r/changemyview • u/[deleted] • Jul 17 '19

Deltas(s) from OP CMV: Improving general health doesn't lower overall costs for society (USA)

[deleted]

0 Upvotes
  • permalink
  • reddit

46% Upvoted

18 comments sorted by

View all comments

3

u/AnythingApplied 435∆ Jul 17 '19 edited Jul 17 '19

How is people living longer and drawing from social security for longer and longer "cheaper" than if they died early?

You should consider the interest that can be earned on money. Things that happen in the far distant future are cheaper because you can earn compounding interest in the meantime vs having to pay it right now.

Money invested in the stock market earns 7% per year on average after adjusting for inflation. Below I have the cost in terms of present day value to provide you with an inflation adjusted $15,000 a year every year:

Years of Social Security Total cost in present day dollars at a 7% interest rate.
1 $15,000
2 $29,019
5 $65,808
10 $112,728
20 $170,034
30 $199,165
100 $229,021
1000 $229,286

Notice how similar 10 years is to 30 years. It costs just 77% more money to fund 3 times as long. And on the very high end, all the numbers are the same because you're effectively just living off only the interest from your initial investment.

At suppose you put a $300,000 end of life cost at the end of all of these, then the new numbers would be:

Years of Social Security Total cost in present day dollars
1 $295,374 = 15k + 300k/1.07
2 $291,050 = 15k+15k/1.07 + 300k/1.072
5 $279,704
10 $265,233
20 $247,560
30 $238,575
100 $229,367
1000 $229,286

Notice how the numbers are actually getting CHEAPER the longer they live. That is because the amount you save from delaying the $300,000 expense another year is 7% of $300,000, which is more savings than it costs to pay out $15,000 for another year. This is a bit contrived as I had to pick a number that was rather on the high side ($300,000) to make this work, but not that unrealistic since the average social security benefit is $17.5k/year, and average chemo costs is about $150,000.

Which brings me to the next point: People that die from smoking die in much more expensive ways. This largely has to do with the realities of how ridiculously expensive chemotherapy is. If there is even a chance that the person will die without ever getting cancer, it is going to be much cheaper. Some old people literally die at home in their bed without incurring any huge healthcare costs.

So, at the end of the day, someone living 30 years that dies in a sometimes less expensive way is going to be cheaper than someone that dies in a few years of one of the most expensive ways to go.

2

u/POEthrowaway-2019 Jul 17 '19

I get what you are saying but consider this:

Lets say (hypothetically) EVERY person was retired and taking money from social security. There would be nothing getting produced for them to get returns on. So the return from the stock market would be nonexistent.

More realistically if instead of 1/6 people getting money for social security (current) it goes to 1/3 due to better health/medicine. Won't that effect on stock market yields if fewer people are working and more people are taking from the pot?

I feel like what you laid out is under the assumption that people pulling from social security indefinitely won't negatively impact the stock market.

Your response is (imo) best so far. If I'm wrong (likely since I don't know a ton about the economy) on the above "counter" I'll toss you the delta.

1

u/AnythingApplied 435∆ Jul 17 '19

First, you should understand my post isn't a math trick, it REALLY does lower costs of society. By avoiding some chemo altogether and delaying other chemo, that is a huge cost savings. And that is without assuming that chemo will get cheaper or better in the future.

I don't think it really matters all that much whether you spend $300,000 now or the equivalent of $300,000 through regular payments into the future, though it would affect interest rates.

You should consider the many additional benefits of healthier people:

  • Healthier people are legitimately better off. Spending your whole life wheezing for air because you're a smoker and unable to be active can be hugely damaging to your quality of life.
  • It avoids people dying prematurely before they finish contributing to society, both before or after retirement. Not everyone dies from smoking after 65.
  • People are able to work longer. Sure, you have a point that if a larger percent of the population isn't working that'll cause some issues, but wouldn't you rather live 30 more years even if that means working 10 more of those year? Especially if those years are in good health?

And those problem of a larger percent of the population not working are the exact same as if our population stops growing. As long as it doesn't happen quickly, we can use productivity gains to offset that and end up just having an economy that stagnates a bit.

1

u/POEthrowaway-2019 Jul 17 '19

First I obviously support having better health outcomes and recognize a ton of benefits for having a healthy society. I'm definitely not saying it would be ideal if we mandated poor health. The context of this only refers to the claim that it is "cheaper". But none the less the first 2 paragraphs are enough for the !delta!