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Thursday, August 7th, 2014   8:58 pm |  Category:   Finance, Health, Life   |   Add Comment
Author:   Terri Benincasa posts: 3 Author's
We constantly hear about the need to tackle entitlements as part of getting the federal budget under control, which leads to two compelling questions:
- Are Medicare and Social Security “entitlements” (is the term accurate)?
- Is there a need to “reform” them?
First, to the question of entitlement.
As have we all, I’ve paid into Social Security my entire working life (I started @ 16… that would be a ton of candles on my worker cake…), the promise being receipt of the benefits I’ve earned upon reaching a certain age.
The same goes for Medicare, which, like Social Security, is funded in most part by payroll taxes and gets additional funding by income taxes on SS benefits (which we will be paying) and interest earned on trust fund investments.
So…yes…we are entitled to both of them: Any argument to the contrary, often used to base debate on a complete overhaul of both systems, is incorrect.
And don’t get bamboozled by the misuse of the term for our situation. “Entitlements” to Congress nowadays, and perhaps to many citizens, means “welfare” “food stamps” and other government programs for the poor/disabled. Some of fine folks in DC then state that the poor/disabled feel “entitled” to such assistance, choosing to draw on it rather than work and provide for themselves.
They go further by lumping our Social Security and Medicare in with this type of “privileged feeling.”
According to Websters, “entitlement” has three meanings:
- the condition of having a right to have, do, or get something – this is us in reality
- the feeling or belief that you deserve to be given something (such as special privileges) (this is the poor/disabled according to some in Congress) – this is how Congress tries to also portray us
- a type of financial help provided by the government for members of a particular group (this is programs like SSDI, SNAP, Medicaid, etc.)
Now, onto the need to “reform” them.
SS & Medicare were set up to pay for themselves, and in fact Social Security would be running a surplus were it not for the raiding of it over decades to pay for other things. Medicare is indeed rife with fraud (I’ve seen just the tip of it in billings for my father and for services they hadn’t approved…we reported it…Medicare ignored it), but the good news is, unless the Medicare trust fund is being handled by Bernie Madoff, it ought to be doing well, so that’s a plus.
That said, unfortunately we do need to reform them.
According to the Department of the Treasury Trustee’s latest report (7/14), both are solvent today….but that will last until just 2034. And many of us will still be around at that time. More importantly, though, “…without reforms, our kids need to be very worried” stated Health and Human Services Secretary Sylvia Burwell when she announced the report results.
However, any reform will be useless without the most important change, not even whispered on Capital Hill – Legislators’ ability to get their hands on those monies for uses other than the purposes of SS & Medicare.
So, for starters: Make both the Medicare & the SS Trust Funds off limits, period.
Once that’s in place, a few tweaks and we’re good to go.
For Social Security:
- Change the formula for SS deductions so that income on earnings over $106K goes into the pot
- Allow those making over $106K a year to claim only the percentage of SS equal to the percentage of their income they invested
- Allow those making over a certain income upon retirement to refuse their benefits if they wish to do so, putting that back into the pot for those who need it most
- Raise the age at which we can claim our benefits, to match life expectancy (which was the original formula, we just haven’t been following it)
Onto Medicare. Invest in more investigators to rout out the fraud. The pay-off will be huge, the ROI significant. Standard thinking on the issue reflects the old catch-22: we don’t have the money right now in part because so much is leaking out of the system through fraudulent activity, but without putting money into ridding the system of fraud we won’t be able to recoup and prevent lost monies.
The fact is, the country (eg Congress) finds the money to get something done when the will is there to address it. But if they, or you, need some money-finding ideas, here are a few; ridding multi-million dollar businesses of their subsidies (big oil, agribusiness), fining companies that take their operations (and jobs) out of the US, and reworking the tax system so it can be both more fair and more productive.
We Boomers are in charge; we have all the influence needed to make these reforms a reality. We are entitled to these programs – in all the right ways – let’s be unafraid to fix them so they work well, for us and future generations.
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