Thursday, April 28, 1994


Health Reform Should Not Be A Free Lunch

Reading the March 1994 AARP Bulletin I've been once more struck by the awesome power of my Golden Age crowd. President Clinton came pleading for the AARP endorsement of his health program, at a conference in Edison, N.J., and indicated that he plans to have the long-term-care (LTC) and prescription drug benefits included. But the tough AARP National Legislative Council urged that AARP support no proposal that fails to include universal coverage, LTC and prescription drugs "It is now or never,... gain these reform elements now or your'e not going to see [them] for another decade, maybe even two," to quote a key delegate. Good surmise, tough attitude... but no one qoutes cost figures. Obviously, the idea is to get these coverages free.

However, a column or so later, AARP Exec Director Horace B. Deets gave the numbers. He felt that the average nursing home care cost of $35,000/yr is beyond most people's reach, and stated that in total some 7 Million Americans, 40% of them below age 65, need long-term care. So let's do some arithmetic. A simple multiplication shows that 7M times $35K makes an annual cost of $245 Billion, less $60B for current nursing home costs. To this we add about $40B, or 2/3 of the annual $60B prescription drug cost. The total is $1,065B, jumping medical expenses from 14% to nearly 18% of the GDP. And if a few million among our 36M long-suffering brothers and sisters surviving below the powerty line should get their doctors to declare them in need of LTC, the increment could double. If a 75+ year old cannot testify to a good reason that would qualify him for nursing home care, there is really something wrong with him.

Now let's think about the additional cost of universal medical care, which by simple arithmetic should add 15% or $126B to the bill (the 37% uninsured are 15% of the population), for a grand total of $1,091B, or 20% of the GDP. How is it all that gonna get paid, and by whom? All of these political people who talk about universal health care, you are just a bunch of slogan salesmen. Where is the price list, the cost/benefit study? Am I the only one who reads statistics and can use a $10 hand calculator? Am I the only one who can put straightforward sums on the table?

Our AARP crowd is also a lot like the politicians, trying to get free benefits. The AARP volunteers are on the air, calling radio talk shows and breathlessly asking that all and sundry write to their comgressmembers, demanding LTC. But do the retirees truly deserve the entitlements? The AARP Bulletin in January shows that 12.9% of them are below the poverty line, they are still better off than the general population, which has a rate of 14.5%. And while the 75+ olds are slipping down further, it is "because more than 20% of the [slipping group's] annual incone is derived from investments and CODs, and interest rates are low." Come now, one can invest in higher risk securities than CODs without taking huge risks. One does not have to hide the principal in low-return investments as a heritage to the kids, meanwhile demanding that the taxpayers at large pick up the bill for the increased cost of living.

As is, there is a great tendency for the elderly to give away their money and strip themselves bare to qualify for Medicaid, should the need for nursing home care arise (if you want to know how to qualify, it has to be done 30 months ahead of the confinement). That also comes under the heading of sticking it to the taxpayers.

With that kind of attitudes on part of the seniors, no wonder there is some talk of intergenerational war. Young people fear that the Social Security will not be there when they will need it.

What should be done? Well, the seniors should opt for more home care, which is much better than the nursing home and less expensive. Moving retirement age to 70 will help (that is due by 2029). Meanwhile, our gang should hold off demanding more entitlements, and ask for a cost analyis. Remember the catastrophic insurance legislation of 1988? The AARP crowd was material in killing the law when it turned out to be too expensive. Do we think that society at large will really give us free LTC, when the costs become apparent? We should show an attitude of willingness to pay at least part of the LTC costs, if we want the benefits. We may have paid our dues, but we should not try to walk away with all the toys. There should be no free lunch for the select.

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