Many health officials believe that Medicaid is the glue that helps to hold our healthcare system together, taking on the highest-risk, sickest, and most expensive populations that cannot qualify for outside private insurance or Medicare. It is America’s ultimate safety net. Unfortunately, it is also extremely costly: Medicaid, Social Security, and Medicare – the “big three” entitlement programs – accounted for 44% of the federal budget in 2012, according to The Heritage Foundation, and collectively consumed more than $2 trillion of services, with total revenues of $2.4 trillion.
According to the Congressional Budget Office, the Federal Government spent $275 billion in 2011 for Medicaid, covering on an average month 54 million Americans. Medicaid expenditures including federal funds is the largest government expenditure in each of the 50 states. Considering only state funds, Medicaid expenses trail only primary and secondary education expenses in state budgets.
Without fundamental change, our social welfare programs (including Medicaid) will ultimately bankrupt the country or drive taxes to unsustainable levels. A distinct possibility is that millions of poor Americans – the elderly, disabled, and children – will face a future without adequate healthcare or long-term nursing care.
A small retail business in my community recently shuttered its doors when one of the partners was unexpectedly killed in an automobile accident. Even though the 25-year-old company had survived numerous economic recessions and changes in healthcare regulation, when the owner passed, the bank required the payment of the company’s outstanding bank debt, and the company was forced to dissolve.
Hundreds of businesses are affected every day by the unexpected death or disability of a key employee, manager, or owner. In the best cases, the business has prepared for the event and the consequences are not catastrophic. However, for most companies, the loss of a key stakeholder has a devastating effect and can result in layoffs, bankruptcy, or even complete failure. Fortunately, such outcomes can be avoided by the prudent purchase of insurance on “key” members of the business enterprise.
Social Security was created on August 14, 1935 when President Franklin D. Roosevelt signed the Social Security Act and has been controversial since its beginning. A Cato Institute commentary compared Social Security to Otto von Bismarck’s welfare state in Germany, calling it a “Ponzi scheme, with new contributions used to pay off earlier ‘investors.’” The author of the Cato commentary, Marc Rudov, doubles down his criticism in a second American Thinker article, stating that “Social Security is irreversibly insolvent.” These negative statements assume that future beneficiaries will receive no benefits or will receive payments less than their contributions because their contributions are being used to support current beneficiaries.
But what are the facts?
Though viewed by many as “socialism,” Social Security was created to protect Americans from the ravages of old age, poverty, and unemployment. In 1937, 53,236 beneficiaries (primarily white males) received benefits of $1.3 million, while in 2012 56,758,185 retired workers, dependent family members and survivors, and disabled workers and their family members received $773.2 billion in benefits. Social Security payments represent the majority income for more than two-thirds of all retirees, with an average monthly benefit of $1,235 – hardly enough to live comfortably in today’s expensive society, yet it often means the difference between homelessness, hunger, and despair.
In 2035, an estimated 91 million Americans will be eligible for benefits. While the program’s funding and benefits mechanisms will be changed, it will remain the primary financial safety net for most citizens.
Historically, almost two-thirds of households in America live in a place they own. Homeownership is a key prong of the American dream, and according to a American Housing Survey by the U.S. Census Bureau, some 9 out of 10 Americans achieve it during their lifetime.
Also key to American homeownership is the notion of moving up – i.e., buying a home, living in it for a few years, then selling to reap the profit in order to purchase another property, either a higher-value place or one that better suits the owners’ current living situation. This was particularly popular in high-growth areas like California and Las Vegas. But that was before the recent economic downturn and a massive slump in housing prices. Now, the decision to sell your house and trade up is not as clear-cut as once thought, and owners are left wondering, Should we stay, or should we go?