January 21, 2014


Triumph and Tribulation : How progressives might approach changes to Medicare, Medicaid, and Social Security. (Henry J. Aaron, 1/21/14, American Prospect)

These trends contain both a challenge and an opportunity. The challenge is to maintain the progressivity of Social Security. The opportunity is to modify support for the elderly in ways that encourage those who can do so without undue hardship to remain economically active until later ages than in the past. These changes could include reductions in Social Security benefits paid when people with above-average incomes claim benefits at an early age. Such changes should be combined with increased access to and support levels in Supplemental Security Income and with incentives to encourage employers to retain older workers and with income-related incentives for older workers to remain in the labor force. The higher earnings from increased labor supply would flow disproportionately to older workers who otherwise would leave work. Added income from earnings would flow primarily to those with low education and earnings who now retire comparatively early. The increased tax revenues from the added output that these workers would produce would contribute noticeably to closing projected budget deficits.

Nor should progressives resist Medicare changes that promote competition between properly compensated managed care organizations (MCOs) and traditional Medicare, provided that the rules of competition are designed to prevent premiums for traditional Medicare from being driven up by MCO cream-skimming.

Raising retirement age, hiking taxes and means-testing are all worthwhile goals for the coming compromise, but oughtn't a Progressive movement worth its name be looking to use the safety net to spread and increase wealth for society's poorest?  And the way to do that, as everyone recognizes, is to give them saving/investment accounts. 

Posted by at January 21, 2014 2:37 PM

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