Social security, medicare, and medicaid are good, valuable programs but should be organized, funded, administered and overseen principally at the state level, not by the federal government. This would almost certainly significantly improve the quality and responsiveness of the programs, but also allow for a more flexible, modifiable approach that molds the programs to more appropriately fit local needs. The healthcare concerns and needs of a rancher in Wyoming may be different than those of a security officer in New York. Access to care issues are different, cost of living is different, regional and local demographics are completely different in each state. If these programs were administered at the state level, this would allow for a much more responsive and accessible system and probably would be much more palatable to taxpayers in terms of the state and local tax burden to pay for them, as people would feel like they were actually getting their money’s worth when benefits were a better fit to their circumstances and needs. As always, the political benefit to local and state politicians if the programs ran well would be direct. Medicaid is a need-based program. In my opinion, medicare and social security should be as well. Many beneficiaries of these programs don’t need these benefits and really do not need to be on the recipient roles. Again, the need-based selection process would be much simpler if administered at the state and local level. Federal funding for these programs could be set up as a matching grant system, where state need is identified and funded by the states to the extent that budgets permit, and then the amount is matched through a federal grant system that allows for through-funding so that the promise of these programs is consistently kept.
In order to keep social security solvent, an investment trust should be set up to replace the current social security trust fund. This could be managed by a carefully selected group of investment fund managers so that the fund would grow rather than remaining stagnant. Legislation to make misuse of the fund or misdirection of fund assets by legislators a federal offense with stiff jail sentences would have to be passed and enforced. Establishment of a strict accounting system to watch fund assets and prevent ill-advised “borrowing” would be crucial—which would prevent abuse of the money by congress in the manner that is happening with the current social security trust. Such a system, starting with the current social security trust fund as the initial investment assets, would provide retirees with a growing retirement investment account as opposed to a tiny pension. Imagine a fund of this size with the ability to buy into a major IPO or other burgeoning investment—the potential for financial security for the elderly would be limitless. A portion of the growth of the fund could then be used to fund projects to benefit the elderly and the poor, such as increasing medicare and medicaid payments and reimbursements to healthcare providers so that these programs would be more widely accepted.
In El Salvador, the USAID ran a program called ‘United to Reconstruct’ which came about as a result of the extraordinary levels of corruption among government officials. The trickle down method had failed miserably as the money given out at the top was subjected to so many hands in the till that nothing ever got to the people that needed it. USAID came up with an idea for changing the program which they set up as a campaign they called “United to Reconstruct.” In this program, the money was designated for a school, sewer system, or other public works project but was given out locally to the mayor in a public ceremony. As part of the process, there was a strict accounting of all of the funds when the money was distributed with the knowledge up front that cost overruns would be the problem of the town (read mayor). The program was very successful as the people of the town knew how much money was being distributed and specifically where it was supposed to go. If the project didn’t take shape as described, the machete-wielding populace knew exactly who to hold accountable.
Our entitlement system must be held to exactly the same degree of accountability, especially trust funds and other large sums of ready money that might be depleted in an irresponsible or illegal manner by elected officials.