Lumping entitlements, earned benefits, and paid-in earned benefits (edited from the less descriptive “contributed benefits”) into the single category of entitlements is one reason why it’s so difficult to have rational discussions of federal tax and spend social policies. For too many people, when they hear the word “entitlement,” they think welfare and in the US, welfare has a bad connotation.
Social Security Retirement income is NOT an entitlement. It’s a retirement insurance fund to which workers and their employers make contributions. At a flat (regressive) rate. It it financially solvent for decades if not forever. Therefore, discussions of “chained CPI” or fixing a non-existent problem by raising the cap are naive and/or decades premature.
The disability portion of Social Security is a mix of entitlement and worker contributed insurance. Beneficiaries that worked before becoming disabled paid into the fund and therefore, those benefits are not an entitlement. If there is a funding problem with either the insurance or entitlement portions of disability, the US Dept of Treasury has not made the case.
Medicare Part A (HI) – hospitalization – is like Social Security (OASDI). Workers and employers contribute to the fund, but beneficiary status is based on age and not contributions. This is not keeping pace with the inflation rate of hospitalization, and unlike OASDI, the earned income cap was removed long ago.
Medicare Part B, C, and D are partial entitlements funded out of general (income tax) revenues. To access the entitlement, the beneficiary contributes a monthly premium during the period of entitlement. Premiums cover approximately a quarter of the annual costs to the Medicare program. Beneficiaries are also personally responsible for deductibles and co-pays.
Medicaid is a means-tested entitlement program for medical and nursing home care. Funded out of federal and state general revenues.
SNAP is a means-tested entitlement program for food.
VA benefits are a mix of means-tested and/or service connected disability earned benefits and earned benefits.
What has made the Social Security Retirement Income and Medicare programs so popular is that they have delivered the promised benefits and the beneficiaries view themselves as investor/owners in the programs. Totally correct on Social Security, but only partially correct with regard to Medicare. The entitlement portion of Medicare might work better if the beneficiaries didn’t feel, well, so entitled. Matt Taibbi described the chiselers to a tea:
Scanning the thousands of hopped-up faces in the crowd, I am immediately struck by two things. One is that there isn’t a single black person here. The other is the truly awesome quantity of medical hardware: Seemingly every third person in the place is sucking oxygen from a tank or propping their giant atrophied glutes on motorized wheelchair-scooters. As Palin launches into her Ronald Reagan impression — “Government’s not the solution! Government’s the problem!” — the person sitting next to me leans over and explains.
“The scooters are because of Medicare,” he whispers helpfully. “They have these commercials down here: ‘You won’t even have to pay for your scooter! Medicare will pay!’ Practically everyone in Kentucky has one.”
A hall full of elderly white people in Medicare-paid scooters, railing against government spending and imagining themselves revolutionaries as they cheer on the vice-presidential puppet hand-picked by the GOP establishment. If there exists a better snapshot of everything the Tea Party represents, I can’t imagine it.
The original design or architecture of each of these programs was rational and solid. None are perfect. Whatever defects exist are more the product of unanticipated changes over time that were not sufficiently addressed. That is one thing that can’t be said of Social Security. The issue of the “Baby Boomer” retirement bubble was handled decades ago. (Well, except for the part about properly managing the trust fund.) Anyone that says otherwise is a liar and a cheat.
So, when you hear people railing about the cost of “entitlements,” demand that they identify the program. If they say Social Security, inform them that it’s not an entitlement. It’s an earned benefit insurance program that beneficiaries have paid for. It has never contributed a penny to the deficit and it’s not going bankrupt. If they point to Medicaid, SNAP, or VA benefits, ask which poor sick people we should euthanize, which poor children we should let starve to death, and which veterans we should deny benefits to. If they point to Medicare, well, socialized medicine would solve that and cut their medical costs in half as a bonus.
