Liberal Democracy

Liberal Democracy
The Free State

Wednesday, February 20, 2013

Commentary: Fiscal Policy: Peter Wehner: Entitlement Reform and Common Ground: How Decentralization and Means Testing Could Save The System

Entitlement Reform and Common Ground: pIn a New York Times op-ed, my Ethics and Public Policy colleague Yuval Levin offers a simple, excellent idea that offers a way out of our current political impasse on entitlements. He argues that Medicare and Social Security should be means-tested (e.g., allocating benefits according to need) and explains, with typical intelligence and clarity, why [...]/p

I use to believe that means testing along with raising the retirement age was the best and fairest way to save the entitlement system. I still like the idea of gradually raising the retirement age as long as there's an exception for disabled workers. Widow and widowers who have average means at best, as well as for disabled workers and people who've worked physically demanding jobs their whole lives. But means testing for Medicare is simply bad healthcare and fiscal policy. Because we want more wealthy people I would argue across the board as far as age groups go in the Medicare system. Because younger and wealthier people especially if they are both young and healthy, well are healthier. Then someone in their sixties and seventies who has diabetes or high blood pressure, perhaps has already had a heart attack. Has gone through a hip replacement or something and the more healthy and wealthy people you have in the. System the less your healthcare system is going to cost including Medicare which of course has to deal with our broader healthcare system.

So we want more wealthy people in Medicare but have them pay for their full Medicare coverage. Including the payroll taxes they've paid up to that point but even go further then that. And scrap the payroll tax all together allow Medicare to serve as a public option for all adults and their families in. America but give them the option to use Medicare as their regular health insurer and bring in younger and healthier. People to the system but go even further then that and allow for each state to setup their own Medicare system. Something a lot of Governors would love to do, especially Progressives who rather see a national single payer system. But also forward looking Conservative Governors, people like Bobby Jindal in Louisiana or Rick Perry in Texas. Who want to use Conservative private market principles to deliver better healthcare for their people rather. Then the Federal Government trying to tell them what they should be doing instead with Medicaid and so fourth.

Medicare and Social Security are really two different problems and issues and I don't like putting them in the same blog. So I'm not going to do that other then to say reforming Social Security is fairly simple. Raise the cap to 500K$ or a million dollars gradually from 110K$ or whatever it is today. And then tax wealthy people on their Social Security income at the rate that someone making that money for their. Living would pay but without an earned income tax credit. And gradually raise the retirement age with the exceptions I've already proposed for Medicare as well.