Conservatives can win on entitlement reform.
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States could also be freed to use part of those block grant funds for high risk pools, where the uninsured who had become too sick to buy market health insurance for the first time, could be assured of guaranteed coverage, without destroying the health insurance markets for everyone else (as Obamacare threatens to do). Those covered by the pool would be charged what they could manage, with the pool subsidized by public funds to the extent necessary. Similar risk pools already exist in over 30 states, and for the most part they work well at relatively little cost to the taxpayers because only about 1% to 2% actually become truly uninsurable in the private market.
Federal law even before Obamacare provided for guaranteed renewability, which ensures that those with health insurance cannot be canceled or charged discriminatory rate increases as long as they continue to pay the premiums.
Therefore, these reforms altogether would provide a complete health care safety net, assuring health care for all (unlike Obamacare, which CBO estimates would still leave 30 million uninsured after 10 years). Those who have insurance would be assured of keeping it, those too poor to buy it would be given the necessary help to get it, and those who nevertheless remain uninsured and then become too sick to buy it could obtain coverage in the High Risk pools. Yet, these reforms could reduce federal spending over the next 10 years by close to $2 trillion or more, by replacing Obamacare with these Patient Power reforms.
Personal Account Prosperity
All of the retirement benefits financed today through the payroll tax could be financed instead through personal savings, investment, and insurance accounts. That includes Social Security and Medicare.
Because long-term, market investment returns are so much higher than what can be paid through these current, non-invested, tax and redistribution programs, future retirees would actually enjoy much higher benefits through such reforms. At the same time, they would be contributing mighty rivers of savings and investment to the economy that would promote booming economic growth.
But the long-run result would be the greatest reduction in government spending in world history, as the benefits would ultimately be moved entirely from the public sector to market financing.
If workers were freed to choose to save and invest what they and their employers would otherwise pay in such payroll taxes into personal savings, investment, and insurance accounts instead, studies show that at standard, long-term, market investment returns, for an average income, two-earner couple, over a career the accounts would accumulate to close to a million dollars or more. Even lower income workers could regularly accumulate half a million over their careers. Retirees would each be free to choose to leave any portion of these funds to their children at death.
With these accumulated funds, retirees could not only finance much better benefits than Social Security even promises, let alone what it could pay. With further premium support payments financed by the general revenue portion of Medicare, similar to Ryan’s proposed Medicare reforms, retirees could purchase better private health insurance than what they are left with after Obamacare’s deformation of Medicare.
Moreover, with such personal accounts, retirees would each be free to individually choose their own retirement age, rather than the government dictating their retirement age to them. The accounts would inherently include market incentives for retirees to each choose on their own to delay their retirement ages, because the longer they wait the more they would accumulate in their accounts, and the higher benefits those accounts could pay.
Millions of workers with less physically taxing jobs would consequently choose on their own to delay their retirement well into their 70s, a result that could never be imposed politically. But other workers whose jobs required heavy physical labor or who for other physical reasons could not work past their early 60s could retire then. Isn’t this so much better for conservatives than demanding the same delays in the retirement age for all from Washington?
These reforms have again been proven to work in the real world, not only in the South American nation of Chile, in Great Britain, and in dozens of other countries. They have been proven to work right here in America as well, in the private alternative to Social Security used for local government workers in Galveston, Texas, and in the highly successful private retirement investment systems used for the federal employee Thrift Savings Plan.
Power to the People
Such reforms are further discussed in a series of entitlement reform studies I am authoring for the Heartland Institute. They were discussed in detail as well in my 2011 book, America’s Ticking Bankruptcy Bomb. The political leaders who already show recognition of the potential for such reforms include House Budget Committee Chairman Paul Ryan, newly elected Senator Ted Cruz, Florida Senator Marco Rubio, and Louisiana Governor Bobby Jindal. In 2012, Presidential candidates Newt Gingrich and Herman Cain readily embraced such reforms.
Given that these reforms have already been proven to work in the real world, why have we not adopted such reforms already? Because politicians want power and control centralized in big government, where counterproductive dependency on the taxpayers works to their political benefit, rather than power and control in the hands of working people and their families all across America, which works to promote independence and prosperity, so that the middle class and yesterday’s poor no longer need the political class.
If conservatives more broadly would only learn to talk about entitlement reform in these terms, the issue would be transformed into a powerful political winner. Entitlement reform would then be an exciting real world opportunity for a true revolution in the size and scope of government, ultimately winning the war on poverty, achieving health care for all, and securing financial independence and retirement prosperity for seniors.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?