SOCIAL SECURITY MYTHS: Following are five myths about the causes and impact of Social Security’s anticipated Insolvency:

1. Social Security isn't a big-deal problem because, absent any change, the system will be able to pay 75% of promised benefits in 2041. Even those reduced benefits would be larger, in real terms, than what current retirees receive: Those numbers are correct; the implication isn't. Social Security represents the only source of income for one-third of elderly households and more than half the income for another third. No one wants to see those benefits suddenly slashed by a quarter -- least of all those who care about preserving what Franklin Roosevelt called "some measure of protection . . . against poverty-ridden old age."

Advocating thumb-twiddling as sensible strategy ignores the reality that acting sooner spreads the burden of change across more generations, allows changes to be phased in gradually and lets future retirees plan ahead.

2. Social Security isn't a big deal because the shortfall is small (less than 2% of taxable payroll), smaller when measured as a share of the economy (less than 1%of gross domestic product): The shortfall is small, and it's a lot smaller than the Medicare shortfall. But increasing taxes or cutting benefits by an amount equal to 2% of payroll shows only what it would take to make Social Security solvent if that change were made immediately. Even then, this is only the amount needed to shore up the program for the 75-year actuarial period, leaving it suddenly strapped for cash at the end of that time. Waiting decades would require a much bigger tax bite or benefit cut. Social Security isn't the biggest budgetary challenge, but it's the largest single federal program and the most easily fixable.

3. Social Security isn't as big a deal as it was a few years ago because the insolvency date has been pushed back, from 2029 (the projection in 1996) to 2041 (the projection this year): The projections have improved, but the problem remains. Those who thought Social Security was a significant problem in 1996 with insolvency projected in 33 years can't cavalierly dismiss the matter today with insolvency projected in 34 years. The bottom line is that the long-run outlook has remained virtually unchanged for the last thirteen years.

4. Social Security isn't a big deal because the trustees' projections are based on unduly pessimistic assumptions, including anticipated economic growth that is slower than has been the case for the past several decades: The projected slowdown in economic growth is based largely on the slower growth of the workforce, which is inevitable unless fertility rates or immigration soar beyond all predictions. Better-than-expected growth cuts both ways: It increases the amount of payroll taxes coming into the system but also the amount of benefits owed. Even if the economy were to grow significantly faster than predicted, that growth would push insolvency back by only six years. Weighing in the opposite direction: The trustees' projections on life expectancy may be too low -- good news overall, bad for Social Security. Yes, the trustees' optimistic scenario shows Social Security solvent for more than 75 years, but that is so unlikely (fertility would have to return to pre-1970s levels, for one) that Social Security puts the chances at less than 2.5%. Furthermore, Social Security's intermediate projections are in line with those of other experts. "There is a greater than 99% probability that total outlays over 100 years will exceed total revenues," the Congressional Budget Office found last year.

5. Social Security wouldn't be a big deal if politicians would stop raiding the trust fund for other purposes, such as financing President Bush’s tax cuts: This point conflates the Social Security shortfall with the larger question of fiscal discipline: using the trust fund to underwrite current spending (especially Bush's unaffordable tax cuts) and mask the real deficit. Eventually, the government's borrowing is going to have to be repaid, adding budgetary pressure at precisely the wrong time -- a strong argument for a more prudent fiscal policy. But Social Security would face the same shortfall even if the now-forgotten lockbox had not been picked. [Source: Washington Post Ruth Marcus article 28 Nov 07 ++]

AGENT ORANGE LAWSUITS UPDATE 11: On 19 NOV Acting VA Secretary Mansfield approved a notice for publication in the Federal Register to rescind provisions of its Adjudication Procedures Manual, M21-1 that were found by the U.S. Court of Appeals for Veterans Claims (CAVC) not to have been properly rescinded. The notice can be reviewed in the 27 NOV issue (Volume 72, Number 227) Page 66218-66219. The notice in effect says that since a 2001 change to the manual’s 1991 provisions has been ruled illegal by the CAVC it would be further changed if the VA lost their appeal to this ruling. The provision in question allowed veterans who received the Vietnam Service medal and served offshore in Vietnam during that war the presumption of exposure to Agent Orange in accordance with a 1991 ruling of the Veterans Court. The VA subsequently changed the rules in their M-21 manual in 2002 taking away this right which brought on the Haas v. VADC-Nicholson lawsuit which the VA lost and is currently appealing. Now the VA is seeking to correctly alter the M-21 provisions by giving notice and a time for comment as required when an agency makes a "substantive change".

The VA is in effect trying to wipe out both the 1991, and 2002 M-21 manual provisions laying the groundwork for a new provision which will allow the VA to continue denying Blue water Navy the

same rights as their fellow veterans who received the Vietnam Service medal. And at the same time they say that if they win their appeal to the Federal Courts, they will withdraw this change and keep the M-21 change of 2002 which denies presumption of exposure. Bottom line either way NO COMPENSATION for Blue Water Navy veteran’s Agent Orange related disabilities. Veterans are encouraged to exercise their right to comment on the change. Written comments must be received by VA on or before 28 JAN 08.

MEDICARE UPDATE 05: The increasing cost of health care, driven primarily by the cost of emerging medical technologies, is a greater threat to the financial sustainability of Medicare than the aging of baby boomers, according to a recent Congressional Budget Office (CBO) report. The Long-Term Outlook for Health Care Spending, released this month by the CBO, projects that medical coverage for a growing aged population will account for only 25% of Medicare spending growth through 2030. On the other hand, the rapid growth of health care spending, rooted in the rising cost of medical technology and increased use of services, will account for 75% of Medicare spending increases through 2030, and 90% through 2082. The CBO predicts that by 2082 spending on Medicare and Medicaid alone could account for one-fifth of the nation's gross domestic product. The projections, which were 50% higher than those released by the Medicare trustees, left federal regulations unchanged to demonstrate the long-term fiscal effects of current Medicare and Medicaid policy, which the report describes as "unsustainable". The CBO recommends expanding research on cost-effective care and reimbursement methods that provide incentives for low-cost interventions and penalize providers who opt for high-cost and unnecessary care. According to Peter Orszag, director of the CBO, between 5 and 50% of health care spending could be eliminated without harming health outcomes, with 30% given as a common estimate. In response to the report, Senator Max Baucus (D-MT) and chairman of the Finance Committee, vowed to jump-start hearings on health care costs and methods to overhauling the health system. He concluded that finding ways to make the health care system more efficient and cost-effective will reduce costs for all health care users, public and private, and . . . will pave the way toward getting Federal spending truly under control. [Source: Medicare Rights Center Newsletter 27 Nov 07 ++]

VISTA BUSINESS CONCERNS: Microsoft is struggling with business concerns over their Vista operating program. The majority of IT professionals worry that migrating to Windows Vista will make their networks less stable and more complex, according to a new survey. Ninety percent of 961 IT professionals surveyed said they have concerns about migrating to Vista and more than half said they have no plans to deploy Vista. "The concerns about Vista specified by participants were overwhelmingly related to stability. Stability in general was frequently cited, as well as compatibility with the business software that would need to run on Vista," said Diane Hagglund of King Research, which conducted the survey for systems management vendor Kace. The survey, echoing one from Forrester last week, shows most IT professionals are worried about Vista and that 44% have considered non-Windows operating systems, such as Linux and Macintosh, to avoid the Microsoft migration. "Clearly many companies are serious about this alternative, with 9% of those saying they have considered non-Windows operating systems already in the process of switching and a further 25% expecting to switch within the next year," the report "Windows Vista Adoption and Alternatives" reads. Macintosh leads the pack of Vista alternatives, with support from 28% of respondents. About a quarter said they would opt for Red Hat Linux, with SUSE Linux and Ubuntu each garnering 18% of the vote. Another 9% cited other Linux operating systems and 4% were unsure. IT professionals also said that virtualization is one of the technologies making a move away from Microsoft possible. About two-thirds reported that the use of virtualization has made it easier to implement an alternative. Yet heterogeneous systems management could be a barrier to going with a provider other than Microsoft, the survey found. Respondents reported that challenges include the need to manage multiple operating systems (49%) and the need to learn a different set of management tools (50%). Sixty percent manage their Windows systems with tools that don't support non-Windows environments. "Almost half of all participants (45%) cited challenges with system management in non-Windows operating systems as preventing them from adopting" alternatives, the report states. [Source: Federal Report 11-20-2007 ++]

VA HOSPICE CARE UPDATE 01: Hundreds of hospice providers across the country are facing the catastrophic financial consequence of what would otherwise seem a positive development: their patients are living longer than expected. Over the last eight years, the refusal of patients to die according to actuarial schedules has led the federal government to demand that hospices exceeding reimbursement care limits repay hundreds of millions of dollars to Medicare. The charges are assessed retrospectively, so in most cases the money has long since been spent on salaries, medicine and supplies. After absorbing huge assessments for several years, often by borrowing at high rates, a number of hospice providers are bracing for a new round that they fear may shut their doors. In the early days of the Medicare hospice benefit, which was designed for those with less than six months to live, nearly all patients were cancer victims, who tended to die relatively quickly and predictably once curative efforts were abandoned. But in the last five years, hospice use has skyrocketed among patients with less predictable trajectories, like those with Alzheimer’s disease and dementia. Those patients now form a majority of hospice consumers, and their average stays are far longer — 86 days for Alzheimer’s patients, for instance, compared with 44 for those with lung cancer, according to the Medicare Payment Advisory Commission.

The commission, which analyzes Medicare issues for Congress, recently projected that 220 hospices — about one of every 13 providers — received 2005 repayment demands totaling $166 million. The National Alliance for Hospice Access, a providers’ group that is lobbying for a three-year moratorium on the collections, places the numbers at 250 hospices and $200 million. Because fewer than a tenth of all hospice providers have faced repayment, Medicare officials suggest that management might have been an issue. But Lois C. Armstrong, president of the hospice access alliance, said that if the cap on Medicare reimbursements was not lifted, the availability of care would tighten at a time when demand for hospice care was exploding and when new research suggests it saves money for the runaway Medicare program. Medicare’s coverage of hospice, which began in 1983, has become one of the fastest growing components of the government’s fastest growing entitlement. Spending nearly tripled from 2000 to 2005, to $8.2 billion, and nearly 40% of Medicare recipients now use the service. To be eligible, patients must be certified by two doctors as having six months or less to live, assuming their illness runs a normal course. They must agree not to bill Medicare for curative procedures related to their diagnosis. Medicare, which pays the vast majority of hospice bills, reimburses providers $135 a day for a patient’s routine home care. The hospice is then responsible for providing nurses, social workers, chaplains, doctors, drugs, supplies and equipment, as well as bereavement support to the family.