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Mona Charen
Mona Charen
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You Pay for Warren Buffett's Medicare

Comment

The president is barnstorming around the nation hoping to enrage voters at the injustice that the wealthy pay fewer taxes than the middle class. "Now that's wrong," Obama objected, "That's not fair."

It also isn't true. According to the National Taxpayers Union, in 2009, the top 1 percent of earners paid 36.7 percent of income taxes. The top 5 percent paid 58.6 percent. And the top 10 percent paid more than 70 percent. Social Security and Medicare taxes fall more evenly on all income groups (except the poor) but are lower. Further, Obama had the opportunity to repeal the Bush tax cuts he claims to find so odious when his party controlled both houses of Congress, but he chose to extend them instead.

This is political demagoguery of a high order, attempting to achieve re-election by whipping up class envy and finding "kulaks" to scapegoat.

While it isn't true that the rich are not paying their fair share, it is true that you are subsidizing Warren Buffett's Medicare. This is but one of the many injustices and inefficiencies of our current health care system that will only worsen if Obamacare is not repealed or overturned by the Supreme Court.

The one and only thing that Democrats and Republicans agree on regarding health care in the United States is that costs are too high and rising at an unsustainable rate, though Democrats engage in denial on the subject of Medicare's solvency. Yet with the very next breath, Democrats nearly always argue that the pre-Obamacare health system was a "free-market" system that failed.

On the contrary, the pre-Obamacare health system was already badly distorted by government. The open-ended Medicare entitlement, which pays for every medical expense incurred by the elderly, without regard to income, is an invitation to overuse. Consumers have no incentive to shop for value and thus, have no idea what the care they receive even costs. Medicaid is even worse.

Those with employer provided insurance (about 80 percent of the population), likewise have no incentive to economize on health care consumption or shop for value, since someone else pays the bills.

People who do not work for large employers face prohibitive prices for individual health insurance policies.

This is partly due to the absence of the tax exclusion offered to employers. But two other factors also drive up the cost of individual policies and leave too many people without coverage. State-imposed mandates on insurance coverage — requiring those expensive items such as substance abuse programs, pregnancy, childbirth, and other expenses may be part of any insurance package — drive up the cost of insurance. Whereas a pure catastrophic plan could be quite inexpensive for a young, healthy purchaser, many states prevent insurance carriers from offering them. Additionally, because government is subsidizing so much of the care in the broader health marketplace, prices are higher than they would otherwise be.

James C. Capretta and Robert Moffit propose a series of reforms in National Affairs that will tackle all of these issues.

Like Paul Ryan, they would transition Medicare to a defined contribution or "premium support" model. Each elderly person (excluding those above 55 at the time of passage) would receive a stipend with which to purchase a health insurance plan. Those who wished to pay more out of pocket for more generous plans would be free to do so. The Ryan plan envisions offering subsidies on a sliding scale — more for the poor than for the wealthy. Why should we be paying for Warren Buffet's Medicare?

Capretta and Moffit further propose changing the tax treatment of health insurance to provide a tax credit to individuals rather than to employers. In one stroke, this would introduce cost-consciousness to a system that has conspicuously lacked it, as the consumers of care would be the ones shopping for coverage. The Heritage Foundation (yes, that supposed bastion of class privilege) has even proposed offering a non-refundable tax credit that would be phased out for the wealthiest.

As for those with pre-existing conditions who cannot get coverage (a much tinier percentage of Americans than the Democrats would have you believe), high-risk pools can be subsidized at a fraction of the cost of Obamacare.

Republicans missed an opportunity to reform health care in a free-market direction during the early years of this century. If the court spares us from Obamacare, they may get a rare second chance and thus avoid the rationing, crippling expense and decline in quality for which we are otherwise headed.

To find out more about Mona Charen and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2012 CREATORS.COM



Comments

6 Comments | Post Comment
Politicians and Conservative Republicans continue to blame the voters for allegedly wanting more government than they are willing to pay for.
The effort of politicians to pin the blame on voters diverts attention from the real entitlement mentality that threatens to bankrupt the nation: A political class that feels entitled to rule over the rest of us.
Government spending has gone up in every year since 1954 because political leaders have pursued their own agenda rather than listening to voters.
Many Republicans talk of an entitlement mentality that threatens the character and finances of the United States. In their view, the problem is that too many voters feel entitled to goodies provided by the government and financed by taxpayers.
But a close look at the data and the facts show that it's not a voter sense of entitlement that is driving the process. Quite the contrary.
The two biggest entitlement programs — Social Security and Medicare — are seen by voters as trust funds they pay into during their working lives and then get back in their retirement years. That's what President Franklin D. Roosevelt sold voters back in 1935. He wanted the "contributors" to have a "legal, moral and political right to collect their pensions." That's what voters still want today. Seventy-three percent believe the best way for the program to operate is to protect the trust funds and make sure there is enough tax revenue to pay the promised benefits.
Just 10 percent want to scrap this approach and have the government pay benefits out of the general operating budget.
There are problems with our public perception, starting with the fact that the way our politicians have defined "trust funds" is fraudulent. But those problems reflect the failings and deceptions of politicians rather than voters.
In Social Security and Medicare, voters are not looking for a handout.
They are looking for a return on money invested.
Thanks for your input, Scott.
Comment: #1
Posted by: Steve
Sat Apr 14, 2012 12:58 PM
Re: Steve

"The two biggest entitlement programs — Social Security and Medicare — are seen by voters as trust funds they pay into during their working lives and then get back in their retirement years. That's what President Franklin D. Roosevelt sold voters back in 1935. He wanted the "contributors" to have a "legal, moral and political right to collect their pensions." That's what voters still want today. Seventy-three percent believe the best way for the program to operate is to protect the trust funds and make sure there is enough tax revenue to pay the promised benefits."

The problem is that what the voters believe is a lie, because that's what FDR sold them. There is no "trust fund," and the money was never "invested." People don't "contribute" to anything.

Social Security and Medicare are funded out of FICA taxes. The money deducted from the pay of today's workers goes to pay benefits to workers from their parents' and grandparents' generations. It doesn't go into any "account," and the fact that someone paid FICA taxes for decades doesn't give them any legal entitlement to future benefits.

Don't take my word for it, though. Those are the facts the government used to defend Social Security in court when it was challenged as unconstitutional.

There is no way to make Social Security solvent. It's a simple matter of demographics. When it was created, the retirement age was set so that the average person would draw benefits for 2 or 3 years. It was also set up so that about 7 current workers were paying in for every person drawing benefits.

Today, we have people drawing benefits for 20 or 30 years, with approximately 2.5 current workers paying in per retiree (and that ratio is continuing to go down, due to low birth rates).

The system simply cannot be made solvent without major changes. The math just doesn't work.
Comment: #2
Posted by: Jeff Gunn
Sat Apr 14, 2012 9:49 PM
Mr. Gunn, the point I seem not to have made is our economic problems reflect the failings and deceptions of politicians rather than an entitlement mentality of voters. Having spent a few years volunteering with the poor and indigent I have found the only entitlement mentality I've noted comes from the families of the more financially well off. They feel entitled to everything the tax laws and subsidies will allow including manipulating the legal system and monopolizing to drive out all small business ventures that were competing. More than any other, big business has changed the face and ideals of America. Now, for lack of choice we are required support these collosus as they've deliberately set about to make everything uniform from the low quality of our foods to the low quality of our goods all priced low enough to allow them to reduce wages and benefits incrementaly. I remember a time before giant companies swallowed up the small business and vacation was spent in local tourist traps rather than casinos and malls. By providing low paying jobs for low quality cheap goods which are no longer supporting local merchants but now supporting the economies of China and India. Yet when the less well off want their little piece of the pie they are accused of an entitlement mentality. It's as absurd as a thief who stole from you and living high off the hog with your monies and telling you to practice austerity measures and get used to it while they continue to get paid and keep doing what they are doing.
Yes SS & Medicare need major financial changes. One of the most helpful changes would be for the goverment to pay back in all the money with accrued interest the monies my generation and the generations after me has already paid in. Start there and then lets look at the problem.
Then lets look at foreign aide if you want to talk about entitlement mentality of the poor. Why are the poor in foreign countries more entitled to my tax money than me?
Let's stop all foreign aide to other countries and start aiding the citizens of our country by using that foreign aide monies toward paying down the debt. Maybe apply it to SS & Medicare for our own citizens?
After we do that, let's put in place changes affecting those who have most profited from their own entitlement mentality. I'm here to tell you, it's not the poor.
Comment: #3
Posted by: Steve
Sun Apr 15, 2012 6:20 AM
Statistics, lies, and damn lies.
You said:
"It also isn't true. According to the National Taxpayers Union, in 2009, the top 1 percent of earners paid 36.7 percent of income taxes. The top 5 percent paid 58.6 percent. And the top 10 percent paid more than 70 percent."
<br>
Ok. So we have half the picture here, the tax side. Please provide the income side. How much of the income did the 1% get, overall? What is their effective tax rate? The 5%? The 10%? Providing the numbers you did, without any reference, is misleading at best. I would call it sneaky.
<br>
I would certainly hope someone making more than I do paid more in taxes! But we cannot tell from this if their effective rate for those high earners is above (as is subtly implied, but incorrect).
<br>
Giving us these numbers without a foundation is a smokescreen. Please tie this to real income if you expect to be taken seriously.
Comment: #4
Posted by: Jack
Mon Apr 16, 2012 5:21 AM
Ms. Charen, there's a glaring flaw in the pretext of your piece - in the interest of accuracy and fairness, you didn't correctly state what the President actually said. He, IN FACT said - "Today, the wealthiest Americans are paying taxes at one of the LOWEST RATES in 50 years. [...] That's not fair. It doesn't make any sense." It's an important distinction that you either chose to ignore or you were deliberately being dishonest to make a point. Readers, you decide.

"While it isn't true that the rich are not paying their fair share," - really? After taxes I get to keep 76% of my income, Willard Romney gets to keep 86.1%. That's fair? Perhaps, I'm just more "fair" than Mr. Romney?
Comment: #5
Posted by: Jilli Brown
Mon Apr 16, 2012 6:00 AM
jilli, why stop at Romney? You also paid a higher % in taxes than Obama. How come you didn't point that out?
Comment: #6
Posted by: Thetruth
Fri Apr 27, 2012 5:28 PM
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