Pulling Back from the Entitlement Cliff

Andrew Biggs reviews the reckless state of our national entitlement, with this bit pointing toward something that I’ve been thinking might be the wisest approach, financially and socially:

Meanwhile, New Zealand offers a flat universal benefit to all retirees, with voluntary “Kiwi Saver” retirement accounts providing additional income. Such a setup would be a significant change from our current system, but would allow us to give the household of every retired and disabled worker a poverty-level benefit with a payroll tax of under 6 percent. A reform that effectively eliminated poverty for retirees and generated income above the poverty level by means of individual savings would be good policy, and might even be good politics.

As I’ve suggested before, with respect to healthcare, every American should have some sort of account with some very limited rules, into which they and others could contribute toward healthcare and retirement. If it helps for the government to issue the account with a person’s Social Security number, then that’d be fine, but government involvement would pretty much end there. Over a person’s life, he or she could contribute money from payroll, tax free, the government could provide whatever minimum benefit we all decide is appropriate, and employers, charities, family members, whoever, could add money, as well. The accounts could be partitioned — part for healthcare and part for retirement — or that could be left up to the owner.
The most important part of the switch would be that the person would pay directly for healthcare services and save directly for his or her own retirement. And, unlike current entitlements, upon the person’s death the remainder would be inheritable, giving lower-income families assets with which they could improve their lot over time.

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11 years ago

Lets be clear. Besides the lower and lower wages we have been experiencing and the higher co-pays and everything else, you are calling for abolishing social security and medicare. You think privatizing it would work better – never mind if Wall Street would steal all that money and do away with a couple decades of savings in an instant. That is not security. That is foolhardy. The current mess cut many pensions in 1/2. This could go on for 1 or 2 decades. I’m pleased to see, though, that you buy the Bush regimes actions and plans note for note. Even GW himself gave up on this idea of private ss – which would have been his biggest gift to Wall Street. I still have missed your critique of the $10,000 per taxpayer per year we are spending on war and security. Don’t you think – just maybe – that if we cut that in 1/2 we’d have money for health care and retirement? You can’t have it all. Make your choice. Corporate profits, continual war or PEOPLE. It appears that you have made your choice. But mine would be different. ———————- Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honours, and emoluments is multiplied; and all the means of seducing the minds, are added to those of subduing the force, of the people. . . [There is also] an inequality of fortunes, and… Read more »

11 years ago

“Free” services are used and over-used, sometimes grossly so. Just ask Michael Morse and his taxicab ambulance.
Another example is health insurance where there are no or very low co-pays. Such coverage is notorious for having higher claims than when the customer has to pay a co-pay.
Therefore, one of the key elements of genuine healthcare reform has to be something along the lines of what Justin describes, where the customer has a stake in the cost of his coverage.
Unfortunately, what we’re heading towards with healthcare reform is the opposite of such natural cost controls. “Free” is going to end up costing an enormous amount, both tax-wise and in terms of the quality of services delivered.

11 years ago

So what you are saying is that people enjoy getting fat, not being able to walk, getting diabetes and having heart attacks?
And if you make it cost them more, they will change their behavior?
I wish.
Sure, public education and health on life style and nutrition is a good thing – however, I hear the same righties fighting against having restaurants having to advertise the calories of their offerings.
If you want people to act more responsibly, they must be given BOTH proper information and access to healthier foods and life styles.
A big problem is that once you buy the whole idea of for-profit and non-universal health care (something no other civilized country has bought), then you have to do what you say – create a rating system. So we each need a Health Score in addition to a Credit Score. Now, let’s decide how you get rated….
As it stands now, if you are a woman and your husband abuses you, you have a pre-existing condition! Your health score goes up, and it costs you more.
A woman would pay more just because of the danger of having children.
To be fair, we’d have to test everyone at birth and not hide those DNA defects which we all have.
To all that, we’d have to add the mental health and personality types, to see if they are the type of person who would take more or less advantage of the system.
This would go on for thousands of pages….well, what am I saying? This system exists right now and is how the health insurance companies decide who to take and what to charge. That’s working out quite badly…….that is, unless you are the CEO of United Health Care, etc.

11 years ago

Actually, if we want people to act more responsibly, we have to give them their own responsibility and the freedom to do well or poorly based on their own decisions and actions.
Restoring free-market principles to the health care system would reduce costs so effectively that both insurance and directly paid costs would be affordable for nearly all Americans and there would be disposable income to support private charitable institutions to care for those who legitimately are unable.
The government’s plan isn’t about healthcare at all. It is all about totalitarian government control as Orwell and Huxley predicted, and it will end up as Rand warned if the people do not stop it soon.

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