There has been going on, a very hot debate, on spending, and welfare and taxation reforms. Basically, there are two major groups. One group says that we must cut spending on welfare and slash taxes. This group opposes the role of government in public welfare and wants government to be out of welfare business. The other group maintains that it is the job of government to make sure that every citizen is taken care of. Welfare cannot be left on chance, if a person will be able to get help he or she needs from charities or by increasing his or her income.
Historically we were society that was totally self-reliant. Everyone was supposed to have the equal opportunity to work and earn his or her living, make enough to pay for all his or current and future needs. This model failed several times, causing serious recessions and great depression. So, government started to build, so called, safety networks. These included entitlement programs like social security, medicaid, medicare and mandatory high school education. Certain necessities like police, defense, fire department, and roads and bridges were already considered as public domain because it was realized that they do not offer proper profitability for businesses and security for public, if run by private companies.
So, government has always had a role in public welfare. It just kept increasing with time, as a result of market crashes. As the time passed by, we realized that public safety networks offered by government may not be permanent solutions, either. The purpose of social security was to offer secured and guaranteed retirements. It’s payments to retired people are already lagging far behind the cost of living and the way things are going, it is getting more and more obvious that social security may not be able to pay retirees at all after some period of time.
Medicare seems to be failing, too. One of the reason is a parallel private insurance system. The private insurance companies get most of the healthy, paying subscribers. While, government programs get mostly sick and non- paying people. So, the cost of government programs is very high and income relatively much lower. Hence, you guessed it right. Government programs like Medicare and Medicaid are at the verge of bankruptcy, too.
Obama’s public option tried to end this unfair distribution of patients and subscribers between public and private insurance. Public option would have enabled government, through healthy competition, to snatch a significant number of healthy and paying patients, from private companies. Hence improving it’s financial outlook. But, private insurance companies, with the help of their rich and powerful lobbies, sold out politicians and corporate media, failed this public option.
Republicans failed public option. Remember it was not a mandate. It was an option that was supposed to compete with private companies and we supposedly believe in competition. This would not just saved the public healthcare programs, it would have also forced privet companies to cut prices and provide better service. But, competition is not what our private insurance companies believe on. Their lobbies have been very resistant to open competition across the states. If insurance companies are allowed to compete nationwide, there would be more competition, less cost and better service. Rather, they are restricted to one or few states, limiting the competition and letting limited number of companies available, do whatever they want to do. Anyone who is really serious about cutting the healthcare cost must allow health insurance companies to compete nationwide, before anything else. This will not solve all the problems, but, it will provide a quick and significant relief to all insurance subscribers and businesses providing health insurance.
We are a society that supposedly has a very strong and deep commitment to healthy competition and open markets. Newt Gingrich is now offering personal savings accounts as a solution to the problems of social security and medicare insolvency. This sounds like a good idea. These are already working very well in Chile and have been a very successful experiment.
This is how I think the 21st century solution for retirement should look like. Instead of keep waging the ideology war, we should leave it on competition and American people’s choice. Congress should introduce a very comprehensive legislation, allowing American people three options.
Number one, social security. People who opt-in to this option will keep paying there social security taxes and will be paid by social security after their retirement, as we know it.
Number two, personal savings accounts, as proposed by Newt Gingrich. People choosing this option will pay into their personal savings accounts, instead of social security. After retirement they will be paid by personal accounts fund, instead of social security.
Number three, individual choice. People going for this option will opt-out of first two options and they will pay for neither of those. But, they will be mandated to invest a certain proportion of their incomes into a retirement portfolio, designed by themselves, with or without the help of a private investment company or by a combination of both. They will be required to provide the proof of their investments at the time of annual tax filling.
People will be allowed to roll-over from one option to another at the time of tax filling. Let the competition and choice determine, which one works better and which one wins. This is very likely to reduce the burden on social security by trillion of dollars, in long run and may save the social security and our retirement structure, as a whole.
Contrary to the all the uproar against universal health care in right wing circles, the healthcare cost in countries with universal healthcare is far less then ours and they cover 100% of people. As about the long lines and waiting times, we have waiting times, too, in spite of paying such a high cost. Our waiting times just a little less then most developed countries. Plus, we have made these waiting times short by pushing out 37 million Americans from these lines. They cover everyone, regardless of anything.
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