One reason those programs are not means tested is because it means that everyone can depend on them. Once they are means-tested to only apply to poor/middle class people, they will begin to be aggressively cut like the other means-tested programs.
Also worth noting net worth "over a million dollars" is not extravagant for a Medicare-age person who did not have a pension, for example. This is basically a median home and $600k in savings. Not poor, but also not likely to be able to pay anything close to rack rate for health insurance for an older person.
I’d also add that there’s a powerful benefit to having something like Medicare as a right of citizenship: it builds social cohesion and avoids the stigma which is often attached to social programs. Some landlords go to great lengths to avoid section 8 tenants, for example, and that has a substantial negative cost to society.
> I’d also add that there’s a powerful benefit to having something like Medicare as a right of citizenship
While not attached to citizenship, there already is something built in. New immigrants to the US often have to have a financial sponsor (I did, on my K-1 fiance visa). That sponsor has to agree (and demonstrate ability) that in the event that the new immigrant claims public benefits in the first ten years of their residence in the US (Medicare, Social Security, etc.) that the government is entitled to recoup those benefit costs from the sponsor.
The Medicare budget is approximately $1400/month for each person over 65. A completely plausible means testing approach isn't "if you have a million dollars you have to go pay a billion dollars for healthcare" but rather that if you have that much money you have to pay the $1400 to get Medicare. Someone with $600,000 and earning 5% APY would be getting more than that in interest, not including appreciation or imputed rent on the $400,000 house, and would stop having to pay the full rate if their net worth fell below the threshold anyway.
This is a political non-starter as it opens the possibility that younger people could also just buy into Medicare instead of paying more for private insurance, something which has been declared strictly off-limits. (Although it would help offset costs to have a lower-risk pool of insureds come into the program, in addition to the other societal benefits.)
> earning 5% APY would be getting more than that in interest
Remember that we are largely talking about retirees. That $1400 + their Social Security is how they pay living expenses. If they have to pay it for healthcare, they have to find another way to pay living expenses.
> imputed rent on the $400,000 house
They live in the house, which lowers their monthly expenses to a level where they can pay them using Social Security and the interest from their savings.
Larger point here is that the suggestion to means test for seniors represents a clawback, a violation of promises made decades ago, around which people planned their elderly (perhaps non-working) years. And we're talking about doing so before we ask the rich to pay (as Warren Buffet says) the same tax rates as their secretaries, and before we trim the military budget back to the levels requested by the military.
> This is a political non-starter as it opens the possibility that younger people could also just buy into Medicare instead of paying more for private insurance, something which has been declared strictly off-limits.
Whether something would have a particular policy outcome and whether you have the votes to pass it are two different things. Moreover, you could obviously require wealthy retirees to pay for Medicare without allowing younger people to do it. Stranger things have happened.
> Remember that we are largely talking about retirees. That $1400 + their Social Security is how they pay living expenses. If they have to pay it for healthcare, they have to find another way to pay living expenses.
They do have another way to pay living expenses. They have $600,000+ plus a house, and as soon a they only had $599,999 plus a house they would no longer have to pay the full rate for Medicare.
> Larger point here is that the suggestion to means test for seniors represents a clawback, a violation of promises made decades ago, around which people planned their elderly (perhaps non-working) years.
You can just as easily make the contrary argument. These programs were never funded -- social security started out making payments to people who never paid in and there isn't anywhere near enough in the "trust fund" to make existing payouts. The people paying the taxes to make up the shortfall were too young to be eligible to vote or not even born when those promises were made, so by what right does an older generation have to bind them to a promise it made to itself and then never actually funded?
> And we're talking about doing so before we ask the rich to pay (as Warren Buffet says) the same tax rates as their secretaries, and before we trim the military budget back to the levels requested by the military.
How about we do this and trim the military budget back to the levels requested by the military so that we can lower the taxes on the secretary to the same rates paid by Warren Buffet?
> and there isn't anywhere near enough in the "trust fund" to make existing payouts
They were funded. But administration after administration constantly "borrows" from it, and then (in one party's case) points to the shortfall as proof of a "failure".
No, they weren't. There was never a point in the history of social security where you could continue making the payments to existing retirees on the basis of the saved up money they paid in themselves so that a future generation could decide that they would prefer to both not pay into and not receive social security.
There have been years when working people paid more into the program than retirees withdrew, i.e. when less than all of the money paid by the current generation went immediately to the previous generation, but that money was never even close to enough to fund the promised future payouts.
Moreover, Congress "borrows" the money in the sense that the Social Security Administration holds it as government bonds rather than cash, but then the Social Security Administration gets the interest on the bonds.
The problem is, that was never even close to enough money either way, because the program was configured from the outset to transfer most of the money from current working people to current retirees instead of investing it at interest in order to make the future payments to the people paying into it. This could have been slightly better if the "trust fund" was invested in stocks rather than government bonds because they pay more interest, but it still wouldn't have been near enough. And if even that was the case then the government in those past years couldn't have spent as much money because it would have lost that huge sink for government debt, in which case all the people currently collecting social security would have had to have paid higher taxes for the level of government services they received.
Meanwhile using the money from existing workers for existing retirees not only doesn't actually fund the program, it only even fails to implode as long as you a) never intend to wind the program down and b) the ratio of working people to retirees never decreases. But the ratio of working people to retirees did decrease, because people started having fewer kids and living longer, so now the unfunded "trust fund" isn't just insufficient to make the payments to the people who are currently paying in, it's soon not even going to be able to make the payments to the people who are currently retired, because it's now shrinking rather than growing as a result of more people collecting for each one paying in.
>And we're talking about doing so before we ask the rich to pay (as Warren Buffet says) the same tax rates as their secretaries, and before we trim the military budget back to the levels requested by the military.
Yes, there are issues with Social Security and Medicare. Not least of which is that, at least for the next thirty years or so (at least until the baby boomers are mostly all dead -- not because I wish them ill, but because later generations are smaller, constraining the pool of contributors to SS/Medicare).
A simple fix (that would give us ~50 years to figure out how to do this better) would be to remove the income cap on SS/Medicare contributions. Currently, that's $176,100[0]. Doing so would keep SS/Medicare solvent long enough to figure out how to structure the safety net appropriately, without jeopardizing the health/well being of those who paid in expecting it to work for them too.
That is not actually a simple fix. You're proposing a 15.3% tax increase -- on top of all existing taxes -- on everyone who makes more than that amount of money. They're obviously going to lobby against that or otherwise take measures to thwart it using tax avoidance strategies etc., making it both less effective than anticipated and no easier to pass than actually reforming the programs.
On top of that, tax incidence is more complicated than "well the people paying it have higher incomes". Federal revenue has been a stable percentage of GDP since WWII, whereas that's an enormous increase in government collections exceeding all historical precedent, and the money had previously been going somewhere else, and the somewhere else (investment markets) would notice it going away. In other words, a tax hike that big would crash the stock market and the housing market etc.
There is no simple fix for this. People voted for a government willing to write them a check it couldn't cash and your only real choices are "don't give that much to wealthy retirees" or "take it from the economy at the expense of the kids".
>That is not actually a simple fix. You're proposing a 15.3% tax increase -- on top of all existing taxes -- on everyone who makes more than that amount of money
No. Not even close. It's not increasing anyone's taxes. It's just making them fairer. Most folks have to pay those taxes on all their income. Why should it be any different for the folks with the highest incomes?
What's more, I can say from experience that not paying SS/Medicare taxes over the arbitrary limit makes exactly zero material difference in my quality of life.
Whereas keeping SS/Medicare solvent while we figure out a better way will have a significant positive impact on my life and the lives of millions of others.
Don't be disingenuous. If there isn't anyone paying more than they are now then there isn't any additional government revenue.
> Most folks have to pay those taxes on all their income. Why should it be any different for the folks with the highest incomes?
The way social security works is that you pay in proportion to your income and then you receive social security payments in proportion to what you paid. There is a cap on both of these. You're proposing to only remove the cap on one of them. That's the same "fairness" argument for not solving the problem by making social security payments according to need or in fixed amounts, so if you're not concerned about that fairness equation then you already have a way of solving the problem without raising taxes.
> What's more, I can say from experience that not paying SS/Medicare taxes over the arbitrary limit makes exactly zero material difference in my quality of life.
This is what I mean by tax incidence. It's not your life which is affected. You're just putting the extra money in your IRA or whatever. But at scale that has consequences for other people. What do you expect happens if you take literally trillions of dollars out of capital markets?
>What do you expect happens if you take literally trillions of dollars out of capital markets?
What a ridiculous trope.
Where do you think those fairer taxes will go? They don't just disappear from existence as you imply. Rather they get plowed right back into the economy. Into the hands of Social Security recipients (so people like your grandmother may not have to go without eating or eat cat food to survive) who will spend most of it almost immediately, and for medical/healthcare products and services.
In that scenario, will such moneys be a net positive for you personally? Probably, as millions of folks won't be starving in the streets and dying of preventable causes because their only means of sustaining themselves has been co-opted so you can have your "number go up."
More economic activity from fairly collecting existing taxes (that's what buying groceries and shoes and prescriptions is) will increase the velocity of money and grow the economy faster than the hoarding you're advocating. And "number go up" will continue.
Don't care about anyone else but you? Enjoy seeing people suffer and die for your marginal benefit? If so, come out and say it. It's at least a defensible, if evil and selfish, argument -- unlike the ridiculous one you made.
Also worth noting net worth "over a million dollars" is not extravagant for a Medicare-age person who did not have a pension, for example. This is basically a median home and $600k in savings. Not poor, but also not likely to be able to pay anything close to rack rate for health insurance for an older person.