Thursday, October 31, 2013

Social Security announces COLA; similar increases for federal retirees; more on the 35 highest years rule

Whatever the doomsday predictions of Social Security cutoffs a few weeks ago during Congressional brinksmanship, now we’re reassured of a 1.5% COLA increase in benefits starting January, 2014. 
Social Security (whose website is rather popular, in great contrast to Obamacare’s “”) has an account of the modest COLA increase here
Eric Yoder, of the Washington Post, discusses the varied Social Security benefits for federal employees on p. B4 (“The Federal Page”) of the Post Thursday, October 31, 2013, where the discusses COLA and CERS and FSRS, systems which replace some or all of Social Security income. 
In 1971-1972, when I worked for the Navy Department, I contributed to the Federal retirement system but did not pay FICA taxes.  That may have reduced my benefit slightly by lowering the average of my top 35 years (as explained here at the “About” site, link ).  These years get replaced by years of lower wages, like when I worked as an instructor at the University of Kansas, or later when I worked as a caller or debt collector, or substitute teacher.  Still, my benefit, reduced further by starting at age 62 (because of the way my employer handled Social Security offset) is significant to my financial stability at age 70.
It’s not clear that those workers who benefited for two years from a 2-year FICA payroll tax cut could eventually see reduced benefits, especially after Congressional reform.  I’ve advocated that Congress should protect legal ownership of some benefits based on lifetime FICA contributions (including legal spouses in some cases).  But that would be a somewhat different actuarial concept from the “top 35 years” notion.  Reform, in giving legal protection of benefits already earned from future partisan battles, is much in order during the budget negotiations that must be completed by Dec. 13.  

Wednesday, October 23, 2013

My own annual Medicare physical approaches, momentum is my best ally, as always

My own annual Medicare physical comes up pretty soon.  There’s the 12-hour fast, the early morning blood tests.
No, I haven’t even done the colonoscopy yet.  I had a high PSA in 2010, but it was back down in 2011 and 2012, probably because the stress of eldercare was gone, and because when I’m alone I eat less fat.
I think that for someone without a lot of personal social support, momentum is the best strategy,  Lots of tests can find things, that can lead to more tests, biopsies, surgeries, hospitalizations, infections, a vicious cycle, let alone the waste to Medicare.
Mehmet Oz has even said that he doesn’t like to do open heart surgery on someone who doesn’t have a partner (preferably marriage) to live for who “loves you back”.  I don’t like the idea of having a relationship “to be loved back” – but that’s what “in sickness and in health” means.

There is something to be said for more aggressive medical testing, though, to find out why I was “behind” as a boy.  Was it neurological, like a very mild form of autism?  Was it hormonal?  Circulatory?  Given my karma, I probably owe the world a willingness to delve into this to find out.  

Sunday, October 20, 2013

Nursing home patients find trust funds embezzled by employees, sometimes

Employees have stolen money from the trust funds of nursing home residents, according to a stunning story Wednesday, Oct. 16, 2013 in USA Today, on the front page, in a “USA Today Investigation” story by Peter Eisler, link here
The story starts with the case of Lee Martin at the Vicksburg Convalescent Center in Mississippi.  Money had been diverted to buy jeans for a patient who had lost both legs, possibly to complications of diabetes.

The story reiterates the pressure on family members not to place non-intact elders (often with Alzheimer’s) into nursing homes, because of fear of abuse.  Hiring 24 hour care costs about $13000 a month; a nursing home typically costs about $7000 a month.   Hiring a live-in costs much less but raises other ethical questions.  I recall lots of discussions with the hospice social worker during the last year of my own mother’s life, 2010.  

Wednesday, October 16, 2013

AARP lobbies against COLA cuts in Social Security

AARP has a short posting on the proposed COLA adjustments and chained CPI proposals, which will certainly come up in budget negotiations this winter.  It has a chart on how the COLA proposals “could affect you”, here
Of course, changes in the COLA formulas could be implemented gradually, and will seem less drastic than many other proposals that will come up with entitlement reform, like means testing, some of which could come quickly, and which might even have been proposed in a default environment as an emergency.

So it’s not possible just to protect one group’s interest when there is a crisis.  But this crisis was self-inflicted. 

Wednesday, October 09, 2013

Bank of America and Merrill Edge offer a half-hour video on the future of Social Security

The Bank of America is presenting a 29 minute video to visitors who sign on to its website, titled “Your Money At Risk”, based on a Merrrill Edge webast, with this URL.

The webcast explains the long term outlook for Social Security. 

One-third of the beneficiaries of Social Security are not retired, which means that these must be on the disability program.  That would mean that your FICA taxes support this disability insurance also, so not all of your FICA contributions would support an earned retirement “annuity” if politicians look at it that way.

If you take Social Security at age 62, you get about 75% of full retirement age benefit for life, which means it results in diminished lifetime payments at about age 78.  If you can wait to age 70-1/2, you get 132%.  43% of beneficiaries start at 62, and about 75% start early.

If you reach age 70, a male has a slightly less than 50% chance of reaching age 92, a female slightly more.
Social Security has an actuarial information page here

Merrill Edge has a website with this video and others, here.

The video explains that Social Security can pay 100% of promised benefits until 2033, but then would have to cut down to 75% of benefits.  It talks about various ways to improve FICA tax collections, and reducing outlays by raising retirement ages or increasing the number of years of work experience evaluated.

The video mentions the idea of a total economic collapse at one point, as the only event that could stop Social Security payments to current beneficiaries (who would include disabled as well as retirees).  

Monday, October 07, 2013

"Better off" Social Security beneficiaries (and future recipients) could be cut off suddenly as part of GOP strategy to mitigate debt "default"; Is Trust Fund a "real creditor"?

If the debt ceiling is not raised and if indeed the federal government is not able to pay all bills on time starting in late October (or probably November 1), some current and future Social Security beneficiaries could lose their benefits forever, of have them reduced, based on immediate but permanent means testing. 
Here’s why it could happen.  I had covered this idea with a blog posting here on January 16, 2013, coordinated with a posting on January 15, 2013 on my  Issue blog, where I linked to a Wall Street Journal article by Rivkin and Casey.   That particular law firm argued that, according to the Constitution, only public debts must be paid.  That generally means interest (and principal, with caveat) on bonds owned by individuals, companies, organizations, and especially outside of the US (like China).  If the president must borrow under the 14th Amendment to pay these, he very likely has the power to do so.  The law firm argues that there is no constitutional duty to continue paying entitlements, even though they were promised.  Failing to pay them as promised so may sound grossly unethical or unfair, but the president (or Treasury) cannot pay them after running out of money without permission from Congress.  The courts are likely to concur with this position.  Continuing to pay entitlements, even those that had been promised, becomes a matter of political pressures, as do most issues.
But enriching this debate is the idea that Social Security is a bondholder.  Failure to pay the entire amount – the next big repayment to the Trust Fund is due Nov. 1 – technically constitutes default.  But the rest of the world looks at this as an internal matter.  Markets would not be affected by a default on the Trust Fund as it would on a default to China.  This sounds offensive, but it is true.  In fact, some parts of the world (most recently Russia) look at our entitlement mess as a sign of evasive, non-committal personal morals.
There is a good legal question as to whether the president has the authority, under the 14th Amendment, to reimburse the Trust Fund, without permission from Congress.   A couple of postings by law professors from California in the New York Times in January maintained that he would.  Medicare is even murkier, but it’s possible that similar arguments will be made.  Even if the Social Security Trust Fund is a legal bond holder, investors overseas could see it as a largely internal "funny money" matter.  The Wall Street Journal has already hinted at this idea when discussing past proposals (like Toomey's) to guarantee the liquidity necessary to pay off bondholders if the debt ceiling is exceeded.  

If in fact the administration cannot make its full repayment to the Social Security trust fund, Congress could move quickly to lighten the burden on Social Security by cutting off at least better off beneficiaries. (The House, of course, would have trouble getting the Senate to go along with this, Ted Cruz notwithstanding.)  The only ready-to-use tool available for emergency means testing would be income tax returns.   In the past, in my own life, I’ve met people who want to expropriate “inherited wealth”, but it would not be very easy for the federal government to base such a scheme on accumulated wealth, as opposed to income, very quickly. 
It’s important to remember that, according to Supreme Court rulings in the past (Flemming v. Nestor), social security recipients have no contractual “ownership rights” to future benefits based on FICA "contributions".  Legally, Congress can not only delay them (by upping retirement ages) but in a national emergency (even if self-inflicted) also cut them off  (for current and future beneficiaries).  Conservatives have actually used this reasoning to mitigate the effects of default, and often privately recommended that better-off Americans move their money overseas (as many of them do themselves).  On the other hand, George W. Bush’s neocons proposed privatization to protect legal ownership of benefits, as have libertarian think tanks like Cato.  It would be more in classical GOP spirit to propose accounting of the actuarial value of FICA “premiums” (taking out the startup and disability insurance component – ironically mandatory and uncontroversial) and guaranteeing them to all current and future beneficiaries, but immediately means-testing the rest.  
Back in the 1990’s, the now late Harry Browne of the Libertarian Party did warn that, for freedom, a generation of people would have to give up their social security benefits, a one time shock. I didn’t take it seriously then.
My next social security deposit occurs on Oct. 9. I’m even doing a withholding tax.  It could  be my last benefit check ever if this analysis is correct and the worst happens.  There is a silver lining of sorts, from corporate America’s old “playbook”.  That is, I took benefits early, at Age 62, starting in September 2005.  Were there to be a cutoff, I would have accumulated more than I could have if I had waited to full retirement age at 66-1/2.  And I could have wound up with zero had I waited until 70-1/2.  This sounds appalling, but legally I may have made the right choice.  I can recall after “retiring” from ING with a layoff, that HR and the outplacement companies recommended taking retirement early, to give people more time to work on what they wanted to do, and fend off pressure to get into less desirable jobs (that is, the hucksterism that is so common).  Companies built their pensions around the idea that employees take Social Security early and many defined benefit pension plans had Social Security offsets which were predicated on this strategy.  So people on pensions built this way get hit twice, but legally there could be nothing they can do.  It’s all “political”.  
Atlantic has an analysis by Matthew Brian that calls a potential debt default “a crisis if we’re lucky and historic calamity if we’re not” here.  But the worst of the calamity is long term, that the US becomes perceived as a cronyistic “banana republic” which is no longer safe enough for investment because moral failure of the people allowed them to be taken over by self-serving special interests. 
There is a hard edge within the “Tea Party” that opposes not only “Obamacare” but entitlements in general.  It maintains that care of the vulnerable belongs in families and communities and not with government at all.  It sounds incredible when you look at the fact that most of the western world uses public funding for a lot of healthcare, but conservatives are quick to point out that “demographic winter” is deep-sixing economies in Europe.  If we could go “cold turkey”, there might be a lot of personal sacrifice, but future generations would have it better.   Conservatives make the argument that we don’t care enough about future generations, particularly by not being willing to take on the “responsibility” of having enough children, but then they contradict themselves by denying global warming. As shocking as it sounds, this sort of thinking pervades Russia’s recent anti-gay laws.  (Michele Bachman and Valdimir Putin think a lot alike.)  This sort of thinking has profound meaning for how we perceive “family responsibility” and how much of it is separate from just choosing to have children. It certainly sets the granularity of individualism.  There was a New York Times article Oct. 5 that touched on this “natural family” idea by Jonathan Wiesman Oct. 5. 
It’s hard to see any radical GOP endgame that makes a lot of sense. It reminds me of a gambit-style attack in a chess game without followup, resulting in a lost position according to the normal rules.  I certainly feel like a pawn that the GOP feels it can sacrifice for its speculative takeover plans.  It claims new prosperity because America will just get rid of its debt by throwing less "self-sufficient" people off the cliff (all of it “constitutionally”), although if you do all the math, even this plan can't work for too long.  It can’t win a legitimate election this way.  But it could try to plot a fascist takeover.  


CNN Money has a story predicting that Social Security checks, starting November, could be cut 16% across the board, until the debt limit is increased (if ever).  Oh. I could stop the IRS withholding.  I won't owe much tax. Play Grover Norquist's game. 

Thursday, October 03, 2013

Boehner as promised not to let the nation default over Obamacare fight (apparently)

Late on Thursday afternoon, October 3, 2013, as the security incident on the Capitol grounds was winding down, the Washington Post, in an online article by Lori Montgomery and E O’keefe, reported that high level aides in the House of Representatives of GOP congressmen have been told that Speaker John Boehner will not take this fight with Obama (over Obamacare, largely) to defaulting on required debt payments.  The implication is that he will support an up-down vote on raising the debt ceiling before long.  Apparently these persons were told this by Boehner directly.  There was some talk that Boehner is testing the waters, setting up a politically acceptable exit from a horrible deadlock by settling the dispute over the shutdown and debt ceiling at the same time.  The link for the story is here

Ezra Klein even tweeted that he hoped that the debt default risk was now over.  It’s a little hard for me to believe that it will be that easy.

The details of the story, however, suggest that Boehner might agree to call votes only on very short term extensions, to pay the nation's bills a week or so at a time, putting the president and Democrats again in a box, challenging their "no negotiation" position and still keeping the nation on edge (especially Walll Street) until Democrats make major policy concessions.  Later, some commentators on CNN said that Boehner, will willing to accept Democratic support to pay the nation's bills (and Social Security, by the way), still wants some kind of policy concession, especially in future entitlements (possibly even present) before he will even do that. 
Later this evening, CNN confirmed the report in a story by Tom Cohen, Deidre Walsh, and Greg Botello, here. As I was at an HRC event this evening, a few people seemed to be following this on their smart phones.  It seemed like following football scores.

However, real entitlement reform will be necessary, as we keep borrowing larger amounts to pay off previous obligations.  Inevitably, the conservatives may be right: we cannot borrow money or print or coin money forever, without risking a crash in the dollar as reserve currency itself, and major entitlement reforms, some of them rather sudden, have to be faced.  I think it is inevitable that means testing will come up soon again, and for starters, Social Security recipients should told the actuarial value of their historical FICA tax contributions, taking into account that a portion of that tax pays for disability insurance as well as retirement (a curious foreshadow of the mandatory insurance debate, which can certainly spread to other areas) and that a small portion is due to the fact that the first beneficiaries in the 1930’s had not paid into the system. 

See a related story today (and yesterday) about the House Hastert Rule on my Issues blog.  

Wednesday, October 02, 2013

Some of my own case histories with retiree health care, Medicare, and providers not taking Medicare

Today, at a post-op visit to a dental surgeon (I did the “clear choice” thing, but with private dentists and surgeons, at pretty much the same, or maybe slightly lower, price).  The surgeon had previous biopsied a periodontal cyst.  The biopsy analysis (done in Richmond) had been covered by Medicare Part B but the actual cost was pretty low (about $100). 
Today, I asked if the cyst obliteration during surgery might be Medicare covered.  The surgeon though maybe, but the office said that it doesn’t take Medicare at all.  That’s interesting.
Back in early 2005, after a major infection when I think the cyst formed, I did get a cat scan.  It was covered by my retiree health insurance, after deductible, but because it was covered, the Virginia Hospital Center in Arlington did it for a list price of about $350 (about a 70% discount, according a contract with United Health Care).  Also, the visit to an oral surgeon in Reston then was covered (we didn’t do much).  Maybe it was a matter of ING’s retiree policy and its being fairly generous with dental-associated problems.
Generally, Medicare doesn’t cover problems of dental origin (like cysts) but there are gray areas if there are health implications (like secondary heart disease) that seem likely.  It may well be that some Medicare Advantage (replacement) policies will cover these, but then again, Obamacare has cut back on some things Advantage plans can cover. 
I do have United Health Care through AARP as my supplemental policy, and I’ve never run into any complications with any claims yet.  Again, during this debate on Obamacare, remember, once you have insurance at all, the list price (which does affect out-of-pocket costs) for most procedures will be much lower, because it is determined by a contract between the insurance company and provider, who wants enough patients to make a profit.

Let me add another aside.  In 1998, I fell in a convenience store, and sustained an acetabular fracture.  I received a new operation at the University of Minnesota on the East Bank campus.   I never saw a bill for the new medical device (almost one of the first installed) or the surgeon’s labor, just the OR and anesthesiology.  It looks like the surgery was almost free because it was subsidized by the medical device company, to prove that the new appliance worked (it did, healing very quickly). There was an insurance squabble for a while over some things, but they were eventually resolved.    Surgery was on January 8, 1998 (it took 6 hours).  I could walk without crutches some distance on March 1.  I was completely off crutches the night of an academy awards fundraiser for the Minnesota AIDS Project at the Orpheus in downtown Minneapolis in late March.  A wonderful night that was.  Maybe “conservatives” would love this story.  In this case, the market actually worked.  

Picture: Minneapolis, 2011.  My pelvic titanium "implant" does not trip TSA machines.  

Tuesday, October 01, 2013

Obamacare helps young woman with "filial responsibility" go to college

Today, in his 1 PM speech (Oct. 1, 2013), President Obama mentioned that a young woman had been able to obtain health insurance for her mother today under the Patient Protection and Affordable Care Act (“Obamacare”) under the slick but overloaded website “Healthcare” (link).   Ironically, Obamacare’s website is up now while many government department sites are down, and the whole Tea Party effort shut down practically everything else besides Obamacare..

The case that the president mentioned is important because the young woman was going to have to give up ever going to college to pay for her mother’s health care.  And apparently this was regular healthcare, not custodial care (and the mother may have been under Medicare age).  That sounded like the ultimate case of filial piety or filial responsibility that some social conservatives see as part of “social capital” and “the common good”.