Social Security, Medicare, Medicaid
Entitlements: As antiquated as hand-crank telephones
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Early in the 20th century, inventors created technology like the television, which used gigantic vacuum tubes to produce a grainy black-and-white image, and the hand-crank telephone. In the 1960s, things got more sophisticated, as inventors gave us gigantic computers that took up an entire room and used punch cards to log information.
There was nothing wrong with any of these inventions. They were revolutionary for the times in which they were created, and they set the stage for the far more advanced technology we use today.
But if anyone were to suggest that we should still be using these same technologies, exactly as they were developed 50 and 80 years ago – with no update for the advances of the times – they would be laughed off as absurd and ridiculous. And deservedly so. Ideas serve us for a time, but as we learn more and advance, they give way to new, better ideas.
Or they should. But good luck telling that to any politician when it comes to Social Security (created in the 1930s) or Medicare and Medicaid (created in the 1960s). These programs were created at a time when the dynamics of American society were very different than today. Demographics were different. The underpinnings of the economy were different. The nation’s fiscal situation was different. And of course, we hadn’t learned then what we’ve learned since about what happens when the federal government tries to run a massive retirement program and two massive health care programs.
And of course, at the time these programs were created, they weren’t costing us 16 percent of GDP.
No private business would cling to an idea that was developed 50 years ago, or 80 years ago, that was presenting out-of-control costs and could easily be improved with new thinking driving by the lessons learned in the years since the idea had first been introduced. And there is no reason Social Security, Medicare and Medicaid need to remain today exactly as they were created during those very different times.
We already know there are proven ideas that can be used as the basis for restructuring these programs. Social Security can follow the model that has been used successfully in Chile for decades, in which individuals maintain personal retirement accounts. Medicare can make extensive use premium support and private medical savings accounts. Medicaid can and should simply be block-granted to the states, which can decide for themselves how best to handle paying for health care for the poor and indigent.
I’m just citing a few examples of ideas I like. There has been much discussion in recent decades about how to improve and restructure our entitlement programs. Virtually no one suggests the current structure is the best possible one available.
Yet suggest to a politician that these programs should be restructured to reflect the realities of modern times, and you would think you had suggested that everyone in America be herded into a slaughterhouse for execution. Democrats accuse you of wanting to throw Grandma off a cliff. Republicans give lip service to the idea of reform, but run for the hills if anyone actually tries it, which President George W. Bush found out when he tried to make changes to Social Security in 2005.
The reason is simple: They are afraid. Everyone recognizes the current system is inefficient and unsustainable, but no one wants to be responsible for creating a new one that they know some people will not like. Why take the political risk when you can defend the status quo and claim you’re just “standing up for seniors” or whatever?
Then again, if we don’t restructure these programs, the nation is going to go bankrupt and the poor and the elderly won’t get anything at all. That’s the truly maddening thing about all this. It’s really not that difficult to figure out how to do this better. We have lots of good examples to model, and we’ve learned lots of useful lessons throughout the life of these programs.
It’s not too hard to restructure our entitlement programs so they will work for the people they are supposed to serve without bringing fiscal calamity on the nation. But it’s seemingly impossible to find leaders who are willing to actually do it if it involves even the slightest political risk. There’s your real problem.