Saving Social Programs
Robert A. Levine 2-21-23
Social Security and Medicare are destined to go broke in the future if something is not done to shore up their finances. The problem is that America is growing older and there are not enough young workers to support the programs for the aged. Republican Senator Rick Scott of Florida suggested reviewing all government programs every five years to make adjustments if they were not financially viable. This produced a general uproar among the public and politicians from both parties as many Americans are dependent on Social Security and Medicare as they grow older and the programs have been seen in the past as politically untouchable.
There are a number of ways these programs could be protected from financial problems, but there are powerful political groups opposed to the various solutions. The simplest way to handle the deficits in these programs would be to raise taxes on the wealthy and devote the increased funding to Social Security and Medicare. Currently, workers pay a 12.4 percent FICA tax on their wages for Social Security benefits, the contributions split equally between the worker and the employer. However, the amount of wages taxed are capped, currently at slightly over $160,000. If the cap were raised significantly, say to $500,000 or more, Social Security would be placed on a firmer financial footing for a long period. But obviously, high earners are opposed to this measure.
Another way to help these programs financially would be to increase the worker base that supports these programs. That means more workers. With America’s birth rates going down, there are two ways to increase workers. One would be to raise the number of immigrants allowed into the country to fill jobs, with the unemployment rate hovering at low levels and jobs going unfilled. However, many Americans do not want more immigrants, making this solution a political problem. Another way to handle this would be to raise the retirement age, perhaps to seventy, to have more workers on the job longer. With life expectancies increasing (aside from the last few years), people should be working longer unless they are sick or disabled. It has been shown that working longer lowers the rate of dementia in people. Even so, there would certainly be an outcry among workers if their retirement age was suddenly raised, which means it would not be politically viable. Cutting benefits to retirees is also a solution that would not gain political support.
FICA taxes of 2.9 percent to support Medicare could also be increased and the cap raised to bring in more funding. However, America needs a more efficient system to provide health care to its citizens than Medicare, Medicaid and insurance through employers and bought privately. American health care is far more expensive than that of any other advanced nation, with no significant difference in outcomes. Americans pay more for necessary medications than any other advanced nation because no negotiations are allowed with pharmaceutical companies. With Medicare, Medicaid, and multiple insurance companies financing health care, all with different rules and benefits, providers find the system an administrative nightmare, increasing time and costs in caring for each patient.
A health care system is needed with uniform rules and benefits, like a Medicare for all, that could be supplemented by additional insurance. Medicare should also be permitted to negotiate prices with pharmaceutical companies, with the understanding that drug prices for America would match those of the lowest price given by the companies to any other advanced nation. More efficient care would mean less expensive care and better care for all patients. However, government action to improve health care and Social Security are unlikely given the polarization between the two political parties. In all probability, health care and Social Security funding will be handled with some stop gap measure, rather than a permanent fix.
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