When in doubt, buy ’em out

Jason Bontrager, commenting at Jane Galt’s place, suggested this solution, if solution it be, to the Social Security/Medicare headaches soon to be visited upon the American taxpayer:

SS: buyout. $500K to each senior currently receiving full benefits (aged 70 and above). $450K to each senior aged 69. $400K to each senior aged 68. And so on in decreasing increments of $50K. Expensive, but it’s a one-time expense and then it’s just a matter of paying off the debt incurred in financing the buyout. Anyone with 10 or more years until full eligibility gets nothing, but no longer has to pay into the system and their employer’s “matching contributions” go directly to the employees rather than the SSA. Everyone gets a de facto raise and employers’ bottom lines are affected not at all.

Medicare: Medical Negative Income Tax and Health Savings Accounts. For any income (from all sources) less than, say, $50K/yr, citizens get $X/year (analogous to the Earned Income Tax Credit. . . the less you make, the more you get, on some graduated scale) deposited directly into their HSA. Money in the HSA is available only for non-elective medical expenses and health insurance. Individuals may make their own, after-tax, contributions to the HSA as well. Heirs may cash out the HSA (and pay taxes on it) or roll it into their own HSAs and NOT pay taxes on it.

Details would have to be worked out of course, but this is a start. Make people the owners of their own healthcare expenses and let them keep more of their own money with which to prepare for their own retirements.

Not surprisingly, this package wasn’t universally hailed. I tend to suspect that I won’t ever draw anything from Social Security anyway, but I’m still a fair number of years away from retirement, unless the Gods of Powerball prove to be more generous than I anticipate. I will note, however, that were FICA withholding discontinued, I’d have roughly three times as much to stash into my 401(k). And if nothing else, this proposal would provide the acid test for the libertarian doctrine that the reason health care costs so damned much is simply that so much of it is paid for by government that the marketplace is severely crippled.

Yeah, I know: boring subject. Life is like that sometimes.


  1. Jeffro »

    3 June 2007 · 10:11 pm

    I’ve decided The Gods of Powerball would more likely smile were I to actually purchase a ticket once in a while…..

  2. CGHill »

    3 June 2007 · 10:42 pm

    Well, yes, there is that.

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