Medicare and Social Security are often tied together as the two great pillars of America’s commitment to the well being of our seniors. But, in fact the two programs could hardly be more different.
Medicare is vastly complicated, paying directly for the health care services of some 50 million people and contracting with hundreds of thousands of health care providers. It fixes the prices paid for every service delivered and prohibits any charges above those prices. “Balance billing” is forbidden. Medicare decides what is and is not an appropriate service for coverage purposes, and is increasingly directing providers on how they must provide the services for which they are paid. Other than some strictly defined supplemental insurance, Medicare is a monopoly insurer.
Social Security, on the other hand, is simple. It sends out monthly checks (or electronic transfers) to about 60 million people — period. The amount of the check is based on the money paid into the program, but that maximum is $2,366 per month for people at full retirement age.
Once you receive your monthly benefit, the money is yours and you may spend it on anything you want. Don’t tell Mayor Bloomberg, but you may spend it on Big Gulp sodas. You may spend it on fois gras. You can even buy cigarettes with the money. You can take that money and overpay for things. You can waste it on silly stuff. The government doesn’t care! It’s none of their business.
If you’re on Social Security, not only is balance billing allowed, it is expected. If you want to buy a car and don’t have enough SS money to pay for it, you are perfectly free to add your own funds to make the purchase — neither you nor the car dealer is punished for doing so. Indeed, it is expected that most people will supplement their payments with other money — savings, investments, money earned from working, a private retirement plan, or contributions from family members. It’s all good.
Now many people in Washington think the elderly — and everybody else, for that matter — are incompetent to make their own decisions. “The people” are like fatted calves ready to be slaughtered by greedy profiteers. Regular people are too poorly informed to make good decisions and they are easily manipulated by clever marketing. Plus, they suffer from “information asymmetry” and don’t know much about the things they would like to purchase.
Certainly that is the thinking in the Medicare program, but why should it stop with Medicare? Perhaps Social Security should be run the same way. Why should our government allow people to spend taxpayer money on things that are bad for them? Why should we let them overpay for essential goods and services?
And just imagine the wonderful opportunities that would open up for federal bureaucrats! Why we could solve the unemployment problem by assigning every Social Security recipient a case manager to “help” them spend their money more intelligently!
Of course, first we would have to institute a program of third-party payment for Social Security benefits. Rather than just giving people money, we would pay directly the providers of food, housing, transportation, utilities, clothing and all the rest. We would have to develop participating contracts for these providers and audit them all to ensure they are not overcharging these vulnerable citizens.
Then we would need to educate recipients to make sure they are spending their allowance appropriately. For instance, where obesity and diabetes are such a problem, people should not be allowed to spend precious Social Security money on fatty foods. So our participating food providers will be strictly monitored to make sure they are not peddling bad things. They will also be responsible for counseling recipients on proper diet.
Now, of course we will have to drop the whole idea of fee-for-service payment because all these providers will want to sell as much stuff as they can. So, we will switch to a “bundled payment” system in which food providers will get a fixed amount of money for each recipient. If they can provide less food, they will get to keep more money. This will be good for people on Social Security, too, because eating too much food is bad for you. I expect there are studies showing that the ideal diet is rice cakes and green tea, so why should anyone need more than that?
This is gonna be GREAT! Utopia is just around the corner.