Tim Burke: separating Social Security, Medicare from other entitlement programs

The word “entitlement” has been placed on just about any government program that benefits a person or persons.

But what does the word really mean?

According to Wikipedia, an entitlement is a provision made in accordance with a legal framework of a society. Merriam Webster defines entitlement even further as:

1) a: the state or condition of being entitled and b: a right to benefits specified especially by law or contract.

2) A government program providing benefits to members of a specified group; also: funds supporting or distributed by such a program.

3) The belief that one is deserving of or entitled to certain privileges.

Using definition 1, Social Security and Medicare are entitlement programs created in accordance with laws that give specific benefits to retired persons that reach a certain age.

Essentially it is a contract made by the government to you that in exchange for paying into Social Security and Medicare during the years you worked you will receive those benefits upon retirement and reaching certain age criteria. These two programs are dependent on new taxpayers providing the funding for those receiving the benefits. The entitlements received by current retirees are funded by the taxes paid by today’s current workers.

When those current workers retire, their benefits will be paid for by the next generation of workers’ taxes. It is actually wealth redistribution, a phrase that Republicans railed against the Democrats these last eight years but it is how these entitlements have always been funded. It is a common belief that the money you paid into Social Security and Medicare is your money that is set aside for when you retire but that assumption is false. The monies you paid went into a large pool that was redistributed as benefits and not into a separate account for you.

When you are living on a “fixed” income, your expenses are anything but “fixed.” Any change to those benefits is a major concern. You will hear a politician say occasionally that the system for those benefits is broken and that those entitlements are going to go broke without major changes. There is some truth to that and reason to be concerned.

The first reason is that there is a trend of fewer workers paying into the system and an increase in persons receiving those benefits. The baby boomer generation was coined that for the obvious reason, a spike in births after World War II and a booming economy led to larger families. As those boomers retired there was a corresponding decline in birth rates meaning fewer workers are paying into the system.

There are also fewer workers paying into the system because they have been replaced by automation or undocumented workers. Much has been made of the problems associated with illegal residents but a major issue is that they often work “under-the-table” without paying into the Social Security and Medicare systems while displacing legal resident workers.

There is also a push by liberal politicians to raise the minimum wage, which on first glance might seem like a good idea to benefit workers but the reality is that those entry level jobs are being replaced by automation because of lower costs. And small businesses can’t afford to pay higher wages without raising prices to consumers. Those factors have brought a corresponding decrease in entry level jobs for American workers.

The second reason is that Medicare costs are far outstripping the monies paid into the system to offset the cost of the program. Medical costs have been steadily increasing for years with no end in sight. Combine that with the fact that obesity, diabetes, and other major health issues are increasing, not decreasing. At the same time, life expectancy is increasing due to advancements in medicine and treatments.

You don’t have to be a rocket scientist to figure out that fewer people paying into the system and higher medical costs will lead to problems with these programs unless substantial changes are made.

Raising taxes would, of course, bring in more revenue but that takes more money out of current workers’ paychecks. It would be better to first get Medicare costs under control before fees or benefits for those now using those services are changed. Medicare, Medicaid, and health reform are all linked together and the politicians need to quit their partisan posturing and figure out some long-term solutions.

Otherwise, the contract that the government made with workers for these entitlements will be in jeopardy.

Next week: how we perceive other entitlements and how they have changed our society.

Tim Burke is a businessman, philanthropist, educator and Pahrump resident. Contact him at timstakenv@gmail.com