Subject: RE: More on Risk: A Response to Mr Reischauer
>From: Javier Jimenez
>>>>Just because benefits remain constant during economic downturns does not mean that beneficiaries have been shielded from the effect of the downturn. The government of course has to balance the in side of the equation with higher taxes, fees, etc. Even if those taxes and fees are not levied on the beneficiaries, they affect them, nonetheless, by changes in prices due to many factors; one I could think is: the higher taxes now paid by the beneficiary's doctor will cause the doctor's fees to go up. Ooops!, a hole in the safety net; perhaps, then we should propose government controlled pricing so that beneficiaries are truly protected. Or better yet, why don't we all move to China and have the government protection afforded to all Chinese.
What a response. To a post talking about differences between individual and shared risks, you say to move to China. Maybe we ought to tell that to those life insurance companies. They sell policies that allow individuals to convert their individual risk to a group risk. They don't automatically raise rates every time somebody dies. For the gov't to average out the highs and lows does not necessarily imply higher taxes or costs. The average IS the average.
You don't seem to understand the concept of pooled risk. It is not just a communist idea. Insurance companies thrive on it. It is a real issue in the debate. We can disagree on its value to each of us individually, but it deserves consideration before we do away with it in SS reform.
