Lanhee J. Chen: A Capsizing Disability-Insurance Program – WSJ

January 24, 2015

SSDI paid $140.1 billion to disabled workers and their dependents in 2013 (according to the latest trust-fund data). By the end of that year spending outpaced receipts by $32 billion, and the balance of the program’s trust fund was a little more than $90 billion. Trust-fund reserves are expected to run out in late 2016.

Congress can reallocate payroll tax revenues from the Old-Age & Survivors Insurance trust fund to shore up the SSDI trust fund. But the Congressional Budget Office estimates that rebalancing tax revenue between the trust funds would cause the reserves of both to run out in 2030.

via Lanhee J. Chen: A Capsizing Disability-Insurance Program – WSJ.

Warning: Disability Insurance Is Hitting the Wall | Economics21

January 15, 2015

The problem in a nutshell is that Social Security’s disability trust fund is running out of money.  The latest trustees’ report projects a reserve depletion date in late 2016.  By law Social Security can only pay benefits if there is a positive balance in the appropriate trust fund (there are two: one for old-age and survivors’ benefits (OASI), the other for disability benefits).  Absent such reserves, incoming taxes provide the only funds that can be spent.  Under current projections, by late 2016 there will only be enough tax income to fund 81 percent of scheduled disability benefits.  In other words, without legislation benefits will be cut 19 percent.

via Warning: Disability Insurance Is Hitting the Wall | Economics21.

Time for truth in Medicare accounting | Other Views |

November 15, 2014

The worst-kept secret on Capitol Hill is that Congress will always, just in the nick of time, pass a doc fix to prevent these payment reductions. This charade results in a multitude of problems.

The Congressional Budget Office is forced to operate under the assumption that Congress will comply with SGR, even though the last 11 years have shown that to be pure fantasy. CBO treats passage of a doc fix as a spending increase. But it’s not, in reality, because Congress always passes a temporary reprieve. Everyone in Washington knows this.

Underscoring this fact, for the first time ever, even Medicare’s own actuaries admitted this year that scheduled SGR payment cuts never would occur. They began factoring that truth into their accounting, noting “it is a virtual certainty that lawmakers will override this reduction as they have every year beginning with 2003.”

via Time for truth in Medicare accounting | Other Views |

Want To Fix The “Doc Fix”? Experiment!

October 27, 2014

The solution to the SGR mess, then, may be simpler than convoluted formulas and political horse-trading. The Medicare Advantage program can serve as a “baseline” for physician reimbursements. For instance, traditional Medicare can take the second-cheapest MA plan in each county across the country, and base physician payments on that plan’s reimbursement schedule, plus any penalties/bonuses required under the program. This would eliminate the bureaucracy of the federal government trying to determine how much physicians should be paid, and for what. Plans in the private sector are clearly already figuring this out, and there’s no sense in reinventing the wheel.But this doesn’t have to happen all at once. Indeed, it would make sense to test such an approach before implementing it across the board. Medicare could pick, at random, a set of counties where reimbursements would be based on private plans for a set period of time. Quality and cost data could then be analyzed to determine whether this method is worth it.

via Want To Fix The “Doc Fix”? Experiment!.

Andrew G. Biggs and Sylvester J. Schieber: The Imaginary Retirement-Income Crisis – WSJ

September 30, 2014

In a 2013 study the Organization for Economic Cooperation and Development compared the incomes of a country’s retirees with the average income in that country. The results are surprising. Despite a supposedly stingy Social Security program and ineffective retirement-savings vehicles, the average U.S. retiree has an income equal to 92% of the average American income, handily outpacing the Scandinavian countries 81%, Germany 85%, Belgium 77% and many others.

In dollar terms, America’s retirement incomes are 53% above the OECD average, second highest in the world. If there’s a crisis in the U.S., the rest of the developed world must be a virtual retirement hellhole. No one truly believes that.

via Andrew G. Biggs and Sylvester J. Schieber: The Imaginary Retirement-Income Crisis – WSJ.

Ryan Leads On Welfare Reform And Fighting Poverty

September 13, 2014

One key reason that poverty stopped declining after the War on Poverty started is that the poor and lower income population stopped working. In 1960, nearly two-thirds of households in the lowest income one-fifth of the population were headed by persons who worked. But by 1991, this work effort had declined by about 50%, with only one-third of household heads in the bottom 20% in income working, and only 11% working full-time, year round.

This was not a matter of the poor not being able to find work. While the economy was chaotic during the 1970s, during the 1980s and 1990s America enjoyed an historic economic boom creating ultimately 50 million new jobs. The proof is in the pudding, or in how people actually voted with their feet. Millions of illegal aliens surged across the border to gain those jobs and participate in America’s economic golden age, with the unemployment rate collapsing to 4.4% under President Bush by 2006.

via Ryan Leads On Welfare Reform And Fighting Poverty.

Crashing Medicare | The Incidental Economist

September 9, 2014

We’ve gone down this road before. In 1972, shortly after a congressional report documented egregious waste and fraud in the young program, Medicare enlisted Physician Standards Review Organizations later renamed Peer Review Organizations to prevent unnecessary hospital admissions. PSROs did what RACs do now: they reviewed claims that hospitals submitted and rejected those that they deemed inappropriate. But, as Tim Jost has observed, “PSROs never succeeded in meeting the expectations of their supporters or overcoming the criticisms of their increasingly vocal detractors.” They saved no money, outraged physicians and hospitals, and embroiled Medicare in protracted litigation.

Medicare couldn’t audit its way out of wasteful spending back then. It can’t audit its way out of it now. RACs are an ill-fitting patch for a system that needs a much more comprehensive fix.

via Crashing Medicare | The Incidental Economist.


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