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Means testing by any other name
Hardly anyone wants to endorse means-testing but almost everyone is for it. Of course Medicaid, food stamps, HUD housing assistance, and many other programs are already means-tested.
Furthermore most people want to extend the scope of the principle.
A few days ago Greg Mankiw described means testing (negatively) as "an income tax surcharge on old, sick people." But last year Greg seemed to endorse a proposal for means-tested subsidies for the purchase of health insurance, involving a corresponding limitation on the tax break for the relatively wealthy.
Paul Krugman writes:
If we’re serious about controlling Medicare costs, Peter Orszag and his staff at CBO have had a lot to say about this. Means-testing isn’t the answer; setting priorities for care is.
Of course the big health care priorities -- most of all in Krugman's eyes -- involve greater access for poor people. The prioritization process, if it is to save money, will in some way discriminate against higher-income users, even if the changes are not labeled as such. The people with "too many doctor visits" or "too much wasteful use of capital equipment" are not in general the poor.
The real question is means-testing at which margin and in which manner. In the meantime, beware of arguments which insist that means-testing is good or bad per se.
Posted by Tyler Cowen on July 23, 2008 at 07:47 AM in Medicine | Permalink
Comments
Since you like to refer often to Krugman, you may want to comment on this story
http://online.wsj.com/article/SB121677050160675397.html?mod=opinion_main_commentaries
Posted by: E. Barandiaran at Jul 23, 2008 8:55:05 AM
What exactly should we be wary about concerning arguments that means testing is good per se? Because it seems like a no brainer to me.
Posted by: Hopefully Anonymous at Jul 23, 2008 9:07:40 AM
The reader can decide whether or not Mankiw's characterization is "negative". That partial derivatives commute is a fact; if you think you like an idea characterized one way and dislike it in mathematically identical terms, your set of preferences is inconsistent, and it's worth resolving the inconsistency.
Posted by: dWj at Jul 23, 2008 9:21:42 AM
I'll happily endorse means-testing, though of course I'm not running for office.
It is very easy to say that no one with double the median US income should receive any form of "assistance" whatsoever.
Posted by: odograph at Jul 23, 2008 9:32:43 AM
BTW though, when you talk about means testing, especially the retired, it is really about net-worth, which becomes more problematic. I'm not sure I'm ready for any intrusive measures of NW for means testing. [some hiccups in posting, retry]
Posted by: odograph at Jul 23, 2008 9:37:01 AM
A thought after reading Paul Krugman's latest: the issue of health care economics seems to make liberals act like robots on bad science-fiction TV shows. You know, the ones that, faced with information that doesn’t fit with the assumptions in their programming, say “Does not compute! Does not compute!” and collapse.
Posted by: Shneezy at Jul 23, 2008 10:01:10 AM
Shneezy, what do you think my reaction as a moderate is to you going off on "liberals?"
(If you've got a comic book in your head you're less well set up to grapple with real problems.)
Posted by: odograph at Jul 23, 2008 10:16:14 AM
What Peter Orszag means by "seting priorities" is rationing. That's also what Krugman means. Does "rationing by some other name smell as awful?
Posted by: John Goodman at Jul 23, 2008 10:18:47 AM
odograph: "It is very easy to say that no one with double the median US income should receive any form of "assistance" whatsoever."
It is also very easy to say that those who contributed 5 or 10 times the national average to medicare and medicaid funding should be entitled to get something back.
"From each according to his ability, to each according to his need" is a proven failure.
It is also very easy to say that the majority voting themselves the right to the wealth of the minority is a very clear assault on personal liberty. But those who promote the Marxist philosophies don't give a damn about liberty, do they?
Posted by: John Dewey at Jul 23, 2008 10:20:23 AM
This is a little off topic but her goes:
I like means testing so much I would like to see rich and middleclass people charged to send their children to public schools. This is based on my idea that it is very difficult to subsidize all of the middle class.
Posted by: floccina at Jul 23, 2008 10:23:34 AM
It is also very easy to say that those who contributed 5 or 10 times the national average to medicare and medicaid funding should be entitled to get something back.
I think you just split the goal. Are Med* about getting medical care to people who need it, or are they also savings plans for the high end earners?
When you say "get something back" it sounds like you want the savings plan aspect.
Posted by: odograph at Jul 23, 2008 10:30:40 AM
floccina, I quoted "assistance" because I think that is where the rubber meets the road. For what it's worth, I don't think public education is assistance for the individual. I think it is a national, even strategic, requirement.
I'm even open to the idea that university, at least in the sciences and engineering ;-), should be free ... if we only had the money.
Posted by: odograph at Jul 23, 2008 10:33:46 AM
odograph: "Are Med* about getting medical care to people who need it, or are they also savings plans for the high end earners?"
The Medicare program as voted on by our representatives has been prepaid medical insurance for everyone who contributed. That was the promise made for all those years in which we gave up our wealth. It is you, and those who favor Marxist philosophies, who would change it to welfare.
Right now, today, I have a claim to some fraction of the Medicare funds which will be collected after I'm 65. You would invalidate that claim - a portion of my wealth - because you feel the program should be "From each according to his ability, to each according to his need"
If Medicare cannot fund medical care for all retirees, then everyone in the program should suffer the same loss. It should not be some sufferring 100% loss and others sufferring 0% loss.
But honoring promises has never been a Marxist principle, has it?
Posted by: John Dewey at Jul 23, 2008 10:50:03 AM
odograph: "I'm even open to the idea that university, at least in the sciences and engineering ;-), should be free ... if we only had the money."
But we don't have an unlimited supply of talent to teach at universities, do we? So some system of rationing must be imposed. Price rationing has been proven to beat every other form of rationing for centuries. Price rationing is the most efficient way to ensure that goods and services go to those for whom the good or service is most important.
Posted by: John Dewey at Jul 23, 2008 10:54:48 AM
John, I think the big double-take I give your Med* comments is that you favor bigger programs, with more cash, and more contributions from high wage earners.
If the goal is to help those who cannot afford it, we drop that pox on the budget: aid to the middle class.
If we stopped giving aid to the un-needy, how much of your "5 or 10 times the national average" do you think would fall away?
It's perverse (but funny in a laugh at the talking point way) that you call "marxist" while asking for bigger government and bigger programs.
Posted by: odograph at Jul 23, 2008 11:02:03 AM
On the university thing, I should start by saying that I am talking off-hand. I think our fiscal mess puts this off the actual table - pragmatism before theory.
That said though, your "market chooses" response seems a bit one-size-fits-all. Do you have actual data on the success of university selection programs from around the world? Or are you claiming a generality will pertain to this specific?
(I like testing, even the evil IQ, as a selector for free higher education, in appropriate fields.)
Posted by: odograph at Jul 23, 2008 11:04:33 AM
Oh, a tidbit on education and means testing ... 99.999% of all "kids" are poor. Their parents may or may not be rich, but we don't really know their commitment to education. I'm sure we all know median+ families who pay for kids college, and others who say "I did it myself, so can you."
Posted by: odograph at Jul 23, 2008 11:08:23 AM
The means test I'd most like to see instituted would be one for Congressional and Presidential pensions. Why should we pay pensions to multimillionaires?
Posted by: VC at Jul 23, 2008 11:45:31 AM
odograph,
I've not asked even once in my life for bigger government and bigger programs.
Had I been a voter when Medicare was started, I would have voted against it. But now that I've been paying Medicare taxes for 40 years, I expect this nation to live up to its promise to me. I did ask - on a number of occasions - that my representatives not increase Medicare programs.
Means testing is an idiotic thing to spring on folks approaching retirement. Socialists in this nation have prevented the formation of health insurance for seniors, so that almost nothing exists outside of medicare. Those who have "uninsurable" diseases, such as diabetes, have no options right now other than Medicare or self-insurance. Some of those "uninsurable" diseases can be so expensive to treat that self-insurance is just not feasible, even for millionaires.
I don't really care what you find to be perverse or what you decide is a "pox on the budget". I expect this nation to live up to the promises it made to its citizens.
Posted by: John dewey at Jul 23, 2008 11:46:36 AM
That sounds close to being for any Marxism already on the books.
FWIW though, I think we should think about the pragmatic issues. If a means test is based on income during retirement, it will probably screen out very few people ... and I don't think anyone is going to embark on a crusade to learn retirees net-worth.
For that reason, I think it is easy to say that those few retirees who meet my bar (twice median income) don't need assistance. If a harsh disease breaks them, they become poor, they get assistance.
Posted by: odograph at Jul 23, 2008 12:00:24 PM
The issue w/means testing is not good or bad. We already have means-testing. Medicare is partly financed with income tax and partly with uncapped payroll tax. The issue is more, less, or the same level of means-testing. I'm for more, via the income tax.
Posted by: Miracle Max at Jul 23, 2008 12:23:20 PM
"That sounds close to being for any Marxism already on the books."
No, Mr. odograph. What I advocate - continuing to provide identical insurance to all medicare retirees - sounds close to not screwing over people you've made lifetime promises to.
Means-testing away 100% of the insurance which the affluent have already paid for - in order to provide 100% of the insurance to a less aflluent group is exactly "From each according to his ability, to each according to his need", a very basic principle of marxist economics.
I'm really tired of this discussion, and pissed off as hell at your cavalier attitude about taking my wealth. I've got meetings the rest of the day, so don't exxpect further responses.
Posted by: John Dewey at Jul 23, 2008 12:31:50 PM
How about replacing health insurance with low interest loans with deferment options for periods of incapacitation.
Posted by: aaron at Jul 23, 2008 1:29:41 PM
With a government debt limit being raised to $10T, isn't "paid for" a bit of a lie?
It's a fantasy, in fact, that the monies we've all paid are sitting there, waiting for us to draw out again.
The harsh fact is that we've been told a story, that those contributions are there, and you'd like to believe it ... because it was a "promise?"
Who is the government fanboy now?
Posted by: odograph at Jul 23, 2008 1:30:44 PM
Wouldn't it be "an income tax surcharge on old, sick rich people."?
With the original perspective any co-pay is a surcharge on sick people and on average any health cost will tend to be a surcharge on old people.
Posted by: anomdebus at Jul 23, 2008 1:31:12 PM
