The fee-for-service system is incredibly popular. Recipients don’t have to think about the costs of their treatment, and they get lots of free money. The average 56-year-old couple pays about $140,000 into the Medicare system over a lifetime and receives about $430,000 in benefits back. The program is also completely unaffordable. Medicare has unfinanced liabilities of more than $30 trillion. The Medicare trustees say the program is about a decade from insolvency.
Recall that when you go to the CMS data site you find that the average expenditure is $10,500 per annum from 65 and the average life expectancy is 12 years. Even for a couple that is $250,000. Now the average contribution, compounded at 5% pa is $180,000 per person, so it is $360,000 per working couple, and more than 70% work.
Thus Brooks is wrong. Why? He got this ditty from someone else and has never checked it. Well it is the Times, that is the way it works.
He concludes:
The fact is, there is no dispositive empirical proof about which method is best — the centralized technocratic one or the decentralized market-based one. Politicians wave studies, but they’re really just reflecting their overall worldviews. Democrats have much greater faith in centralized expertise. Republicans (at least the most honest among them) believe that the world is too complicated, knowledge is too imperfect. They have much greater faith in the decentralized discovery process of the market.
I’d only add two things. This basic debate will define the identities of the two parties for decades. In the age of the Internet and open-source technology, the Democrats are mad to define themselves as the party of top-down centralized planning. Moreover, if 15 Washington-based experts really can save a system as vast as Medicare through a process of top-down control, then this will be the only realm of human endeavor where that sort of engineering actually works.
Yes, there is no clear proof of which system is best. Yes this seems to be becoming the defining issue. Not war. not taxes, not the economy or debt, but Medicare. The shame is that most who debate have no handle on the facts. And I thought Brooks was a follower of Hume.
As Brooks was quoted in The Guardian:
Brooks hails British rather than French Enlightenment thinkers as the guys who really understood what makes the social animal tick. While Voltaire, Condorcet and Descartes used reason to confront superstition and feudalism, thinkers across the Channel – Brooks cites Burke, Hume and Adam Smith – thought it unwise to trust reason. Rather, and here Brooks quotes Hume with approval: "Reason is and ought to be the slave of the passions."
But Hume was a believer in the observed, not the reasoned. Thus the difference. Rationalism versus Empiricism. To be an Empiricist as Brooks alleges one MUST deal with the facts, one must go beyond hear say and discover what the facts are. Their interpretation may take on some Humean form of self delusion but at least one deals with facts.
Thus my suggestion:
1. Go to CMS and especially the annual report from the Medicare Board and determine the cost per subscriber per year.
2. Then go to the Census data and determine the survivor rates.
3. Then go to the same data and determine what people made, the advantage of Medicare is that people pay a fixed percent of their total salaries! Not like taxes or SSI. In fact of one takes all salaries and then takes 3% that is what has gone into Medicare.
4. Then take that on a per person basis. Not what Brook did assume that it was a single worker family who made it to $45,000 pa by age 65! Give us a break, how few are these people. 70% of people are dual income, and $45,000 pa in 2011 for a 65 year old probably means a lot, the bottom 10% of all salaries!
5. Then do the analysis as I have done. Hume did teach us something, facts count!
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