Social Security and Medicare and American Health Care

Both Social Security and Medicare depend upon the federal government taking money from those working through the payroll tax (currently a total of 15.3% split between employee and employer) that is then distributed to those retired.  Both are actually simply “transfer” programs where the money in reality is simply transferred from one person’s pocket to another person’s pocket.  The amount of you will receive is based to a fair degree on how much you earned during your working life as regards Social Security.  However, contrary to popular belief, there is no “lock box” with money stored away to pay either present claims or future claims.  In fact Congress “robbed” the “lock box” a long time ago, and left IOU’s in the form of Treasury notes in place of the money that was once there.  Which of course creates a problem as to redeem these IOU’s will require additional money from the taxpayers to continue paying out benefits to those retired.  According to current predictions, Social Security will run into trouble in about 2036 as the IOU’s will be all gone then and Social Security will only be able to pay out about 75% of the benefits promised.  Which means either people won’t get as much as they thought they’d receive, or there will be a “reduction” in the benefits to those who earned higher incomes in their working lives and now expect to receive the higher benefits they were promised.  In any case, there is obviously a problem here.  Of course we could raise the “ceiling” level where people no longer pay into Social Security, but this means that those people will end up paying in far more than they will ever get back in the form of benefits.

The problem for Medicare is even worse.  Due to the fact that health care costs continue to rise at a rate much higher than the rate of growth of wages and salaries, the amount of money coming in to Medicare is well below the amount of money now being paid out to retirees in the form of benefits.  And again, there is no “lock box” for Medicare either, only IOU’s that Congress left in there after they took all the money out and spent it earlier.  In the case of Medicare, this means the program will be in “trouble” as soon as another decade if something isn’t done.  Again, taxes could be raised, but that creates problems of its own in that combined with Social Security we’re looking at a payroll tax rate probably at least 20%.  And remember here that payroll taxes start with the first dollar you earn!  For many people this would the major tax that they would be paying!

OK, what can we do about it?  On the Medicare end, elimination of prescription laws would of course help, but we’d need to do a lot more to bring health care costs under control.  Obviously it is possible to do it, as the rest of the developed world has health care costs that are between 1/2 and 2/3 of our own.  However, the way it has been done is to let the “government” take over the health care system and treat medical providers as “employees” instead of self employed businessmen as the AMA sees doctors as today.  In some systems there is also “rationing” in that access to specialists (the more expensive doctors) is limited.  Then there are limits on hospitals regarding services that they are allowed to provide.  Expensive advanced technology is rationed for reasons of cost.  So if you need an MRI or a CAT scan, you’ll only get one if you meet certain qualifications.  If not, you won’t get one…  Some of these countries do a much better job than others, but they all “ration” to some degree.  This is how they keep the costs of health care under control.  As a rule, services by primary care physicians are probably easier to obtain in these countries because they depend more upon primary care physicians than they do on specialists.  In France, for example, you can even get a doctor to come to your home.

There is a claim that we have “free market health care” here in the USA.  If you believe that, I believe I might have a toll bridge that you might be interested in buying too…  The fact of the matter is that we have the exact opposite of free market medicine.  Nor do we have the “socialized medicine” that the rest of the developed world has today.  What we do have is the worst of both worlds.  We have created for ourselves a very “expensive” system of health care that “rations” on the basis of income, and that charges far more for its services than what is really justified.  We have “monopoly medicine”, which is the most expensive kind of medicine you can have.  This is also why Medicare is also in financial trouble.  So what could we do to fix it?  First, repeal of prescription laws would help a lot.  Along with a change in our malpractice laws so that the relationship between doctor and patient changes to one of contractor to client.  In effect, the patient becomes the client who seeks the doctor’s advice, but also has the responsibility to make the decision whether or not to follow that advice.  We might also consider changing from a system of professional licensing to one of certification similar to that used in the computer industry.  Computer technicians for example are “certified”, not “licensed”.  So when you call Best Buy and they send out a “geek” to fix your computer, that person is a certified technician, not someone “licensed” by the state.  We could do the same thing with medical personnel.  There’s no real need to have “government” involved in medicine to the extent that it is.  Government generally isn’t all that “efficient” at doing things, and what government “does” generally is more expensive than private enterprise.   We could simply “certify” all our medical personnel and be done with it.  We could also allow various levels of medical services to be provided, so you only pay for what you need.  This would certainly save you money over our present day monopoly system as most people don’t need the full level of services a modern day hospital has to offer, but everyone has to pay for in order that these services can be provided to those who need them.  If it was done on a basis of “user pays”, the cost would be too high and most people would refuse to pay the very high prices that would be necessary to cover the cost of the equipment.  Whether or not this would have as much effect on medical outcomes is a question I don’t feel I’m qualified to say.  My own opinion is it wouldn’t make much difference so far as length of life span goes as Europeans have less “access” than we do, but their life spans are still a bit longer than ours…

This brings us back to the issue of Social Security and Medicare, Medicaid, and everything else.  Paying for these services through taxes also isn’t really “efficient” because “Uncle Sam” takes his “cut” off the “top” before the money gets back to you.  It makes more sense to allow people to keep their money rather than cycle it through the IRS where it is then sent to the proper agencies who then cycle it through their hands before any of it comes back to you.  Some of the money you send in to the IRS remains with the IRS, some remains with the Social Security Administration, some remains with the Center for Medicare/Medicaid Services.  There’s a lot of “paperwork” involved, and that costs money.  Plus government employees are generally well paid and get good benefits, all of which of course has to come out of the money you pay in to the IRS.

Do we really need “need” government to provide us with funds for our retirement?  Do we need “government” to provide us with health care financed through the payroll tax?  The major problem here is that we have just a “transfer” system where money goes from one person’s pocket (the worker) to another person’s pocket (the retiree) with “Uncle Sam” taking his own “cut” in the process.  Can we do better on our own?  This will be the subject of my next post…

 

 

 

 

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About muskegonlibertarian

77 year old retired owner of a security guard agency. Member of the Libertarian Party.
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