Who bears the risk

Who bears the risk?  That is a fundamental question of our political system.  In the United States, we are a mixed economy where there is a mixture of private risk bearing and public risk bearing.  All industrialized nations have a mixed economy where there is public and private risk bearing.  The difference is the split between public and private risk bearing and how much exposure the private individual has to bear if things truly get bad.  In the United States, we have traditionally had a comparatively small proportion of public/governmental risk bearing.

Our retirement system has counted on either private sector funded defined benefit plans or private sector funded defined contribution plans.  Defined benefits, if they were funded well enough, collectivized the risk of an individual outliving their average savings.  Social Security is a minimal insurance against outliving savings and destitution.  It is not a particularly rich benefit compared to other national public pension plans.

Medicare is insurance against the catastrophe that is old age.  Getting old means getting unhealthy and needing expensive care.  Very few people can self-insure against the care that they need to have a long and full life.

That is the fundamental question that animates our politics. How much do we self-insure and allow for tail risk to smash individuals who have no ability to self-insure and how much do we collectively insure while using the ability of the federal government to operate with a nearly infinite shadow of the future and much looser budgetary constraints than any individual. It is not a fight about voucherization of Medicare as the right design could produce vouchers that perform the same insurance function at the same cost to the individual. It is not about Social Security privatization. It is about how much idiosyncratic risk do we expect people to bear.

54 replies
  1. 1
    WereBear says:

    We also “leverage the mass.” Or maybe, “buy in bulk.”

    The Libertarians seem to think that we can skip taxes and fund ourselves, but that is ridiculous. What if we got the slice of taxes that go for roads, and tried, as private citizens, to get that some benefit?

    Or hey, that part that goes for police and courts and jails; we all get that back in our taxes, and come up with our own systems!

    It makes as much sense as doing the same thing for social safety net systems.

  2. 2
    MomSense says:

    @WereBear:

    The libertarians are idiots. They assume all the taxpayer/ government benefits and services as a given so they can pretend they don’t need government.

    I submitted a couldhappentoyou entry btw. I read through the posts and it looks good. Well done!

  3. 3
    Inmourning says:

    My story is a cautionary tale for what happens when the risk of age-related illness shifts to individuals. I was diagnosed with rheumatoid arthritis at age 70. My grandmother learned she had RA in her early 70’s. Then, there were no treatments, and she gradually became crippled and lived in constant pain. There are wonderful treatments for me today, and I bear no signs of the disease. I have a once monthly infusion, which is paid for by Medicare and my supplemental Medicare. Last year the “cost” of the procedure was $3500. This year it will “cost” $5000 a month. Next year, who knows how much. The price under Medicare is less, so when I get my report, I see what Medicare pays, and what my supplemental policy pays. Without Medicare, I would face a future where I would have to chose between depleting my savings to obtain this miracle medicine, or going without and living thru my old age with crippled hands and in constant pain. So you can see why I don’t want Medicare phased out or changed in any way. I remember when Reagan raised payroll taxes to put both SS and Medicare on a more solid footing. My husband is self-employed, so the increase for us was a lot. What happened to the party of Reagan? The present Republican Party is not conservative; it is radical, and I do not feel safe with them entirely in power.

  4. 4
    OGLiberal says:

    @MomSense: I think that’s true…they take stuff like infrastructure for granted. The true Galtian masters of the world will provide for all. Problem with Rand’s model is that John Galt probably would build a great highway, but only he’d be allowed to use it. Or maybe the plebes could use it at some exorbitant cost. If you’re building shit using your own resources out of your own selfish need, why are you going to let others use it?

  5. 5
    MomSense says:

    @OGLiberal:

    They are like the teenage boy who puts a keep out sign on his bedroom door and sits inside playing video games and thinking how much his family sucks because they won’t let him smoke pot and his house sucks and he doesn’t need them at all. Then he goes down to the kitchen and has a snack when no one is there. He takes it all for granted because he is not a grown up and is clueless about how the world works. Libertarians are in a suspended state of adolescence.

  6. 6
    Baud says:

    @MomSense: Ha. Perfect.

  7. 7
    Taylor says:

    It is not a fight about voucherization of Medicare as the right design could produce vouchers that perform the same insurance function at the same cost to the individual. It is not about Social Security privatization.

    Bullshit. In the fights the lie ahead, the Left lives and dies on its message discipline.

  8. 8
    D58826 says:

    somewhat OT but a bit of good news for those who were dreading seeing the Reptilian Cruz running for president for the next 4 years. Trump has canceled the 2020 election. In a tweet today he said he is meeting with the people who will lead the country for the next 8 years.

    Also good for the D’s since it will give them 4 more years to get their s*t together, even though that will probably be a stretch.

  9. 9
    satby says:

    While I was in India I shared a cab a couple of days with the other two Americans, one of whom told me they voted for Johnson because they were libertarians who didn’t like Drumpf. They found the chaos of Delhi traffic frightening and weren’t particularly amused when I pointed out that the “every man for himself” driving was the purest form of libertarianism in real life they would ever see. But it gave them something to think about.

  10. 10
    Baud says:

    @satby: Also perfect.

  11. 11
    Sister Rail Gun of Warm Humanitarianism says:

    New York Times:

    We were unaware that the meeting was canceled until we saw the president-elect’s tweet this morning. We did not change the ground rules at all and made no attempt to. They tried to yesterday — asking for only a private meeting and no on-the-record segment, which we refused to agree to. In the end, we concluded with them that we would go back to the original plan of a small off-the-record session and a larger on-the-record session with reporters and columnists.

  12. 12
    NotMax says:

    Sure it is very clever and all that, but don’t understand what is meant by Crab Bucket Politics.

  13. 13
  14. 14
    satby says:

    @Baud: People yammer about “being libertarian” usually without any idea of the actual philosophy of libertarianism and what it entails. To a person, every single one who has told me they “were libertarians” went to public schools, crab about bad roads and wonder why they aren’t maintained better, and take for granted public libraries and utilities. Clueless is too kind a description, and I enjoy most of all nailing people like that with a clue by four.
    I’m mean like that.

  15. 15
    Chris says:

    @OGLiberal:

    they take stuff like infrastructure for granted.

    Yep, this is key. They’ve never lived without all of this stuff, they can’t imagine the world without it, and they credit it to a fuzzy amalgamation of the Free Market and ‘Merican Exceptionalism.

  16. 16
    WereBear says:

    @MomSense: Thanks so much! Just put it up if you want to share.

    For those wondering, that site to Share Your Healthcare Story is:

    Could Happen to You

    and please let others know.

  17. 17
    WereBear says:

    @satby: I enjoy most of all nailing people like that with a clue by four.
    I’m mean like that.

    It’s not mean! It’s useful instruction they should have accepted by now.

  18. 18
    Chris says:

    @NotMax:

    I don’t know whether this is true or not, but supposedly if you put a bunch of crabs in a bucket, whenever one of them gets close to climbing out, the others pull him back in. They could get out if they all worked together, but don’t.

    Hence, “crab bucket society” = everyone stepping all over each other in an attempt to get out and making things worse for themselves in the process.

    I first saw this as a right wing meme scolding liberals for trying to hold back the Galtian Ubermenschen, about eight years ago. Since then, a bunch of us have adopted it, pointing out that it’s a far better description for the right wing mentality of “as long as even one poor black single mother is collecting welfare, none of us are free.”

  19. 19
    rikyrah says:

    Saving Medicare is Job #1 for Democrats. Period.

  20. 20

    @Taylor: Given the actual proposal in the Ryan plan, I agree, the only message is HELL NO and The only votes for it will be Republican votes.

    In another world, maybe Earth 4 as Earth 2 and 3 are too close to ours, a voucher system is not intrinsically a risk shift.

  21. 21
    Taylor says:

    OT the Guardian is partnering with CJR to examine what happened with press coverage during this election season. This to me is the money quote, though the non-ironic reporting by the Guardian suggests that they do not:

    “That’s ridiculous,” ripostes the Times’ Dean Baquet. “We didn’t cover Donald Trump any more aggressively than we covered Hillary Clinton. People forget that we broke the story of Clinton’s emails. If both sides think you were tough on them, maybe that means you were fair.”

    Self-serving little piece of shit, but nicely illustrating the sickness at the heart of the NYT.

  22. 22
    Baud says:

    @Taylor:

    The Guardian wasn’t much better on the email stuff as far as I saw.

  23. 23
    gvg says:

    @NotMax: Terry Pratchett wrote in the Disc World book Unseen Academicals

    “Oh, that’s crabs for you,” said Verity, disentangling the ones who had hitched a ride. “Thick as planks, the lot of them. That’s why you can keep them in a bucket without a lid. Any that tries to get out gets pulled back. Yes, as thick as planks.” Verity held the crab over an ominously bubbling cauldron. “Shall I cook it for you now?”
    “No!” said Glenda, much louder than she had intended.
    “Are you okay dear?” Verity inquired. “You look a bit ill.”
    “I’m fine. Fine. Just a touch of a sore throat, that’s all.”
    Crab bucket, she thought. I thought Pepe was talking non-sense. “Erm, can you just truss it up for us? It’s going to be a long night.”
    “Right you are,” said Miss Pushpram, expertly wrapping the unresisting crab in twine. “You know what to do, that’s certain. Lovely crabs, these, real good eating. But thick as planks.”

    What does that have to do with anything? Here’s a bit more.

    Crab bucket, thought Glenda as they hurried toward the Night Kitchen. That’s how it works. People from the Sisters disapproving when a girl takes the trolley-bus. That’s crab bucket. Practically everything my mum ever told me, that’s crab bucket. Practically everything I’ve ever told Juliet, that’s crab bucket, too…….The worst of it is, the crab that mostly keeps you down is you….the realization had her mind on fire.

    This is such a brilliant insight into a particular thing wrong with certain situations, that it has spread like wildfire as a useful allegory in just a few years. I had not known how many other people read Pratchett until the last few years, but people refer to him when discussing politics, a lot. This is not the only point he made that has become widely known. And yet, his stories are young adult fantasy!

  24. 24
    Baud says:

    @Taylor: But you are correct to highlight how the NYT is a hopeless cause. They think they command you to treat them as credible.

  25. 25
    MomSense says:

    @Inmourning:

    We are not going to roll over and let Republicans end Medicare without a big Biden fight!

  26. 26
    Chris says:

    @gvg:

    Ah, thank you. I knew the meme, I did not know where it came from.

  27. 27
    Taylor says:

    @Baud: Unfortunately the Guardian seems to hire their US reporters out of the same sausage factory as the other US MSM outlets.

    Their UK coverage has been much better. Their reporting led to the Levenson inquiry, which could have led to the end of Murdock’s stranglehold on UK politics, until Cameron buried its recommendations.

    ETA I subscribe to the Guardian because they have made good editorial decisions (yes, that includes publishing Snowden). The NYT has been dead to me since they buried Risen’s story on illegal wiretapping, which revealed their own image of themselves as a branch of the establishment. Don’t get me started on what they did to Al Gore (thank you Kit Seelye).

  28. 28
    D58826 says:

    CNN is reporting that der Fuhrer will not lock Hillary up after all. Going to be a lot of disappointed Trumpsters

  29. 29
    WereBear says:

    “That’s ridiculous,” ripostes the Times’ Dean Baquet. “We didn’t cover Donald Trump any more aggressively than we covered Hillary Clinton. People forget that we broke the story of Clinton’s emails. If both sides think you were tough on them, maybe that means you were fair.”

    So if there isn’t a commensurate scandal on the Democratic side, we will create one. Then it’s “fair.”

    @Taylor: I agree with the theory that as our Press Corpse became one with the people they were reporting on, an essential element wound up missing. Now they are let in the VIP entrance, wined and dined, and winked at as courtiers, and that is how they act towards the people they should be skeptically reporting on.

    With newspapers dying; with fewer, and higher paying, journalism jobs at stake, it’s all too easy for them to bob their heads at management meetings and work hard at being “fair.”

  30. 30
    FlipYrWhig says:

    @WereBear:

    Now they are let in the VIP entrance, wined and dined, and winked at as courtiers, and that is how they act towards the people they should be skeptically reporting on.

    Except for Hillary Clinton, who they just plain hate. If it was just a courtier mentality, they should have been kissing her butt, no?

  31. 31
    WereBear says:

    @gvg: Like Rod Serling, Harlan Ellison, John Brunner and many others, speculative fiction lets a writer get away with a lot they could never come out and state.

  32. 32
    Chris says:

    @D58826:

    Oh, they’ll probably be talking about the Dear Leader’s magnanimity and greatness of spirit for the next six months. And lamenting how we liberals are simply so rude and uncivil for not returning such a grand gesture appropriately.

  33. 33
    gvg says:

    @satby: libertarians don’t know how things work. they don’t know history or how much work over generations went into the ideas that roads should have right away, that we all benefit by giving up a bit of our land to make a continuous path by which goods can flow without tolls. People have forgotten that producing goods that someone else wants doesn’t mean any profit if you can’t get it too them. Roads, and Navy’s to suppress pirates, police to catch robbers and the roads them selves without which you just have a fortress to starve in. You can’t buy what you need either.
    Money to simplify trade. It doesn’t need to be gold, it just needs to work and that means a government. A working faithful government.
    Contracts are only good if you have courts and police to enforce them. Libertarians really are spoiled.
    My preferred refutation of libertarianism is the middle ages. However the whole progress of history and how we built habits and mind sets and traditions that help us shows that individualism is poor, nasty, brutish and short lived. They think all these things just fall out of the air naturally instead of taking work and taxes to maintain. I had a couple of friends in high school who went all libertarian. I didn’t argue at the time but I could see some problems and more as I grew up and gained knowledge and experience.

  34. 34
    Mathguy says:

    @Taylor: The Times has me puzzled–it’s as though the place is full of silos: op/ed (decent on Trump condemnations), the gawd awful political (a newspaper versions of the nerdy HS journalism “kool kids” taking vengeance on the girl running for class president while enabling the idiot jock/rich kid to win), and the rest (e.g., the clueless “1.5 million will buy you a modest starter home”). I keep wondering if I should finally cancel my subscription to stop aiding their terrible political reporters in their quest to destroy democracy.

  35. 35
    WereBear says:

    @FlipYrWhig: Nope. Only Republicans count.

    So their bosses have decreed, and so it is so.

  36. 36
    Chris says:

    @FlipYrWhig:

    Courts run on middle school rules. There’s always designated unpopular kids that it’s okay to pick on. And for people like the media, picking on the unpopular kid makes them feel like they’re part of the in-group, which they desperately want to be.

  37. 37
    Elizabelle says:

    @Taylor: Oh my God. RE Dean Baquet. Of the New York Times. Beyond clueless.

    He needs to be out of there.

  38. 38
    greennotGreen says:

    Richard wrote:

    That is the fundamental question that animates our politics. How much do we self-insure and allow for tail risk to smash individuals who have no ability to self-insure and how much do we collectively insure…

    The fundamental question that animates our politics is much more fundamental than that. What kind of a People do we want to be? What does it mean to be an American? Do we still believe in the poem’s words “Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore,” or we need to sandblast those words away? A rich nation, do we allow any of our citizens to die of treatable illnesses, live in wretched poverty, go hungry? Or do we take care of each other? Sure, somewhere along the way, we’re going to feed, clothe and house some pretty worthless individuals. I wonder how many of those are balanced by trust fund kids who throw their money away on fast cars and drugs…or trips to Africa where they kill animals for pleasure.

    I prefer to sacrifice that newest iPad or an extra pair of $100 shoes (actually, I never pay that much, I always wait for sales) or any of a number of unnecessary conveniences (many manufactured outside the U.S. where they may not benefit our economy as much as buying locally) so that my neighbors are housed, clothed, fed, receive medical care…no matter whether they meet some judgemental so-and-so’s standard of worthiness.

    That’s the kind of America I want us to be.

  39. 39
    Elizabelle says:

    @Taylor:

    I mean, really. Folks: NYTimes editor Dean Baquet:

    We didn’t cover Donald Trump any more aggressively than we covered Hillary Clinton. People forget that we broke the story of Clinton’s emails.

    Nobody forgets about the fucking emails.

    And you had an actual CROOK running for President. You needed to cover him at least as aggressively as you did Hillary, on the trumped up emails shit.

    That editor gave the game away, and needs to be fired. Immediately. Fish rotting at the head and all.

    The mystery of why the Times ran such awful and misleading Clinton headlines and shadows/clouds reporting. Solved.

  40. 40
    Mathguy says:

    @Richard Mayhew: I fear you will have to play the role that Krugman does in economics: pounding the drum on why we need Medicare, Medicaid and the ACA, because people simply don’t understand what insurance is and why they need it, until they need it. I despise what the GOP and their rich enablers have done to the social contracts of this country.

  41. 41
    WereBear says:

    @Mathguy: The history of homo sapiens sapiens is that only some of them are sapiens.

    At times like these, I just know the first wheel was greeted with something like this:

    “Og, you are driving me crazy with this wheel shit. It’s screwed up our migrations, we keep passing my favorite grub log, we’re going into territories we don’t know anything about. That’s why I’m a travois man! My dad was a travois man, my grandfather too — just stop or there’s going to be demons!”

  42. 42
    greennotGreen says:

    @gvg: It’s not just libertarians. A lot of Republicans think the same way.
    and there’s always the externalization of “the Government.” WE are the government! It exists to carry out our will. We express that will through voting. But when people keep sending the same people back to Congress who either put in place people who don’t solve the problems they’re supposed to solve, or block the wishes of an Executive branch who would install competent people to solve problems, the the voters throw up their hands, and say, “They’re all crooks.”

  43. 43
    D58826 says:

    @Elizabelle: Yes they broke the e-mail story but continued to flog it long past when it was obvious that there was nothing there. Same with the Foundation.

    One thing der Fuhrer is right about when he says his business conflicts were there for all to see before the election but media didn’t cover them..

  44. 44
    low-tech cyclist says:

    It is not a fight about voucherization of Medicare as the right design could produce vouchers that perform the same insurance function at the same cost to the individual. It is not about Social Security privatization. It is about how much idiosyncratic risk do we expect people to bear.

    Well, sure, the Republicans could design vouchers that way. But we all know they’re not going there because they’ve got some brilliant idea to tweak the system to improve it a bit. They’re going there because they want to destroy Medicare as we know it, and replace it with something that’s easy to phase out by intermittent decreases in the level of premium support.

    So let voucherization be synonymous with privatization. It’s what’s really going on.

  45. 45
    BBA says:

    @D58826: I was expecting him to try to bring charges, but get thrown out by the grand jury (which he could then blame for being “losers” and “sad”). I guess I’m overestimating him, or not cynical enough about his voters’ attention spans being any longer than his.

  46. 46
    Inmourning says:

    Thank you, momsense. I have called every elected rep I have, and have asked others to do so too. I have written a letter to the editor, which has been ignored. I try to do something toward saving Medicare every day. Hope others will do also, as I think it may be one of the first items on the list for action after inauguration.

  47. 47
    Ohio Mom says:

    @Taylor: Agree. No talk of vouchers, ever. That will only serve to confuse people and give Republicans cover.

    Also, can not understand why Richard would even suggest for arguments sake that vouchers could work. I mean, maybe they could but why on earth should any more of my tax money go to subsidize big insurance than it already is? Even a fabulous voucher plan is a step backward. If for no other reason that it leaves the door ajar to all sorts of cutbacks and shenanigans.

  48. 48
    rikyrah says:

    How Ryan Plans to Undermine Obamacare
    by Nancy LeTourneau
    November 22, 2016 8:44 AM

    There has been a lot of talk lately about the challenge Trump and Republicans face in meeting their promise to repeal Obamacare. The argument has been that, without a plan to replace ACA (which Republicans haven’t been able to agree on), to simply repeal it means that approximately 20 million people will lose the insurance they’ve signed up for via the exchanges. There are, of course, other challenges, such as how to make the provision that eliminated the ability to refuse coverage for those with pre-existing conditions affordable without the mandate and subsidies. But let’s leave those for another day to focus on what is likely to be Speaker Paul Ryan’s plan for undermining the exchanges.

    Tierney Sneed reports that House Republicans are reviewing their plans about whether or not to continue a lawsuit they filed against Obamacare known as House vs Burwell. To review what that is about, it is important to know that the law included several provisions to make insurance affordable on the exchanges. One of those is that, for enrollees who earn between 100 and 250 percent of the federal poverty line, the government provides cost-sharing subsidies to insurance companies in order to limit out-of-pocket expenses. These are separate from the subsidies individuals receive directly based on their income.

    From the time the exchanges were implemented, House Republicans have refused to appropriate the money for these cost-sharing subsidies. The Obama administration found a work-around for that in tying them to the tax credits which are available to enrollees. In House vs Burwell, Republicans challenged that work-around and won a ruling from a DC Circuit Court Judge. Payment of the subsidies has continued awaiting appeal by the administration.

    Here is what Sneed reported:

    House Republicans led by Speaker Paul Ryan filed a court document Monday evening asking an appeals court to pause the proceedings in the case, known as House v. Burwell. A senior GOP aide said the move was made to give the new administration the opportunity to weigh how to handle the lawsuit.

    While Sneed suggests that how the Trump administration handles this will tell us a lot about how they plan to proceed on repealing Obamacare, the signal has already been sent. Rather than risk losing the case, what is likely to happen is that the president-elect will simply drop the appeal and stop paying the subsidies – claiming the circuit court judge has already deemed them illegal. That means that insurance companies will face a decision about whether or not to significantly raise premiums or get out of the exchanges altogether…at which point Republicans will claim that they failed.

    This is classic Republicanism – especially the kind we’ve seen from Speaker Paul Ryan. What it amounts to is that they do what they can to ensure the failure of government programs and then claim that their condemnation of those programs was correct. It is similar to what Ryan is likely to try to do with Medicare. The plan is to remove the Obamacare cost savings to that program and then claim that Medicare is going broke and needs to be privatized.

  49. 49
    liberal says:

    In the United States, we have traditionally had a comparatively small proportion of public/governmental risk bearing.

    Yes and no. For Wall St., there’s a lot of public risk bearing.

  50. 50
    liberal says:

    It is not a fight about voucherization of Medicare as the right design could produce vouchers that perform the same insurance function at the same cost to the individual.

    “The right design” is doing an awful lot of work there.

  51. 51
    liberal says:

    @Ohio Mom:

    Also, can not understand why Richard would even suggest for arguments sake that vouchers could work.

    Because he works in the insurance business? Just a thought.

  52. 52
    liberal says:

    @low-tech cyclist:

    Well, sure, the Republicans could design vouchers that way.

    No, actually, they couldn’t, even if they wanted to.

  53. 53
    liberal says:

    @Taylor:

    The NYT has been dead to me since they buried Risen’s story on illegal wiretapping…

    They weren’t dead to you after they helped Shrub make the case for invading Iraq? It’s not like it’s ancient history.

  54. 54
    RaflW says:

    @Chris: I have this fantasy that libertarians can opt out of a set of taxes. Then, when they call 911, the operator gets a message on their screen that they read to the caller: “Hello, 9-1-1. What is your credit card number…” and just silence till the libertarian either gives the CC# or hangs up.

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