Friday, April 8, 2011

Gross Domestic Product (GDP) and the Value of a Human Life

There is an old Jewish teaching that if you put a single human life on one side of a scale, and the rest of the world on the other side, the scale would be balanced equally.

But some of Washington’s newly-elected representatives intend to take the wisdom of this teaching and tear it apart. For instance, when they speak of “cutting fraud and waste in our healthcare systems” all for America’s “fiscal future”, what they really mean is that the lives of over 45 million people receiving Medicare and over 50 million receiving Medicaid services will be made harder and more confusing.

95 million people – babies, grandparents, and the neighbor that had an accident

The new class of lawmakers has put a divisive spin on the programs, services and protections that have helped support the needs of the aged, the poorest and the disabled, while assuring. While we contemplate the inherent unfairness of these policies, perhaps a good question to ask is: should the value of human life be calculated on how much we contribute to the GDP?

Have you ever wondered what your life is worth in pure financial terms?

According to the U.S. Environmental Protection Agency, the price of an American’s life is currently $9.1 million dollars. Over at the U.S. Food and Drug Administration, however, a human life is only worth $7.9 million dollars. Either option, however, is arguably better than in India, where the World Bank has estimated the value of a human life at less than $5,000.

In 1956, the Quality Adjusted Life Year (QALY) was invented by two health economists. This measurement of “disease burden” quantifies and assesses the value of medical interventions based on the expected quality of life and length of life that will be lived. If a medical procedure would result in a life outcome that includes permanent disability, the QALY ratio would be significantly lower than for someone whose life outcome is expected to result in a full recovery and ‘perfect health’. So based on this calculation, those who are most fragile, most ill, and usually least able to pay may not be worth saving. This harsh and variable ranking system is used to allocate healthcare resources.

But how do we calculate human worth? How do we determine who lives well or even who lives at all?

Medicaid and Medicare have both been unfairly derided as an expensive runaway train of care for the poor and elderly that should be cut and cut and cut. In fact, millions of Americans have benefited from funds that have sustained a wide variety of Medicaid and Medicare programs without regard to ranking or life expectancy. Under a new plan being promoted in Congress, America’s Medicaid and Medicare recipients, whose fundamental value and equality should never be questioned, may not have the health care choices that they need.

Access to healthcare services should not be a lucky privilege that should only be enjoyed by those who can pay for it, or those with the highest ranking of future health.

- Kate F.

Tuesday, April 5, 2011

Saving, when there’s not much to save

Encouraging savings and developing assets (such as a car, a home, or money for emergencies) is especially important for persons with disabilities. These resources allow people to have choices that help with creating a better life - mental and physical health, self-esteem, and opportunities in your community. But, particularly when you live on a fixed income or earn a low wage, it can seem almost impossible. Consider these possibilities:

1. Individual Development Accounts
The Assets for Independence Act passed in 1998 allowed individuals with low incomes to participate in “individual development accounts” (commonly called IDAs). These accounts can really help people save for their own home. The core elements of the act included a savings match incentive, and financial literacy and homeownership counseling. A larger down payment provides more affordable loan terms and lessens the risk of potential foreclosures later.

The Assets for Independence Act expired in 2003, but is currently being reintroduced with streamlining of operating requirements, expanded eligibility, and enhanced funding. The Savings for Working Families Act would include an IDA tax credit, and authorize $4 billion over ten years to support financial institutions’ efforts to participate in matching individual savings. “Auto Save” directs a small amount of post tax wages to be automatically deposited into a new low cost individual savings account – in this case fund use is not restricted, so could be used for any emergency needs.

2. Retirement Investment Account Plan
One idea for those whose employers do not offer a retirement plan is to develop a “Retirement Investment Account Plan”. This would be a government authorized, but privately run central clearinghouse to accept worker contributions to retirement savings accounts. These workers would have access to an automatic payroll-deduction retirement savings account through their workplace. The employer would not have to administer the plan or take responsibility for the investment choices of employees.

3. Saver’s Bonus
A recent proposal from the New America Foundation is the “Saver’s Bonus”. This would create an incentive for low income individuals and families to save at tax time. Tax refunds represent receipt of the largest check families will receive all year. For example, in 2009 the average refund was just under $3,000, with over 24 million EITC recipients getting refunds as large as $5,767. Every dollar deposited into an eligible savings account would be matched (that means free to you!) by an additional dollar up to a maximum of $500 per year. The money could go towards your long term dreams such as money for education or retirement under accounts such as IRA’s, 401k’s, and 529 College Savings plans.

If you look around the world, other countries are thinking and trying out other ideas – all with the plan to help everyone save a little more money for the future. In the United Kingdom, and Latin America they’ve tried prize-linked savings. Savers are entered into drawings for small monthly prizes and a larger annual jackpot.

What would help you save more?

- Dave