Health Care Reform will Salvage Social Security

The celebrated progressive, Pres. Franklin Roosevelt, introduced Social Security to provide income for older Americans. Supposedly this would allow them to leave the workforce thereby opening up employment opportunities for younger workers. It is funded by a payroll tax on workers and employers.

The funds were originally kept in a separate account. This account was used to pay benefits and the surplus was invested in government securities. The growing surplus of funds made it increasingly attractive for politicians to offer more goodies. Additions included death benefits, income for children under 18 who suffer the loss of a parent, and disability income payments.

President Johnson convinced the congress to fund the Great Society by combining the Social Security Trust Fund with the General Fund. The Social Security Trust fund is nothing more than an account entry. The change is subtle but the effect was substantial. The old Social Security surplus was supported by treasury securities that could be sold on the open market at any time. Now the surplus is spent and the government gives an IOU which has no value. Social Security has access to this money only if congress appropriates the funds.

Social Security was transformed from an actuarially sound annuity into a Ponzi scheme. The money that is collected is immediately spent on all government programs. The result is the account entry called surplus continues to shrink in size and will eventually become a negative number.

Ponzi schemes need more and more income to prevent total collapse. Congresses have increased the tax rates, raised the limit on income to be taxed, provided a means test for benefits, and even raised the age that benefits could be claimed. This has only postponed the day when the collapse will occur. Medicare has the same funding problems as Social Security. The only difference is the shortfall is even more urgent with Medicare.

What would happen if the Federal Government was the sole provider of health care? Trillions of dollars are spent on health care every year. How could a good Ponzi schemer resist the temptation to control that flow of funds?

When the government is the sole provider, they can improve the margin by simply paying health care providers less money. They can arbitrarily control how many expensive treatments are allowed per year. They can direct research dollars to political patrons. They can set the amount of money charged in taxes to pay for healthcare.

As sole provider of health care, the government will be able to enforce a policy of complete lives system. This is a policy whereby the largest number of health care resources are spent on persons from age 15 to 45 simply because they have the potential to return the greatest value to society.

As a bonus; reduced healthcare expenditures for unproductive citizens will cause them to simply stop draining scarce resources from our economy. This will help prevent the impending collapse of Social Security and Medicare.

It is a Ponzi schemer’s dream come true. There is no downside for the government and those who administer the government.

There is no upside for voters, taxpayers, young people, old people, ordinary people, and medical practitioners.

Bumper sticker of the week: "You will love Obamacare, unless you want to be born, or don't want to die."