Entitlements: the 800 Pound Gorilla!

Scot Lehigh’s column in today’s Boston Globe focused on the “Fiscal Wake-Up Tour” http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/02/16/fiscal_wake_up_tours_inconvenient_truth/ . In short, the leaders of this tour are trying to mobilize public opinion so that Congress will effectively deal with the inevitable disaster of the so called, Entitlement Programs (Social Security, Medicare, and Medicaid). There has been a constant chatter about the scary projections. The Federal Reserve Bank Commissioner, Ben Bernanke, shares his concerns with congressional committees, Robert Samuelson approaches the subject from a relatively conservative perspective, noting the lack of political will to deal with the problems. He sees no alternative to either raising revenue (which he feels will be self-defeating) or curtailing outlays, possibly by transitioning to another system of retirement insurance and imposing some form of rationing of health care. Paul Krugman repeatedly supports a need to increase Social Security Benefits by raising the ceiling for sharing revenue and restricting payments to those with incomes beyond and controlling medical costs by adopting a universal care system under the auspices of the federal government.

I support Social Security since the vast majority of the population needs this source of support as they age (it is hard to believe that people could be self-sufficient to save for their retirement. Chile found out that their system that privatized their retirement system did not work!). Poverty among the aged is relatively low because of these benefits. At the same time, those with many monetary resources have no need of their benefits, even if they are technically entitled to their benefits. Raising the ceiling for those above the present threshold ($94,200) becomes an increase in taxation for the higher income earners. Reducing benefits for those 65 and older to those with income higher than $200,000 or $300,000 does not seem unreasonable.

While it is clear why the insurance companies want the present health care system to continue, supporting universal health care seems good for virtually everyone, especially businesses whose products have to pay for their employees’ insurance. The unneeded expenditures associated with private health insurers is very high (both administrative and legal costs) and there is no control over costs. If the federal government was the primary insurer, as with Medicare, the administrative costs would decrease remarkably and there would be some method of controlling costs. Rationing health care is inevitable. In fact, it has always occurred, at least on those unable to benefit by the current system.