Heaven forbid that people of means should pay for their own health care, what a sensible idea this was:
Last week, she [Theresa May] came up with a flawed but constructive answer to the crisis of funding in social care. The elderly would finance their care out of their own estate upon death. The upper limit on their contribution would go but they could keep £100,000 for their children. In the mixed metaphors that proliferate in politics, a floor would replace a cap.
The idea turned old age into a high-stakes game of chance — die suddenly and your estate would go untouched, contract dementia and it would shrivel over time — but it confronted voters with the principle that things must be paid for and challenged the Conservative cult of inheritance. Mrs May made it central to her election manifesto. Her self-image as a firm leader hinged on her fidelity to this brave, contentious idea.
A few days of popular disquiet and the cap is back.
That is from Janan Ganesh at the FT. Solve for the fiscal equilibrium!
the tragedy of the “Commons.”
How could this be true. We are talking about England where socialized health care is working great. Why do they need to now make some pay and others not pay? Does this mean that the socialized health care is failing as everyone predicted? Say it isn’t so.
This policy relates to social care (someone to wheel you to the toilet etc.), not healthcare. Free healthcare via the NHS still fails less than other systems one observes.
It’s called long-term care in the US.
Fun fact: the #1 payer for LTC in the US is Medicaid (even middle class people spend down their assets after a couple years of an $85,000 nursing home.) However, you’re allowed to keep your home and still qualify for Medicaid. It is hard to enforce, but for there are in fact laws on the books that allow states to recover the cost of one’s long-term care from their estate after death.
On the other side, there are plenty of lawyers who offer estate-planning advice to middle class people on how to shield their assets from long-term care providers by signing their assets over to a trust. If someone gets professional advice, I think it would be legally impossible for the state to take action against the estate. While some conservatives and libertarians advocate for more means-testing for old-age entitlements, Medicaid is an example of a means-tested program that is gradually becoming more of a middle class entitlement because there are many holes in “means-testing” for the elderly.
Only some States allow homes to be kept once you get Medicaid. If homes are kept, it’s only because it provides cheaper housing than renting, and on death, the proceeds from sale are paid to the State. And recovering Medicaid and other Medicaid costs is not that hard because qualifying for LTC requires extensive paperwork documenting assets which are then tracked constantly until after the estate is settled.
In some States, you can’t have a car, say a van for someone in a wheelchair, because the asset value limits are still at the price of a year old car in 1970, say $2000.
An elderly person whose nursing home care is paid for by Medicaid does NOT keep his home, unless there is a spouse still living in it, and even then the house has a lien on it and will be sold after the spouse is deceased.
“This policy relates to social care (someone to wheel you to the toilet etc.), not healthcare.”
That sounds like a distinction without a difference. But let’s take it on face value. Would this non-health health care still be provided without cost to those who are poor? If yes then how is it not a failure of the system? If it were indeed possible to create this “free lunch” kind of health care then why would anyone be billed for it? Unless it was failing and needed more and more money and this is simply one of the many attempts to pump more and more money into a failing socialist system.
“Free healthcare via the NHS still fails less than other systems one observes.”
Only if you are blind or biased. The NHS has been failing for years. If you show up with a appendicitis they will treat it with anti-biotics. Why would they do that??? Well of course because anti-biotics is cheaper than a surgeon and oh yeah they don’t have enough surgeons because the surgeons and specialists choose to leave the country and market their skills where they can earn more. This is by definition a failure.
Hmm, that’s an interesting story. Is that why the OECD statistics show an almost identical rate for appendectomies in the US and UK? http://www.oecd.org/els/health-systems/48831231.pdf
Well, apart from hastening my father’s death with the wrong meds and inflicting serious post-op infections on BOTH my wife and child (one of which they then failed to diagnose), I’m just fine with the NHS. Just fine.
Could happen in any system…
Hey, you could have had both parents die early and you have infections in addition to your wife and kids if you were treated in the US health care system instead of the UK NHS. Error rates reported by patients are 50% higher in the US than in the UK.
>what a sensible idea this was
Yeah, if your goal is to watch the price of elderly care go up 20x overnight.
Can you unpack that a little?
The equilibrium that Tyler wants us to solve for sounds a lot like the US, where people of means find ways to push their assets to their kids through various arrangements before old age sets in.
There are at least two behaviors incentivized by this policy:
1) Transferring assets to heirs before old age (probably by first getting them offshore to evade taxes);
2) Heirs may take steps to ensure than conditions of prolonged and expensive decline are efficiently transformed into shorter and more affordable denouements.
Add those two together and they amount to the affluent paying their heirs not to bump them off. Touching.
You wrote that as if it’s a bad thing.
Upper middle class people can, with effective planning, artifically impoverish themselves to qualify for Medicaid. Medicaid effectively subsidizes the inheritance of upper middle class Americans.
Open the phone book and you will be overwhelmed by the number of jacklegs advertising to do Medicaid Planning.
The standards have been greatly tightened up in the last few years, but much wealth is still shielded.
“Upper middle class people can, with effective planning, artifically impoverish themselves to qualify for Medicaid.”
I seriously doubt this is happening to any significant degree. Medicaid is not Medicare. To artificially impoverish yourself you’d have to either not work at all or take a low paying job. How many upper middle class don’t work or work at low paying jobs?
He means old people who will need long term care.
They plan carefully to move all the assets and only hold the “safe” assets (i’m guessing primary home?) when they need the care.
Thus they can avoid Medicaid look back periods.
“They plan carefully to move all the assets and only hold the “safe” assets (i’m guessing primary home?) when they need the care.”
In that case “artificially impoverish” seems a stretch. You can’t hide money that way, you legitimately have to either give it away or use it to buy insurance. That seems more like actually impoverishing themselves.
I would support reducing the household exemption, though. $500,000+ is pretty steep amount to allow as an exemption to qualify for a poverty program.
JWatts, the next commentator cleaned up your misundertstanding.
Married couples can, with the Anti-Spousal Impoverishment, can move assts in noncountable categories such as the house, cars-Buy that Lexus.
For the surviving spouse, they will time large transfers before the lookback periods. It is hard to effectively shield a lot of wealth if someone does not have a cushion to live the way they wish during the lookback period.
They give it to their children with the understanding that the children will help them financially if need be.
“They give it to their children with the understanding that the children will help them financially if need be.”
If you can predict you will become so I’ll you need long term care 5 years before you need long term care, why can’t you prevent needing long term care? Even a three year look back period requires planning and action early enough to eliminate evidence of action for the action from the 3 years of records prior to the year of application, and the tax impact usually shows up in the filings the year after actions are taken, which themselves require planning.
And giving it to children assumes they won’t be hit by bad luck requiring they spend the assets you gave them for their own problems. And they get to decide who has the bigger problems requiring spending THEIR MONEY that you gave them.
Are you as worried about the people who game student loan repayments or healthcare payments they owe? You know, the people who know if you pay one dollar a month they can’t come after you?
How about the cheats who lie on their EBT forms? or disability?
See, once you have enough people cheating and gaming, suddenly you think “why not me?”
We don’t have strict enforcement on these programs. We don’t dare. See the ACA with its myriad of hardship options which the navigator will teach you how to use to avoid the penalty.
I know, I know: they can’t pass direct redistribution to share the wealth so they do this instead. Fudge the rules.
But you rich people…don’t you dare fudge the rules. We need somebody to pay full freight and you need to pay your fair share!
I was a corporate healthcare attorney for about 15 years. Some of that time was spend in reimbursement. One client lived off of Medicare and Medicaid (he hated the government and taxes but could pick up on the irony.) He said that the government programs do not withhold money, they withhold the information necessary to get the money. It satisfies “due process” requirements, saves the government some money, and tips the board the stakeholder’s way.
This country seems to honor the sharp, the clever grifter. And of course large stakeholders capture the regulators and help write the rules to their advantage.
I don’t understand why I have to pay for the health of other people, rich or poor, or why other people have to pay for my health. Bunch of totalitarian socialists…
….well, you do understand the political-economic concept of socialism, you just strongly disagree with it.
that concept (with its many variations) is quite popular in UK/US and among the world’s economists.
apparently Tyler finds British socialized medicine “sensible”, with the proper government tweaking imposed. and of course government should always have discretionary first claim to all a person’s assets upon death.
…. you don’t sound like a progressive “team player”
I don’t understand why I have to pay for the health of other people, rich or poor, or why other people have to pay for my health. Bunch of totalitarian socialists…
You’re not paying for anyone’s ‘health’. You’re paying into a risk-pooling scheme for the finance of medical care and long term care. Medical care is given to unpredictable and enormous spikes in expenditure which can be influenced by personal behavior to a degree but only to a degree.
10% risk-pooling scheme. 90% wealth transfer scheme.
You’re not transferring ‘wealth’ at all. These programs are financed out of income taxes.
What does that even mean “10% risk pooling, 90% wealth transfer”. What is it you’re apportioning?
The money out of my paycheck isn’t wealth?
No, it’s income.
A hundred bucks is a hundred bucks no matter what pocket you have it in.
Your paycheck, I guess, is income instead of wealth, until the second you deposit it, at which point it becomes wealth
” 10% risk-pooling scheme. 90% wealth transfer scheme”
Oh, fuck off.
Read Kenneth Arrow’s paper on catastrophic health care.
I think that it is you, sir, who should fuck off. And right quick at that.
“You’re paying into a risk-pooling scheme for the finance of medical care ”
Is the amount paid by an individual based on actuarial math for the individual? If not see WC Varones comment below.
Example of actuarial math. My neighbor owns a Porsche I own a Corolla. For each of us to purchase total collision insurance will my neighbor pay higher monthly premiums or the same monthly premiums as I do?
Another example, should someone (not sure whom) be required to sell CDS protection on low-grade corporate bonds for the same premium payments as CDS protection on Aaa rated corporate bonds?
You’re complaint is that the scheme is not structured the way it would be if it were insurance purchased on a private market. Gosh, no kidding?
Charging premiums different from actuarial math is by definition the wealth transfer that WC Varones is alluding to. If you disagree with this basic mathematical statement than you are innumerate and there is nothing I can do to help you. You can’t fix stupid.
Actuarial math can’t predict the future.
We know a few correlations such as tobacco smoking and cancer, but causality is in the blur. such
Please tell the cause of leukemia.
LOL. If actuarial math can’t predict the future than insurance companies could not make money.
lots of people want to delude themselves into thinking that all statistic likelihoods are equal and equally unknowable. They are deeply wrong.
Sorry. Life’s not fair. Some people are more likely to get cancer and the insurance companies know who those people are.
Unlike cars, one cannot chose to purchase a different body or genetic structure with a lower maintenance cost. Your analogy doesn’t hold up.
My analogy was how actuarial math works. I understand innumerate people have problems with computing E[X] so we won’t bother going into the details of E[X|Y].
So what? The auto insurance companies know whose cars are going to cost more.
There’s nothing you can do about it. Facts are facts.
Is the amount paid by an individual based on actuarial math for the individual?
Depends on the plan. In employer-based plans it is not generally based on an actuarial calculation for the individual covered. Rather, the premium is often uniform, sort of socialistic.
Byomtov, and you can thank government rules and regulations for that one.
Yes, and that’s one of the reasons why employer-based plans incentivize excess consumption.
The “risk pooling scheme” includes a lot of people who are known to be far “riskier” than others. Indeed, a lot of people whose risk of costing $1,000,000 a year is close to 100%.
it also includes a lot of things that are not at all unpredictable.
For instance, a planned pregnancy has predictable medical expenses. That’s why insurers often did not cover maternity in the US. If you intend to get pregnant, then sign up for insurance, then get pregnant as expected, you’re essentially bilking the insurance company for thousands of dollars.
I hope you’ve never claimed an insurance payout.
It’s pretty simple. None of us can predict how much our future healthcare and care needs will cost. If we’re unlucky we will be wiped out. Classic situation for insurance but insurance imposes massive additional costs on an already expensive good which adds no value. So government provides the insurance policy and you get a much more efficient health service, with the massive purchasing power of an enire country keeping purchasing costs low and the tiny interest rates paid by government keeping the capital costs low.
Furthermore, healthcare is spectacularly badly suited to competition because we all want the best and none of us can tell what is best. Healthcare researchers have a difficut enough time working that out even when Pharma is not muddying the waters, individual consumers have no chance. Put hospitals and doctors into the mix of private interests trying to sell their wares as often as possible and you end up with a really epensive health care system that is really bad at extending life expectancy.
There are several big problems with May’s social care policy, not related to these points:
– it is an inheritance tax by lottery (“dementia tax”) which does not pool risks
– people with substantial assets other than their home will be able to avoid it by passing the wealth they don’t live in
– with the belated introduction of a cap (of an unspecified amount) on costs to be taken from the estate makes it a(n even more) regressive inheritance tax by lottery
But there’s a huge issue that I have not seen pressed yet and which hasn’t been answered by the minimal detail provided so far. Who pays the cash up front? Who pays the interest on that before the house is sold, potentially decades after the expenditure if there is a surviving spouse? Who gets those interest payments?
When Andrew Neil interviewed Damien Green he answered a question about doing it through insurance with something like “there’s no product on the market for that”, Which strongly suggests that they plan to do this via equity-release financial products on the private market. This is foolishly expensive for much the same reasons as private health insurance is foolishly expensive; high interest rates and high admiistrative charges. Individuals will pay far more than the actual cost of their care. Furthermore the £100k threshold will be reached more often than necessary and so government will be picking up the tab for commercial interest rates and fees. It looks like a costly way to transfer public funds to The City for no added benefit. And the government which does this foolish thing will be long gone before the shit hits the fan.
It makes far more sense to tax people enough while they are working to pay for social care in real money in real time when they need it. I am of the view that people who gain disproportionately from very expensive developed economies should also contribute disproportionately to those expenses.. The UK currentlly has largely flat taxes on income, which become regressive for the poorest 10% because they don’t pay income tax, the only progressive element of taxes paid from personal income. If the top 10% (by income) paid the same rate of tax overall as the poorest 10% (+8%) there would be plenty of money to pay for social care and plenty else besides and it can hardly be argued that it is burdensome when we already demand this percentage from people living below the poverty line. As this group are the most likely to be liable for large costs under this new Tory scheme, inflated by use of a private provider, most of them would be better off that way too. Weath taxes (along with lower non-regressive taxes on income) would be preferable, but either way it is not hard to pay for this, you simply have to make the better of pay their way in the world.
*not UNrelate to these points
Well put
None of us can predict how much our future healthcare and care needs will cost.
Demonstrably not true. Some people are riskier than others as a matter of fact. You may not be able to predict your exact future costs with 100% certainty, but you can predict expected costs as a matter of statistical likelihood, and different people WILL have different expected costs. Insurance companies make money off of knowing these things.
Once again, your comment represents an evident failure to understand statistics. Not all probability distributions are uniform. Some people have measurably higher likelihoods of getting certain conditions. Some conditions cost more than others. You expected future healthcare costs *are knowable*.
You expected future healthcare costs *are knowable*.
Only up to a point. Not 100%.
The data is noisy, variable, and sometimes incomplete. Outcomes are stochastic, not deterministic–a matter of probability, not certainty. Consistent inputs don’t always yield consistent outputs. Exceptions and outliers invalidate assumptions and defy expectations. New data can introduce new variables and modify existing ones, shifting the probability curve.
It’s not all just self-evident clockwork.
That’s why I’m using the word “expected”. As in the statsitical concept of “expectation”, E[X].
And yes there will be inaccuracies in that too. But if it were all a perfect mystery what any of us is going to cost, then the insurers would not bother pricing according to risk, or attempting to recruit the healthiest customers. For that matter, the word “healthiest” would be meaningless because hey – it’s all totally unpredictable. Present health status would be completely unrelated to future health status.
“I don’t understand why I have to pay for the health of other people, rich or poor, or why other people have to pay for my health. Bunch of totalitarian socialists…”
You will never be dependent on others, killing yourself first?
I’m if you were born in Africa in poverty living off the land and drought hit, you would kill yourself and your family? Or slowly starve to death, watching your children die before you?
Because there is no avoiding this, unless you disconnect from the economy entirely. “There is no such thing as an unpaid bill”: When people have unpayable healthcare bills those bills will be paid by one mechanism or another by the the rest of the economy. This is just a fact of life. Might as well complain about the sun coming up in the east.
I don’t understand why I have to pay for other people’s cars who get into accidents, rich or poor. And the state requires me to have automobile insurance if I want to drive!
Bunch of totalitarian socialists!
The cost of a 1,000 square foot apartment in outer Liverpool is around $185,000. So basically, if you were very sick, you could forget about leaving even one of your kids a place to live.
Sorry to sound like a scold, but this comment is so typical of the sense of entitlement among wealthy people.
The vast majority of people in the UK will never inherit anything close to 100,000 pounds from their parents. That is an unthinkably large sum for the vast majority of Britons (or Americans for that matter).
If I understand the commenter’s position, it is this: “it’s unfair for my children to miss out on inheriting a 100,000 pound house just because I, their parent, was so UNFORTUNATE as to become sick”.
Compare and contrast: “it’s unfair for my children to miss out on inheriting 100,000 pounds when I die just because they are so UNFORTUNATE as to not have been born into a wealthy family”.
The first is seen as a tragic injustice; the second is seen as socialist whining. I can’t help but laugh at these kooky fuckers.
Even people without inheritances have issues with estate taxes. You will of course scold them for voting against their self-interest, but just maybe they are making a considered stand on principle, the same way that some high income people say their taxes should go up.
Even people without inheritances have issues with estate taxes. You will of course scold them for voting against their self-interest, but just maybe they are making a considered stand on principle, the same way that some high income people say their taxes should go up.
I don’t scold them for voting against their self-interest. I scold them for not understanding estate taxes, and falling for what are deliberate misrepresentations by those who want to do away with them.
Actually, on second thought, I don’t scold them as much as I scold those who tell the lies – most Republicans.
What lies?
That there are not massive exemptions, so only a few pay the tax, and they pay less than it sounds like.
That farms and small businesses routinely have to be sold to pay estate taxes.
Those come to mind immediately.
That farms and small businesses routinely have to be sold to pay estate taxes.
How is this a lie?
It’s a lie because it’s not true, and the people peddling the stories know it.
Where are these victims? They seem to be awfully hard to find.
If there are massive exemptions (and there are), why not discontinue the tax? Why put up with the inefficiencies of structuring one’s wealth to avoid the taxes if everyone’s just going to avoid them anyways? Reminds me of Obama’s answer to the question of whether he’d support more progressive taxes even if they didn’t didn’t raise revenue. He did, out of ‘fairness’. The progressives are typically the liars on this subject.
Everyone (who is subject to the tax) doesn’t avoid it. It collects about $20 billion a year.
This sort of argument is strange anyway. On the one hand estate tax opponents tell us how oppressive it is, on the other they say nobody pays it.
It’s a lie because it’s not true, and the people peddling the stories know it.
What’s not true? People do not sell assets to pay estate taxes? The federal exemption is fairly high, but that doesn’t apply to the states.
Please read again.
Of course heirs sell assets to pay taxes. If the estate consists mostly of a honking big stock portfolio some of it will be sold (with stepped-up basis) to pay the tax. Boo-hoo. That’s not the point of the argument. It’s the standard emotional appeal to the family farm and the small businessman that’s false, and the “destruction of a way of life,” etc.
Vanishingly few of these things have to be sold or liquidated to pay estate taxes.
byomtov, so you complain of massive exemptions and then that many people pay. Pick a side and stick with it. Either way, matters little to me, just that taxing money twice isn’t fair.
TMC,
you complain of massive exemptions and then that many people pay. Pick a side and stick with it. Either way, matters little to me, just that taxing money twice isn’t fair.
First, my comment about massive exemptions was not a complaint. It was a statement of fact. I think an $11 million dollar exemption for a married couple qualifies as “massive.”
Second, we “tax money twice” all the time. Please be more specific.
“Even people without inheritances have issues with estate taxes. You will of course scold them for voting against their self-interest, but just maybe they are making a considered stand on principle, the same way that some high income people say their taxes should go up.”
Like what?
You mean people who will never know anyone paying estate taxes feel psychic pain for the liberal elites who look down on them as being uneducated lower class conservatives clinging to their guns?
UK has NHS. Healthcare is a right.
Except if you’re rich…then you have to pay a special tax on it.
Wealth to bequeath can be the consequence of windfalls or it can be the consequence of prudence or it can be the consequence of enterprise.
I guess if we come at it from a behavioral angle, the implicit contract in the UK is that taxes are high but everyone is entitled to the same basic services for free or low cost. Once you break that for wealthy people how long before it reaches the average income person? When the US income tax was introduced people were assured that only the rich would have to pay it. Top rate was 7% on income over $11 million in today’s money.
But that replaced tariffs on imports which only the rich could afford to buy, and taxes on on spirits which only the lazy working class wasted their money buying.
The income tax was required to replace the huge stream of revenue taxing the sinful sloth of the lazy working class drinking.
It replaced taxes on workers to fund government with taxes on the rich.
Oddly, the rich never took up arms in protest of taxes on imports.
The Boston Tea Party was a protest by the working class smugglers against the cut in tariffs to increase tax revenues which would also increase the revenue of British ship owners at the expense of New England ship owners and smugglers.
But President Washington did need to lead an army to put down the whisky rebellion which was an armed action against tax collectors trying to collect taxes on spirits.
Sorry, in the U.S. a median house costs at least twice that amount and yes, people do expect to be able to leave it to their kids. A paid-off house is a form of savings.
The reason for buying health insurance at all is to pool the risk with others so as to limit the possible total loss.
Since the median American living in a median house is not wealthy, the ability to leave the value of that house to one’s children is not the sole concern of the wealthy.
Right, but why do I have to pay for your nursing home so that your kid can inherit your house?
You have a 100% chance of contributing toward his mother’s nursing home care in lieu of a 40% chance of your life being completely upended by the necessity of paying for your mother’s nursing home care. As we speak, public expenditures on l/t care are somewhat north of $150 bn, or a 1.5% assessment on discoverable personal income.
No it’s not “unthinkably large”. Maybe you need to check the data?
http://onlinelibrary.wiley.com/doi/10.1111/j.1475-5890.2016.12083/full
Median wealth for UK retiree households is about £200k. The 75th percentile have about £300k. About half of that will be bundled in pensions and annuities, but there will be many children standing to inherit 6-figure sums.
185k£ in assets is almost unthinkably rich to most of the people on this planet.
I easily understand why wealthy people, for personal reasons, don’t like any forms of inheritance tax, but let’s at least be intellectually honest and not pretend that there is some greater good or justice in inherited wealth. The fact that inheritance is a thing at all (instead of all of the wealth just being distributed to the society) is a telltale sign that wealth is proportional to political power in this world.
I’m not sure why you guys, or Ms. May, for that matter, was shocked by the response this proposal received. It’s a pretty significant change that’s far more austere than even in the most conservative regions of the United States.
People like owning things. It makes them feel in control of their fates. And an essential part of owning things includes the ability to distribute them to others.
If this passes, another part of the equilibrium that Tyler asked us to solve for is to significantly reduce support for the welfare state. Before, the concept was that everyone pays in and everyone gets benefits. When you start scaling back benefits for the rich, you are breaking the concept of universal benefits.
In the U.S., people have to pay for their own elder care until they are impoverished enough (meaning, having no assets worth mentioning and extremely low monthly income) to qualify for Medicaid. A nursing home will certainly seek payment from all of its residents and from their estates after they die unless the resident qualifies for Medicaid. May’s proposal sounds less severe.
Except that “impoverished” in the case of Medicaid excludes the most or all of value of the home in most jurisdictions. Texas, for example, doesn’t consider the home a countable asset unless it’s value is over $534,000. Medicaid also doesn’t require “extremely low incomes.” The cap for Medicaid nursing home coverage is about $2,000 a month, and any income above the level can be placed in a health care trust to include income to the qualifiying level.
Max income for a single person to qualify for Medicaid in TN is $11,880 per year. That would qualify as the working poor in my opinion.
That’s Medicaid for medical expenses. Re long-term care expenses, there are spending money limits, but they’re primarily looking at your assets.
To a certain extent, just in reverse, this is done already. The elderly spend down their wealth, or transfer it in various ways, in order to qualify for Medicaid, which will pay for long term care for those without assets.
What if we had the same policy for Medicare? After you die, your estate repays Medicare expenses?
Or… just make estate taxes in general broader and applicable to more people. Bring down the exemptions so that even the middle class pays estate taxes.
If you set up welfare states, remove shame in using welfare, etc. expect people to game these systems.
I bet it’s especially hard to shame someone after they are dead.
What about Jacob Marley?
He was dead to begin with.
But he repented AFTER dying. He used to be like Scrooge, he himself said so.
“‘I wear the chain I forged in life,’ replied the Ghost. ‘I made it link by link, and yard by yard; I girded it on of my own free-will, and of my own free-will I wore it. Is its pattern strange to you?’ Scrooge trembled more and more. ‘Or would you know,’ pursued the Ghost, ‘the weight and length of the strong coil you bear yourself? It was full as heavy and as long as this, seven Christmas-eves ago. You have laboured on it since. It is a ponderous chain!’”
“Mankind was my business. The common welfare was my business; charity, mercy, forbearance, benevolence, were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!”
My first agreement with Thiago, but Jacob Marley is a good call!
“He that troubleth his own house shall inherit the wind: and the fool shall be servant to the wise of heart”
Note that at the moment, social care is means tested and people do pay out of their own estate, but their residence is exempt. The change would be that the residence is not exempt (up to a limit of £100,000).
If you own a few cheap properties and need care, good luck leaving that estate to your family. Own one expensive one, and your inheritance to your children is fully state subsided. Great if you’ve got an expensive London house, not very good if you’ve downsized to a cheaper place and pocketed the difference. There was, it seems, a huge backlash to correcting the imbalance.
Residences are not exempt, except temporarily if a spouse is still living in the house. They are subject to having a lien placed on them and after a spouse has died the house will be sold on the open market (immediate family is banned from buying it) and the proceeds go to Medicaid. I am surprised people are not aware of this.
What country are you talking about here?
This is the UK, where the general idea is that when people are ill, the state will cure them paid for by taxation. However the problem arises when they are ill but incurable, and have to be looked after until they die by natural causes. The state will not pay for this terminal care, but someone has to. The existing method is that people pay for themselves until their assets run down to very little, then the state takes over. But the value of their home was excluded. Now it was suggested that their assets could run down to UKP100k including the value of their home, but they (and their partner if any) would keep the home until after they had died when it would be sold to pay the bill.
I am not quite sure what would happen if they deliberately married someone a fraction of their age once their first partner dies – whether this person could keep the home.
An alternative to the high cost of care in old age is for the patient to have a direct relationship with the carer and pay just the money that ends up in the carer’s pocket with the present system. No tax, insurance, agency fees and so on. Possibly some form of Internet business like Uber will appear to disrupt the care business to keep things under control. If the money changed hand by a cryptocurrency there may be little a government could do to stop it.
The thinking is that this problem will never go away. But this does not take into account the growing speed of technology advance. Many of these incurable conditions of old age will become curable. Google The SENS Foundation. If governments are concerned, they could speed this up even more by relaxing some regulations. There will be more risk of harm to come individuals on the way, but on average many more people will benefit. There should be plenty of volunteers, or certainly enough to get the job done quicker, for taking a risk over some novel treatment if the alternative is certain disablement followed by death.
If you spend 50 years telling your population that healthcare is a right, they are going to be somewhat upset if you start billing them for it. Imagine the outrage if the US started billing wealthy murder victims’ estates for the cost of the investigations and you’ll have some idea of how May’s proposal struck British sensibilities.
The obvious solution to paying for “care” in old age is insurance, since the cost is high but the probability fairly low. I gather that firms have not been able to make a living from it in the UK. I guess that that is because everyone (a) hopes it won’t happen to them, and (b) plans that if it does happen to them the taxpayer should cover the cost.
Anyway, May has learnt a lesson about being frank in politics, and treating the electorate as a bunch of grown-ups: namely, it’s inadvisable.
Underwriting standards for LTC insurance can be pretty severe. I know someone turned down because he’d had some vertibrae fused a quarter century earlier.
Even if one wants to socialize coverage for the relatively small percentage of people with pre-existing conditions, one should do so with a narrowly targeted program instead of having the government take over the entire LTC insurance market for everyone. That was, of course, a crucial mistake in Obamacare’s design.
I’m not sure what you fancy the pre-existing condition is. You cannot differentiate for billing purposes the care received in a nursing home into that derived from spinal fusion and that derived from some other problem.
I don’t think it’s possible to set up actuarial pools for long-term-care that cover more than a modest share of the population. You’ve had socialization of long-term care for over a century (state asylums, poorhouses, sanitorums, &c). Of course, actuarial science is not my trade.
The moderator’s comment elides the distinction between medical care and long-term care. Nursing home residents receive supervision and aid with activities of daily living. There are attending physicians, but these are GPs or internists and they’re in and out (and mostly monitoring medication). You’re dealing with nurses, and more commonly CNAs or LPNs than RNs. Long-term care is very expensive because 24 hour care is sorely labor intensive. The cost inflation in medicine is driven by technology, ‘cost disease’, and misallocation of resources. Only the second of these is notable in a nursing home setting.
I was surprised and disappointed to see a (presumed) conservative oppose this proposal in National Review. Some conservatives managed to (mis-)interpret this policy as an inheritance tax, which is the flip side of progressives’ annoying habit of talking about tax cuts as if they are a form of spending (“paying for” and “affording” tax cuts, etc.). Cuts in generally levied taxes are not a form of spending and benefit cuts, like the one proposed, are not a form of tax hikes.
Under the current policy, the state socializes long-term care insurance at least partly. By including the value of one’s home in determining the amount of state-provided long-term care, the state would be socializing long-term care a little less. Conservatives are supposed to like that. If one wants to insure one’s heirs’ inheritance against one’s own long-term care expenses, one should just buy *private* long-term care insurance. There is no need to involve the state.
Some conservatives might note that the proposal makes socialized long-term care more means-tested, and hence redistributionist, than the existing policy. That may be true. However, over time it seems to be easier to control the growth of means-tested welfare programs than general entitlements. One can at least make a case for welfare for the truly needy. General entitlements just lead to waste and uncontrollably Big Government.
+1
Honestly, the only solution may be revisiting cultural taboos surrounding euthanasia. What gets lost in the debate about the cost of nursing home care is the commonly abysmal quality of life most of these patients have. SlateStarCodex had a great post about just how miserable end of life is in modern medical settings (linked below). What’s even worse is that a culture of blind optimism systematically deceives elderly patients about their chances of recovery or any normal life.
Here’s a better solution, which has the side effect of saving public budgets billions. First make medical care providers be brutally honest about the expected fortune to those in physical decline. It would help if doctors had to present hard probability and timetables estimates rather than vague platitudes. Second make euthanasia available not just to those with specific terminal diseases, but also people with general advanced decrepitude. Encourage people to schedule a specific end of life point. One that they could celebrate with friends and family in comfort. Third, make powerful drugs easily available for those on a time table. Instead of trying to drag an old body out for another 2 years with round-the-clock medicine, pump it full of heroin and methamphetamine for six months and let her do all the things she always wanted to.
http://slatestarcodex.com/2013/07/17/who-by-very-slow-decay/
Honestly, the only solution may be revisiting cultural taboos surrounding euthanasia.
That’s not a ‘solution’, it’s a horror to be avoided.
In fact, I am devising a Final Solution for the Old People Problem.
Can we send them to Brazil? I hear the climate is wonderful for the aged.
I actually wrote Tyler about this once, suggesting the same thing.
The numbers simply don’t add up when it comes to taking care of the elderly, and in a pretty big way.
I’m actually trying to shift the equilibrium myself by openly talking about the (non-extreme) conditions under which I plan to have myself euthanized.
The numbers simply don’t add up when it comes to taking care of the elderly, and in a pretty big way.
We aren’t breaking the bank on long term care.
Not yet.
Most people do not end up in nursing homes. (Note: Not talking about rehab, convalescent care facilities or hospice facilities, all of which are temporary not long term). Most people die after fairly short-term (=months or shorter not years) declines in health. Even most people with chronic conditions can usually live independently with some assistance from family and other caregivers until their final days/weeks when hospice can take over.
Tell you what Tyler, try buying insurance against suffering from dementia.
I mean to, but I keep forgetting.
I’ll sell you some, but if you miss one payment….
And yet there is such a thing as life insurance even though it’s 100% certain that everyone dies.
Will anyone be particularly upset if I’m chosen the first head of the Federal department of Revisiting Cultural Taboos?
This has a certain elegance considering the older people pushed the Brexit solution. Theresa May will have to disappoint a fair share of Brits before this is all over.
Quick note: Many older Americans would gladly trade places.
This is perfectly irrelevant to the issues re Brexit.
How about a discount for seniors that take up motorcycle racing, competitive free climbing, hang gliding, and near-earth-orbit sky diving after age 75?
Wasn’t this covered in the American epic “Death Race 2000”?
Didn’t see it – Hollywood brain poison…
I am in reframing inheritance tax as a medicare tax. When you die, the last 6 months costs of your healthcare come out of your estate, unless you have a surviving spouse, in which case the tax is deferred.
Children, who are beneficiaries of an estate, will be the death panel who will decide how long and how extreme medical care will be offered to their parents.
I remember reading about a Japanese politician who suggested that parents with children should be allowed to vote on behalf of their children in general elections. This issue highlights the issue of borrowing from the future and that the constituents most likely to be impacted by many longer term fiscal decisions are children who don’t have a vote.
In Spain there’s little interest in education and one of the reason posited is that the average voter is 55 years old. As a policy issue Education just isn’t very close to home to an aging population (Healthcare is) . I like the proposal, but in today’s world it’s doomed given the age of most voting populations. It also includes an implicit tax on lifestyle choices. As an aside, as more and more people sign up to “23 and me” genetic profiling one could adjust the lifestyle “controlling” for one’s genetic endowment.
You could just pool the risk as for other care, by having state funding and a 100% inheritance tax. Inheritance and economic rents are not justified on any universalist or utilitarian grounds. In the long run, it leads back to feudalism. So remove them. All taxes can be exchanged for one antoher, so not taxing unearned income means more tax on earned income at any given level of government spending.
I recall a sci-fi tale vaguely along these lines, but alas can’t recall the title or author.
Alien beings invaded and took over Earth and drew it into their economy. As Earthlings had nothing to trade with the aliens, Earth remained a poor backwater in a populous universe. Then one person wrote something (a book or a song) that went viral around the universe. Everyone else on Earth was jealous of his wealth. The Earth government confiscated all of it, and threatened to kill him if he made any sort of fuss. After a while, it was discovered that the new found wealth was subject to alien law, and the aliens had a law against inheritance. Suddenly, the key character becomes very important and is kept alive at all cost and for as long as possible, being allowed to keep anything he wants.
(A good job the aliens had no law against copyright.)
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