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Friday, November 26, 2021  

Don't Come Crying to Me, I Told You So!Published 2/28/2005

From many years of experience in the geriatrics and social services arenas, I can tell you that most adult children cannot stand the news that Medicare will only pay for their parents' "skilled care." Medicare is the national health insurance program for the retired and the disabled (not to be confused with Medicaid, the health insurance program for the impoverished). Medicare only covers intermittent, skilled home care or skilled (meaning not long-term) nursing home stays. Medicare does not cover on-going care.

Conversations about the limits of Medicare coverage are some of the most painful discussions I have with children of aging parents. They watch in helpless rage as their parents' retirement savings, or a would-be nest egg, disappears into $5,000 a month nursing home bills. Or their parent has to "spend down" and become indigent in order to qualify for Medicaid. And oh how they argue and manipulate and threaten, as if I wrote the Medicare rules myself! I feel for them in their anguish.

The question of "who pays" for us as we age is a very timely concept, as the President heats up his second term by agitating for "partial privatization" of social security. Social security is a social insurance program that provides a floor income for retired and disabled workers, or for surviving family members of deceased workers. Like other insurance programs, it is designed to minimize and pool our collective risk. All workers pay into the program, with the exception of some. And how much does it cost to run this behemoth program? About $1.30 for every $100.00, which is much less than the administrative costs of standard insurance plans! The President proposes private accounts, which will surely involve account manager fees. More importantly, individual accounts mean individual risk. A pooled social insurance program is designed to minimize and absorb risk.

I can safely predict that, if given the choice, most people would much prefer to have social security available to cover their parents' and their own basic living expenses during disability or retirement. Nonetheless, privatization pundits waste no time with their dire warnings that social security will go bankrupt if something drastic isn't done. The facts do not support this doomsday scenario. Reports from the nonpartisan Congressional Budget Office, as well as from the program's actuaries, point to the need for some tweaking, yes, but not a major overhaul. The more pithy arguments include a lot of financial and economic forecasting data. I therefore strongly encourage people to get informed and involved now. We need to ask ourselves which scenario is more frightening, a future of financial risk and insecurity for ourselves and our children, or a hugely successful social program (which belongs to us collectively!!) that has served elders, the disabled, and their surviving family members very, very well for the past 65 years.

The title of today's editorial sounds so much like the classic 'resigned parent' screed. I can practically hear my own mother's admonishing voice! Why must I sound so reprimanding? Because like most parents, I can see into the future, and unless people get cracking, and call /write/email/fax their elected representatives, the dismantling of social security will take place right under our little noseys. As enticing as partial privatization sounds, Social Security should not be privatized at all. Why? Because that breaks apart our collectively owned social insurance and makes each of us absorb our own risk. It weakens all workers economically: If the stock market goes south, or some bad decision is made, or someone happens to outlive their 'pot' of retirement money, then what? What is more, the privatization scheme was already tried (with disasterous results) in Great Britain and Argentina. One thing people should be very wary of is the proposal to make benefits reflect price-indexing versus wage-indexing. From what I understand, price-indexing would result in approximately a 50% decrease in actual benefits for those retiring 20-30 years from now.

How about this as an alternative to privatization: increase wages to keep pace with cost of living. Make college tuitions reasonable and affordable. Keep health insurance premiums reasonable and affordable (as opposed to being about as costly as some people's mortgage payments). Then increase the amount that individuals can be saved in tax-deferred accounts (Individual Retirement Accounts or 401K).

Lastly, if privatization does become an option, I would argue for a mandatory waiver, signed by all people opting-in, with their children as witnesses: a "No Whining" waiver that would extend indefinitely, like the national debt we are passing onto future generations. Because in the brave new world of privatized social security, if the stock market goes south, if people blow their money, or if the whole thing turns into a giant fiasco, guess what? Anyone who did not fight to preserve the integrity of the existing program can talk to the hand! I refuse to listen to the uproar when adult children become responsible for their parents' basic living expenses.

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