Saving What You Don’t Have

[mykevermin]

[quote name='Greg Saunders']Want a good example of how out-of-touch the President is? Well, here’s a preview of his State of the Union address :

President Bush is expected to promote a series of health care initiatives in his State of the Union address tonight, including new incentives for workers to choose coverage that gives them more control over their medical spending.

Bush’s proposals will center on health savings accounts, which allow people to set aside tax-free dollars to cover medical expenses. These accounts, which were established under the Medicare Modernization Act passed in late 2003, are tied to high-deductible health insurance policies.

This concept is designed to make people more prudent health care consumers because they spend more of their own money. The accounts reflect Bush’s philosophy of an “ownership society” in which individuals take greater control over their personal health and wealth.

Only a rich kid like the King George would ever think up something like health savings accounts. In his world, it makes perfect sense for Americans to save up for something they can’t afford. Hell, he’s never had to worry about money, why should we? Well, here’s a good reason to worry :

Americans spent $42bn (£24bn) more than they earned last year, turning the annual US savings ratio negative for the first time since the Great Depression.
. . .
The savings ratio fell to minus 0.5 per cent last year, meaning Americans not only spent all of their after-tax income but also had to increase their borrowings or plunder their savings. This is the first time theratio has gone negative for an entire year since 1932 and 1933, when the US was struggling to cope with the Great Depression.

The savings ratio is seen as a key economic indicator as it shows how vulnerable households are to a sudden shock such as a surge in interest rates or unexpected redundancy.

Since our trust fund baby-in-chief is fond of recycling the same crappy proposals over and over again, I hope you’ll forgive me for doing the same by reposting part of what I wrote the last time he tried to sell this utopian garbage :

I wonder if Bush has ever had to lay all his bills out on the kitchen table and figure out which ones he can pay immediately and which ones can wait until the next paycheck? Or if he’s ever lived in an overcrowded apartment with hand-me-down furniture, eating the same thing six days a week because it’s cheaper? Or if he’s ever had to settle for a job slightly less shitty than the one he had in high school because there weren’t any jobs in the field he majored in? Of if he’s gone through the process of figuring out which generic brand products at the grocery store are as good as the name brands and which ones aren’t?

As most of you know, I’m not just describing poverty here. This is normal life for many Americans. Some live paycheck to paycheck, while others are able to pinch enough pennies to save a few bucks. Either way, most people don’t have thousands of dollars to spare.

Practically speaking, savings accounts for retirement and heath care a huge mistake, but for entirely separate reasons. With the latter, the rub is that health care is expensive. Let’s say you have an medical emergency with costs in the $20-30K range. How long would it take you to save that much? A few years? Even with the vague incentives, we’re still looking at a plan that’s the equivalent of asking every American to buy a new car that he/she may never drive.

That same principle holds true with Republican proposals for education and retirement savings. Do they honestly believe we’ve all got extra income sitting around that we can throw in the bank? It must be nice to grow up in the GOP world of disposable income and “personal responsibility”… [/quote]

Links from the article:
SOTU Preview: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/01/31/BUSHHEALTH.TMP
Negative Savings in 2005: http://news.independent.co.uk/business/news/article342157.ece
Blog post itself: http://thismodernworld.com/2649

I had heard about Americans delving into negative spending last night, but I just couldn't believe that we behave no different from the government we elect. This ought to serve as undeniable proof that health care reform will be entirely hollow if we push for savings accounts - for 's sake, we can't even venture into positive savings in the absense of such a health care model!

 

[dtcarson]

Hmmm......I'm not 'rich' but I manage a health care savings account just find. Granted, I don't have 25k in it, but it's there and can cover the majority of my family's ongoing med expenses.
Practically speaking, health care savings accounts or FSAs are an *excellent* idea, especially if you want to try to pay your bills, and not risk the new heightened bankruptcy rules.

I agree that the negative savings ratio is a very bad sign. Of course, continuing tax cuts, thus letting people keep more of their own money, will help. As will 'practicing what they preach', and getting the government to rein in and stop spending so profligately on things that aren't even its purview.

This concept is excellent "The accounts reflect Bush’s philosophy of an “ownership society” in which individuals take greater control over their personal health and wealth". It's much easier to spend someone else's money than your own. If it's your money you're trying to stretch, you'll use it much more conservatively. I think a big part of the problem is that American society has moved away from respecting delayed gratification. We see it everywhere, from the lottery-like stock market of the 90's, to full financing/no down payment auto sales, to 'Don't wait till marriage, go ahead and be promiscuous.'

The point of savings accounts is not that you have 'extra income' to just 'throw in thebank'. It's that you save a little bit every week/paycheck/month as part of an ongoing effort, so when you need that money, it's there. It can be a challenge, yes, especially if you're already overextended. And you have more motivation to do it if it's your money, and if you know the impact of not doing it [ie, putting a car repair or hospital bill on a 21% credit card instead of your savings, which you continually add to]. We did this a little while ago--in addition to putting money in my 401k [which, admittedly, not everyone has access to--although if you have access to one, and your company matches contributions, it's stupid not to do it], automatically depositing a percentage into our savings account. It's there if we need it, but we don't spend it on 'normal' everyday stuff. So far we've dipped into it once, and put that money back in. It's nice seeing a balance grow, albeit slowly, and knowing it's there "in case". And virtually everyone who has an income, can do it, if they start small. If the esteemed Greg Saunders doesn't understand how savings works, then he's already too far gone into the entitlement, government-will-provide-for-me socialist attitude many liberals want to foster.
I'll admit, surely there are people who are *really* starving and have *nothing* and no income. No, savings accounts won't help them. But are they paying for medical care anyway? And the core concept of saving is an important one, and valid for everyone. Most of 'the rich' didn't get that way by hitting the lottery, they either had a great idea that others were willing to pay for, or used their money wisely [including various forms of savings and investment], or both.
And yes, I have done all of Greg's 'normal life' things. Quite recently, in fact. His argument seems to be that since we can't all put 25k in an account, we shouldn't do it at all. A typical liberal all-or-nothing argument. When in fact, when talking savings, the idea should be 'save as much as you can, till you can save more'. And he glosses over the fact that a main benefit is a tax savings, which means the person saves even more, and that the core issue is the government taking money that's not theirs, sometimes 50% or more. I personally saved about 1500 bucks in taxes last year due to FSAs, and I'm set to save more this year. Set a goal, see the benefit, and buckle up to do it. [Again, I know this won't help the single mother with nine kids living in the hood or the trailer park. But nothing is a panacea for everyone, and if she can manage to save five bucks a week, the habits are good.]

 

[alonzomourning23]

This concept is excellent "The accounts reflect Bush’s philosophy of an “ownership society” in which individuals take greater control over their personal health and wealth". It's much easier to spend someone else's money than your own. If it's your money you're trying to stretch, you'll use it much more conservatively. I think a big part of the problem is that American society has moved away from respecting delayed gratification. We see it everywhere, from the lottery-like stock market of the 90's, to full financing/no down payment auto sales, to 'Don't wait till marriage, go ahead and be promiscuous.

One of the major problems is getting people with problems to a doctor. For various reasons people don't go even when they have symptoms. This will make them even less likely to go.

I'll admit, surely there are people who are *really* starving and have *nothing* and no income. No, savings accounts won't help them. But are they paying for medical care anyway?

Yes and no. If they go they are going to be stuck with huge bills, therefore many don't go, and therefore many don't pay. Then there's the whole quality of health insurance issue, which can leave many people having to pay for what they need or not get it.

'Don't wait till marriage, go ahead and be promiscuous.'

That (and the overriding concept your arguing of instant gratification) has always been true. We just didn't verbalize it before, particularly with sex.

Granted, I don't have 25k in it, but it's there and can cover the majority of my family's ongoing med expenses.

The last time my father was hospitalized he ran through that much in medication alone every 5 days, and he was there a month.

 

[bmulligan]

[quote name='alonzomourning23']One of the major problems is getting people with problems to a doctor. For various reasons people don't go even when they have symptoms. This will make them even less likely to go. [/quote]

One of the major problems is people going to the doctor when they have the sniffles and a cough, or their finger hurts and they want antibiotics. Or when medicare and ppo patients go to emergency rooms instead of their plan doctors for routine treatment for their chronic disorders.

[quote name='mykevermin'] Practically speaking, savings accounts for retirement and heath care a huge mistake, but for entirely separate reasons. With the latter, the rub is that health care is expensive. Let’s say you have an medical emergency with costs in the $20-30K range. How long would it take you to save that much? A few years? Even with the vague incentives, we’re still looking at a plan that’s the equivalent of asking every American to buy a new car that he/she may never drive.[/quote]

But at least you'll be alive to not drive that car you paid for. 100 years ago you would just die from a heart attack, nuff said. Now you have the opportunity to live 20, 30, 40 years after an MI and boo, hoo, you'll have to pay for it. It's a small price to pay for something that's priceless. You should be thanking god for the opportunity to pay for every precious minute you have on earth with your loved ones and not bitching because someone else won't foot your bill.

You're one of those have-your-cake-and-eat-it-too kind of people, myke. You want to be able to ride the pony anytime you want but don't want to clean up the shit and pay for his food. I don't think you understand the consequences of this "free rider" program, it's ramifications, scope, and limitations.

 

[mykevermin]

[quote name='bmulligan']You're one of those have-your-cake-and-eat-it-too kind of people, myke. You want to be able to ride the pony anytime you want but don't want to clean up the shit and pay for his food. I don't think you understand the consequences of this "free rider" program, it's ramifications, scope, and limitations.[/QUOTE]

Well, if it's cake that I'm not expecting to eat, or a pony I had no prior intention in riding, then yes. While I believe people ought to pay for a portion of their medicine (the corollary of people not going to a physician due to expense is people going for superfluous things if their copay is miniscule), I do believe that society (whether it is the government or your employer) ought to bear the burden of some health problems. Now, say you're a lifelong smoker; I'm not too keen on paying for your treatment when you inevitably develop a myriad of health problems. On the other hand, separating self-induced health issues from work-related health issues (and even family-related health issues) makes this a very muddy concept to try and cleanly separate.

I firmly believe that employer-mandated health care is a vastly superior option to state-sponsored medicine. To satisfy you, it's in the hands of private industry and not in the government; to satisfy me, it would hopefully avoid the sheer idiocy of programs (such as the new medicaire plan's "donut hole" of assistance). The downside of that model is the variance from employer to employer, of course. I look at it this way: if you don't think you should be paying for medical bills of people who are full-time employees that make so little as to qualify for government assistance (the data behind the mandated Wal-Mart health care in Maryland), then it should be acquired somewhere.

Should the government force savings on people, so they can pay for medical expenses?

Should people under a certain yearly wage get free medical care up to $X?

Should we continue to allow people to "finance" their medical coverage to the point of bankruptcy, where they will find out how much damage the new bankruptcy rules cause?

I'm personally more hateful of the pharmaceutical industry due to the amount spent on advertising and marketing - their market is client-delivered, and not something that demands advertising. Moreover, you and I pay for that advertising every time you and I pick up a prescription. OTC? Fine. Prescription? Nope.

 

[alonzomourning23]

[quote name='bmulligan']One of the major problems is people going to the doctor when they have the sniffles and a cough, or their finger hurts and they want antibiotics. Or when medicare and ppo patients go to emergency rooms instead of their plan doctors for routine treatment for their chronic disorders. [/QUOTE]

Funny, you complain about the minority of people who go to the doctors for everything, yet ignore all the people who ignore the pains in their testicles, difficult breathing etc. ya know, some of the symptoms for things such as cancer. Not seeking early treatment is one of the reasons so many people die of diseases like cancer. Most people just assume it's nothing, or it will go away. Way too many diseases are allowed to progress that have very high rates of recovery if detected early. I doubt you'd get doctors in hospitals to agree with you that people come too often.

That's the problem with a lot (not all) of the people who oppose programs designed to give aid to people, they focus on the minority who abuse it instead of the majority who benefit and need the services. It often seem more personal disgust at those people more than anything else.

 

[dtcarson]

Actually, the issue of 'too much care' is an important and valid one. Lots of people, esp. those with insurance, do visit the doctor for 'every little sniffle', or want [and are given] a wonder drug for anything, rather than changing their habits/lifestyle. And doctors, in this hyperlitigious society, often perform every medical test they can, because insurance pays for it [or some of it], and even if not, and the person can't pay, it's cheaper to write off some tests than be sued for missing that one little thing.

Forced savings? Sure. We have that now, to an extent--I am 'forced' to save money in Social Security, which I am highly unlikely to ever see a cent of my 'investments'. The government mandates that we wear motorcycle helmets and seatbelts, so it could certainly mandate some 'financial' safety in addition to physical safety.

 

[alonzomourning23]

How do you mandate financial safety with the millions of people living paycheck to paycheck, barely affording (if even) to pay there bills.

Though I think forced savings is a world apart from forced physical safety.

There is too much care along with simultaneously too little care in hospitals. Some treatments that may work but have varying drawbacks (ie. expensive and don't work much of the time, but work wonders others) aren't used. They often do utilize many checks just because it's not costing anything. At the same time not taking such measures will increase the amount of people who need to spend massive amount of insurance money to cover the cost of the more progressive disease, or possibly even die. It's not quite true preventative care, but having people get checked more than is required is a great way to prevent minor problems from becoming serious and extremely costly. So in that sense the too much care is still beneficial. And when you see half the problems older people get, the ones who were smart and went to the doctor early are often the ones who are able to continue living a normal life, or simply continue living.

The problem of lack of treatment, or caregivers being told by insurance companies what treatments to use, is serious. This results in preventing treatments from being tailored to individual needs, or from using treatments may work better for that person than another but overall aren't as succesful as another type. This is a particular problem in psychology, but is also a major one in hospitals. If you ever had family members hospitalized with major diseases or for long periods you quickly learn all the things that insurance won't pay for, and the difference between high quality insurance, low quality insurance and no insurance.

 

[dtcarson]

For those people paying taxes, a simple tax cut or credit with the stipulation that that money be invested in certain places/accounts would work. For those ultrapoor paying no taxes, well, I would not be averse to a slight increase in aid payment, again with that stipulation, as long as the recipient attempts to live a healthier life [stop smoking, don't do drugs, exercise thrice a week if physically capable].

Forced savings actually makes more sense than forced physical safety. Forced savings would recognize that financial hardship or inability to pay medical bills can affect lots more people than just the patient. Family, friends, doctors, other people who aren't getting treatment, people paying insurance, etc. Forced physical safety implies, contrary to liberal abortion supporters who cry 'My body!' when wanting to destroy a separate entity, that the state can tell you what to do with your body, almost as if you are chattel.

 

[alonzomourning23]

It's hard to present the other sides view when you don't understand it. Supporters for the right to abortion generally do not view it as a separate entity, that's language used by abortion opponents. That logic cannot be factored into their reasoning because they do not support that belief.

But the state is justified, in my mind, in regulating things such as a seatbelt because it is of minimal inconvenience to the person and prevents, or reduces, costly hospital stays and death.

 

[mykevermin]

[quote name='dtcarson']Forced savings? Sure. We have that now, to an extent--I am 'forced' to save money in Social Security, which I am highly unlikely to ever see a cent of my 'investments'. The government mandates that we wear motorcycle helmets and seatbelts, so it could certainly mandate some 'financial' safety in addition to physical safety.[/QUOTE]

Well, SS is more of a collective "take a penny, leave a penny" mentality - you don't receive what you put in, essentially. Considering the retiring baby boomers, stagnant wages despite inflation, and the reduction in lower class labor (outsourcing of manufacturing and soon many telephone jobs) create a dire scenario for SS. The government will go further and further into debt trying to cover the asses of all of us when we retire; none of this is to say, of course, that I support the "investment" model Bush proposed last year. I do, however, think that it needs some severe revamping (including, but not limited to, taking out taxes on more than the first $90K of income).

 

[bmulligan]

Social Security is not an investment program, unless you see it as investment in the debt of the federal government and therefore an investment in the US economy. SS is an insurance program.

 

[elprincipe]

[quote name='bmulligan']Social Security is not an investment program, unless you see it as investment in the debt of the federal government and therefore an investment in the US economy. SS is an insurance program.[/QUOTE]

SS is a Ponzi scheme that asks each generation to fund the previous one's retirement, then extort the same money for their own retirement from the next generation...all the while the government getting more and more bloated and inefficient, levying more and more taxes, and creating more and more of a burden on younger workers and the economy in general.

 

[bmulligan]

[quote name='elprincipe']SS is a Ponzi scheme that asks each generation to fund the previous one's retirement, then extort the same money for their own retirement from the next generation...all the while the government getting more and more bloated and inefficient, levying more and more taxes, and creating more and more of a burden on younger workers and the economy in general.[/QUOTE]

Yeah, pretty much. All the money taken in tax for social security is 'borrowed' by the congress to pay for this year's budget. Congress gives the SSA an IOU for the money, also known as a 'treasurey security'. It is a treasury bond. A treasury bond is an investment in the debt of the united states. The neat thing is that it never needs to be paid back. Current benefits are paid out of the general fund budgeted by congress. So, yes, it's a ponzi scheme.