SOCIAL SECURITY & HEALTH CARE
is one of several DAF working groups. More about them here.

Please indicate whether you would be interested in serving on
this subcommittee by contacting Peter Goldfarb.

Topics for consideration include health care reform in the USA, reducing the price of drugs, comparing the health care plans of the 2008 candidates and others.

Pharmaceutical resolution | Goals and ideas | Social Security

Can the U.S. health system be cured?

With more than 45 million people without health insurance and millions more underinsured,  is the U.S. health care system broken? If so, how can it be fixed? These were the main questions at  a  forum moderated by Peter Goldfarb, chair of the DAF Health Care/Social Security subcommittee at the American University of Paris Oct. 29.

The wide-ranging discussion was  opened by Dr. Elizabeth Docteur, deputy chief of the OECD health division, who presented many measures  showing that the U.S. care system cost more and delivered less than most of the 30 countries in the OECD.  Specifics: Medical costs consume nearly 16% of the nation’s national  spending and are rising faster than inflation. This  is  double the rate of spending in France, yet life expectancy in the U.S. is an average of a year less that in France and the other OECD nations.

She noted that the U.S. system relies heavily on  private insurance, and health care is mostly considered a matter of individual responsibility rather than a  fundamental  human right. There is an overinvestment in insurance, Docteur said,  but  America has  fewer doctors per  capita and ranks  near the top in infant morality and coronary problems. The U.S. does have some of the best training and treatments in the world, but millions of people don’t get it. Doctors and most patients have few incentives to consider costs. One bright spot is that the U.S. has reduced cancer deaths by cutting down smoking.  

She was followed by Tom Rose, chair of AARO’s Health Care and Social Security Committee, who detailed the retiree association’s  case for extending Medicare to Americans overseas, so far without little result. Rose noted that there are some minor waivers, mainly for people living near the borders in Mexico and Canada who can use the foreign facilities if they are closer than American ones. In another case, Americans who are traveling from one U.S. area to another through a foreign country, for example, from Washington State across Canada to Alaska, can get Medicare reimbursement if they fall sick in Canada. A proposal to extend Medicare to more than 400,000 Americans living in Mexico  failed. The reason is that Congress resists extending Medicare to all  Americans Abroad  as too costly,  difficult to administer and hard to control fraud. One possibility is setting up individual health savings accounts but so far, this is limited.

Bill Sara, a pharmaceutical industry consultant and retired AUP professor, detailed the French approach where  doctors’ fees and drug prices are kept lower because doctors and drug companies have to negotiate rates and prices with the government.

Goldfarb described the political landscape with the Democratic presidential candidates focusing on extending the current system by requiring mandatory coverage and making better use technology to control costs, but shying away from a universal healthcare system. Neither party is likely to propose cutting private insurance companies out of the system, he said.

In a fast and furious question period, members of the audience suggested such things such as a cap on insurance and  pharmaceutical companies’ profits, legalizing cross-border purchases of drugs, widening medical education, promoting generic drugs and curbing insurance company control of what diseases can be treated and by which doctors.  All of  these have political downsides. The AMA is totally committed to blocking a universal care system or controls on fees, Goldfarb noted. However he said there was a building consensus that it was necessary to reform the system. One  promising approach is to extend Medicare to children; another is to curb HMO ability to control treatments and choice of doctor or cut off insurance for people with “pre-existing conditions.” A proposal  to cap insurance company profits, similar to the public utility model,  isn’t likely to get far.
                                            
The goal of forums such as this is to develop ideas and proposals for the worldwide  Democrats Abroad platform to be submitted to the national Democratic convention in August, get more Democrats into the House and Senate and build political pressure for much-needed reform.
                                                                                      —Barney Kirchhoff   Top...         

A resolution concerning pharmaceutical pricing and practices in the United States was proposed by this subcommittee and adopted June 13, 2007 by the DAF Executive Committee:

WHEREAS the price of prescription drugs in the United States is considerably higher than the same drugs sold in other countries;

WHEREAS many American citizens are forced to choose between prescription drugs, food, home heating or other essentials;

WHEREAS the United States government, the largest buyer of pharmaceutical products, is prevented by law from negotiating prices with the pharmaceutical companies;

BE IT RESOLVED that Democrats Abroad asserts its firm belief that health care is a basic human right and not a privilege, that the strength of our nation rests on the foundation of the health, education and safety of our people and that the pharmaceutical industry, while entitled to make a reasonable profit necessary for the development of new and more efficacious drugs, nevertheless should offer its products for sale in the United States at fair prices;

BE IT FURTHER RESOLVED that the federal government should have the right to negotiate prices for prescription drugs purchased in connection with Medicare, Medicaid and other government health programs, and Democrats Abroad France hereby calls on Congress to adopt implementing legislation to those ends. Top...

Ideas

For papers

• Compare the health care proposals of the 2008 presidential candidates
• Health data paper—compare U.S. health outcomes with other countries
• U.S. state proposals—compare CA, MA, VT and other state programs
• Health insurance—review current state of health insurance sector; consider alternative plans such as re-insurance for highest risk pool
• Pharmaceutical issues—suggestions on how to reduce the cost of drugs in the U.S.
• Medicare Trust Fund—status report on the deficit in the fund; call for high level bi-partisan commission to fix it (as was done in 1983 for Social Security)
• Potential technical improvements in health care, e.g. automated medical records
• Health care and the poor in the US—how the system is failing the poor

  Potential projects

• Create a space on the DemsFrance website for Health Care/Social Security and load articles and other developments as they arise
• Hold a seminar or forum which updates health care reform as proposed by the candidates (perhaps in the autumn)
• Invite a speaker with national or international credentials in the health care business, e.g. a health economist, medical researcher, hospital CEO or others
• Develop a position paper of DAF on health care reform (difficult because of the complexity of the issue and the broad range of views)

PREVIOUS PROPOSED SOLUTIONS TO SOCIAL SECURITY SOLVENCY May, 2005 - Earlier fact sheet

Projected deficit in the Social Security Trust Fund (SSTF): Per the Social Security Trustees Report for 2005, the SSTF will be depleted in 2041. From that date until 2079 (the end of the normal 75-year evaluation period), the Social Security system will be able to pay only 75% of benefits currently specified by law. To pay benefits at the100% level, Congress must adopt changes amounting to $4 trillion.

Potential solutions

• Increase the wage ceiling for calculating payroll taxes from the current level of $90,000 to $140,000: o Solves 40% of deficit per Business Week (5/30/05)
• Increase the payroll tax by 1.92% from 12.4% to 14.32%: Eliminates entire deficit per Social Security Trustees Report 2005
• Former Social Security Commissioner Robert Ball's proposal: Gradually raise the wage ceiling so 90% of all income is taxed (current level is 85%; Greenspan Commission of 1983 called for 90% level). Starting in 2010, apply Social Security taxes to state and local workers. Retain estate tax provisions and dedicate estate tax revenues to SSTF. Result: eliminates the deficit completely.
• Robert Pozen's proposal (noted by President Bush): Apply "progressive indexing" starting in 2012—for low-earners, link benefits to wages (which normally rise faster than prices); for high-earners, link benefits to prices (increase more slowly); use "blend" for mid-level earners. Result: It is estimated that this will reduce the deficit by 75%.
• Other proposals are being drafted by members of Congress and other parties.

Assessment
No matter which proposal is eventually adopted, it is apparent that some level of tax increase, benefit decrease or a combination of both will be needed to make the SSTF solvent through the rest of this century (although Robert Reich, former Secretary of Labor with responsibility for the Social Security system under the Clinton Administration, notes that the SSTF deficit may never materialize if we assume that the US economy will continue to grow through the rest of the 21st century at its historic average rate of 3.2% rather than the rates used by the SSTF actuaries of 2.7% through 2014 declining to 1.8% by 2079).

Congress will struggle in the months to come with the question of which Americans should bear the greater burden of these changes and whether private accounts are part of the solution. As C. Eugene Steuerle, a senior fellow at the Urban Institute and an expert on Social Security reform, put it, "One way or another, somebody's going to have to pay. I'm guessing it will be the middle class and the upper class."

Alert - If you think the Social Security debate is complex, prepare for an even bigger challenge —the Medicare Trust Fund deficit. According to the Social Security Trustees 2005 Annual Report (available at www.socialsecurity.gov or www.socsec.org), the Medicare Hospital Insurance Trust Fund will be exhausted by 2020. To bring it into balance during the next 75 years would require "a 107% increase in program income or an immediate 48% reduction in program outlays (or some combination of the two)". If no corrective action is taken, the Hospital Insurance Trust Fund will be able to pay only 27% of benefits by the end of the 75- year lookout period. More information will be provided in the months ahead as this issue moves toward center stage. Top...

SOCIAL SECURITY FACT SHEET April

WARNING: Social Security privatization is not yet defeated. Beware of new distracting tactics and language

Solvency First: Recent surveys indicate that Americans in growing numbers believe Social Security faces financial difficulties. Yet polls also indicate the public is increasingly skeptical of the President's call for voluntary personal accounts. SOLVENCY, not privatization, of the Social Security system does need to be addressed. Senators and members of Congress from both parties have been discussing ways to guarantee the financial future of the system which may include one or more changes such as tax increases, adjustments in the levels at which payroll taxes are assessed, changes in the age for eligibility, potential reductions in benefits and other possible solutions. However, so far the broader debate over ensuring Social SecurityÕs long-term solvency has stalled over opposition to partial privatization.

Bush's Flip Flop: After failing to convince the American people that Social Security requires private accounts to save it, President Bush has "flip-flopped" and changed his strategy. Now he says that private accounts are part of "The Ownership Society." Since the polls tell him that Americans donÕt like the privatization idea, he has taken to calling them "personal accounts" as if that would change the substance of his plan. Democrats have said they would be much more inclined to embrace the private accountsÑthe signature item of the PresidentÕs proposed Social Security overhaul—if such accounts were treated as an add-on. Rep. Sandy Levin, the senior Democrat on the House Ways and Means Social Security subcommittee, said in the Democratic Party's weekly radio address, "The President's proposals to divert Social Security money to private accounts move us in the wrong direction. They are a roadblock—standing in the way of bipartisan efforts to strengthen this vital program for all future generations."

Beware: While the whole issue of Social Security is still very much in flux, we urge you to beware of the President's dangerous remarks about the Social Security Trust Fund. The President and other leading spokesmen for the Administration say that the Trust Fund assets are not "real" because they consist of US Government Treasury Bonds, which are IOU's and not hard cash. Yet, the President is quite content to have the governments of China, Japan and other major trading partners continue to buy these same US Government Treasury Bonds to support our trade deficit. If you asked knowledgeable investors, they would certainly say that these bonds are one of the most secure investments available today anywhere on earth, yet President Bush, Vice-President Cheney and others continue to talk about them as if they are worthless. As stated in a recent New York Times editorial, "Social Security takes in more money than it needs to pay current beneficiaries, and the excess is invested in Treasury securities. They carry the same legal and political obligations as all other forms of Treasury debt, every penny of which has always been paid in full and on time. Mr. Bush wants Americans to believe that the trust fund is a joke. But, if the trust fund is a joke, so is the full faith and credit of the United States." The Social Security Trust Fund is not bankrupt or fake—it is real and is on solid footing for many years to come, and, with some minor adjustments, the current Social Security System should provide our citizens with their full benefits under the law through the end of this century.

YOU CAN HELP. CONTACT YOUR SENATOR OR MEMBER OF CONGRESS AND ASK THEM TO OPPOSE PRIVATIZATION AND SUPPORT REFORMS THAT WILL TRULY GUARANTEE THE SOLVENCY OF THE SOCIAL SECURITY SYSTEM.

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