Sunday, June 20, 2004

Rising medical malpractice insurance costs
We have come to be a litigious society. Like so many other things which began as responses to legitimate needs, the right to seek redress and compensation through civil, rather than criminal courts, served a valid purpose. But, like so many other things which have gone down the same road in our culture -- rampant misuse, abuse and exploitation in the name of pure greed -- the litigation process now has aspects which do more than damage a single individual's or even a corporation's bank balance. One direct effect of soaring litigation rewards is to drive medical malpractice insurance rates up to the point where doctors are forced to do without it or simply opt out of treating some individuals.

It's hard to argue that someone who has been seriously injured or the family of someone who has died due to a doctor's error isn't due compensation, given that we as a society have long ago accepted the idea of medical malpractice. But the dollar value of a human life, if there even is such a thing, continues to be difficult to define or agree on. In sensational trials and settlements the huge amounts of money at stake take on lottery proportions, appealing to rich vs. poor or little guy vs. big guy views, and are seen by some as a way for the underdog to strike back and get rich quick rather than seeking just compensation. And while the successful litigant(s) in such a case may collect a substantial sum of money, the bulk (as much as two-thirds to three-quarters) goes to the trial lawyer's firm. Both may be satisfied with the result, but where do the costs of these proceedings actually come to rest? To be sure, the defendant's insurance company will pay, but will then attempt to recoup that money through higher rates. The cost to doctors of those higher rates is then passed on to their patients. And the beat goes on.

By Robert Parker at 10:04 AM | Permalink
Category: Health and Retirement Care | Comments (0)

Sunday, May 2, 2004

Social Security is not going broke!
Social Security is just like any large-scale retirement plan such as those established by major corporations like GM or Pfizer, or industry groups like the Teacher's Retirement System or Railroad Retirement. That is, the Social Security Administration receives contributions from its members (FICA taxes from you and me), it invests those contributions in investments allowed by its charter, and then later pays out benefits to retirees. Most large pension plans, like the ones mentioned above, only invest about 30-60% of their assets in government debt because their charters also allow them to invest a portion of their assets in corporate stocks and bonds. The Social Security Trust Fund, on the other hand, invests 100% in U.S. government debt. This means two things (a) its returns are low because interest rates have been low for the last few years, and (b) its totally dependent on one organization for its future security. Now if you believe the U.S. government will never default on its debt, then “b” is no big deal – but, “a” is still a problem. Right now the Social Security Trust Fund should last out past 2025 (some say as far out as 2045) without any increase in Social Security taxes. However, that deadline could be extend out way further if the Social Security Trust fund was allowed to invest a portion of its assets in corporate stocks and bonds. Therefore, the way to make Social Security financially sound is by retaining professional money managers (mutual funds, insurance companies, etc.) to invest a portion of the Social Security assets in corporate stocks and bonds which would increase the return on the Trust Fund assets and extend its life at current contribution levels –it could even cause a surplus and contributions could be reduced! The problem then is that the government (made up of both Democrats and Republicans) would have to go find another source to to buy its debt so it can overspend (“deficit finance”) every year– but that's another discussion!

By Ray Darnell at 7:57 PM | Permalink
Category: Health and Retirement Care | Comments (0)