Social Security and ACA

[The Minsky Moment]

Social Security was sold to the public as an insurance program.  That is still the way it is perceived by many today. 
It is not so of course.  In reality, it is and always has been a transfer of funds from young, middle class working people to the elderly, pure and simple.  The "trust fund" is just a marketing gimmick, a set of accounting fictions where different branches of the federal government write IOUs back and forth to each other.  The program does contain a financing element, however, in the form of a tax that falls on wages but no other form of income, has no deduction, and stops at an income cap.  Easily the most regressive feature of the US tax system, and again the burden falls hardest on the working middle class.

Notwithstanding all this, Social Security has endured for decades, is popular with the electorate and has became the untouchable "third rail" of US politics.

ACA is also marketed as an insurance program.  But like social security what it really involves is transferring costs from older, sicker people, to younger, healthier people. The burden, like social security, mainly falls on young middle class people.  The financing mechanism -- other than the notorious mandate tax -- is even more well hidden than with social security but the effect is the same.

The similarity in the use of deception to conceal the true effects of the program is interesting.  In the case of Social Security, the deception has worked quite effectively for a long time, even though it isn't too hard to see what is going on.  In the case of ACA, however, the deception has worked less well, probably because for those negatively affected there is a direct increase in costs that is more obvious thant the inter-temporal subsidy game going on with Social Security.  Still it is interesting to see the different ways the programs are perceived.  And if ACA sticks, then the deception may become more effective because people will no longer be able to "see" the one off increase for some.

It is easy to sling arrows at ACA.  I am not a fan.  However, if we start with the premise that the following two concepts are popular and desired by most Americans:
1)   a private system for insurance provision that maintains the key features of the current employer-based system, and
2)   non-discrimination against higher risk  people that have little control over the nature of risk,

then anything you design that makes any sense is going to end up looking a lot like ACA.

Some people might say that #2 should be dispensed with but that raises lots of problems of its own in terms of fairness and practicality.
Some people might say that #1 should be dispensed with.  I am inclined to agree there.  But we tried that route and the majority of US opinion is too against to pull it off.

So that leaves ACA or something a heck of a lot like ACA.  I am open to hearing other ideas, really.  But haven't heard any yet.
Bottom line: if the program survives its implementation teething problems, I suspect it will eventually be accepted as the new normal and stick, kind of like social security has.

[The Brain]

Really?

[Admiral Yi]

A reasonable alternative would have been to subsidize those with pre-existing conditions and leave everyone else alone. 

Alternatively, mandate high deductible catastrophic insurance for everyone.

[frunk]

On the whole I agree, although I'm starting to think the way forward is to gradually extend Medicare to greater segments of the population until it includes all citizens.  Right now it covers those with the expected and expensive medical costs, so I don't see why it wouldn't work to cover those who wouldn't be using it as much and get rid of all this other insurance nonsense.

[The Minsky Moment]

A reasonable alternative would have been to subsidize those with pre-existing conditions and leave everyone else alone. 

Alternatively, mandate high deductible catastrophic insurance for everyone.

#1 I don't think would work politically.  But it would meet the conditions.
#2 is just ACA with a lower bar for qualifying plans - which could very well happen if Congress moves in that direction.

[Admiral Yi]

#1 I don't think would work politically.  But it would meet the conditions.
#2 is just ACA with a lower bar for qualifying plans - which could very well happen if Congress moves in that direction.

What do you mean by work politically?  You mean achieve the fabled consensus that you pooh-poohed earlier?

#2 would be ACA without the various cross-subsidies.

[mongers]

JR, it's been going for a long time, it's working and so sort of undermining you argument, as those young hard working people have grown old and are now claiming these benefit, in turn other young people have come along to fund it ?

Or am I missing something ? 

[The Minsky Moment]

What do you mean by work politically? 

I mean pass Congress and be signed by a President.
Liberals won't like it because its not universal.  Conservatives because it looks like welfare for "takers".

[The Minsky Moment]

JR, it's been going for a long time, it's working and so sort of undermining you argument, as those young hard working people have grown old and are now claiming these benefit, in turn other young people have come along to fund it ?

Doesn't change the fact that any given point in time, there is a transfer.  It's not a true insurance program.
This is not necessarily a criticism of social security.  It is a criticism of the way it has been represented.  Also of the way the tax is levied by that is a different point.

[garbon]

Working middle class?

[Admiral Yi]

I mean pass Congress and be signed by a President.

Well with the current Congress and the current president nothing would pass.

Back at the beginning of Obama's first term they would have passed whatever he told them to.

[Razgovory]

 

[Ed Anger]

 

[derspiess]

[MadImmortalMan]

JR, it's been going for a long time, it's working and so sort of undermining you argument, as those young hard working people have grown old and are now claiming these benefit, in turn other young people have come along to fund it ?

Or am I missing something ? 

You're missing that it's been passed for some time but hasn't actually been in implementation. It's still getting started.