along with the US financial system of the last 4 to prove the absurdity, and you ignore it. All means testing is going to do is make the inevitable crash and burn more disastrous.

  13. Well, if they don’t get the benefit, they also shouldn’t have to pay in.

    http://www.intellectualtakeout…..-insurance

    1. Try reading the thread before taking a shit in it.

      In recognition of the fungibility of money, I understand that I may, through my taxes, be paying for roads that I will never use, schools that I will never attend, a military that really is not defending me, and so on.

  14. Once the rich get carved out of Medicare, it looks less like “social insurance” and more like plain ol’ welfare. Fewer people will have a stake in it (and so are less likely to object to cuts) and it will receive the judgmental sting of association with poor people (fairly or not).

    If the Democrats want to fight for a smothering and omnipresent welfare state, they need to apply it to everybody. It’s horrible for the country, but it makes sense in line with their larger goals.

  15. The main problem with the government saving money is that it provides politicians more money to buy votes. The primary strategy should be to de-incentivize Congress spending money on wasteful ideas.

  16. Holy fuck.

    The biggest problem with the solvency of OASDI/HI is the shitload of regulations we pass year after year that kill employment and job creation. There are other problems in the silly bullshit HI pays out on, and maybe we have a demographic problem related to increased life expectancy.

    But means testing is sheer lunacy, designed to take the easy way out temprarily rather than actually solve the root causes of the problems. When commenter joe (boyle-on-the-butt-of-humanity) argued for means testing he rightly got lambasted for the further slicing of liberties and property rights it will inevitably bring. But when a reason staffer suggests it’s a good idea, the sheep apparently fall in line.

    Suderman’s means testing idea is as horrible as Ron Bailey’s universal health insurance idea. Stop listening to the messenger and listen to the mesasage; good people can make mistakes in judgment.

    Trying to save bad systems is always a bad idea; the temporary reprieve is never worth the long-term consequences. “Fix” OASDI/HI with means testing and the economy-killing regulatory state will continue unabated.

  17. “Medicare is a social insurance program where you get back for paying in, whether you are middle class, poor, or rich”

    I thought the essence of a social insurance program was that you got paid back if you became socially disadvantaged. Like, for instance, crippled by old age or disability and thus unable to support yourself.

    I mean, I know that Waxman is both an idiot and a scumbag, but surely he has a passing familiarity with the idea that most people that pay premiums for insurance don’t actually get their money back. Right?

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