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The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Burden Lundgren
With the United States engaged in seemingly endless military operations, we are hearing a great deal about collateral damage. When armies seek to destroy a military target, it seems almost inevitable that there will be collateral damage – the unintentional killing of civilians or accidental destruction of infrastructure.
In public programs, we also have targets: populations for whom benefits are intended. It often falls to public administrators to measure the benefits or possible harms of such programs. We usually assess the program effects on the target populations, e.g., at-risk juveniles, homebound seniors. We should certainly continue to do this. However, I would argue that we should go beyond that to measure the spillover effects on non-target populations. Specifically, I want to look at Medicare, Medicaid and Social Security.
The Medicare program covers care for end stage kidney disease patients and for people with disabilities, but most benefits are directed at health care for Americans over the age of 64 years. Social Security provides income for those over age 65. Medicaid, often thought of as a program for poor women and their children, uses 70 percent of its budget on long-term care, mainly for seniors. With seniors being the principle beneficiaries of these programs and with their funding coming from younger, working people, the political arguments over the programs are often framed as an inter-generational conflict. I maintain that, since younger people, even children, benefit at least as much as their grandparents that framing is incorrect.
The direct benefits of these programs go to seniors, but that is not where they end. To look at the spillover effects of these benefits, it is useful to consider what might happen to individual families in the absence of these programs.
Scenario A: There is no Social Security program. Your parents cannot afford to keep living in their home, so they move in with you. Despite the extra expense of additional people living in the home, such an arrangement can be beneficial to some – at least for a time. If all family members are compatible, grandparents can often help with child care or other tasks. However, adding additional family members can also introduce inter-generational tensions into a home. It is also likely that aging family members will require more help as time goes by, putting additional stress on relationships and diverting attention from others, e.g., children who may also be in need of care. Living with an extended family may be a good choice for some – when it is a choice. But when it is not a choice, success seems unlikely.
Scenario B: There is no Medicare program. You and your spouse are working parents trying to save for your children’s education and your own retirement. Suddenly, one (or more) of your parents needs a life-saving and expensive surgery. If they or you are wealthy, coming up with the money may not be a problem. But most of us are not wealthy. You could borrow the money thereby putting yourself in debt for years. You could dip into a retirement account if you have one, thereby imperiling your own future (and making it more likely that your children will be supporting you when you are ageing) or you could dip into your savings for your children’s education thereby imperiling their futures. You are in the position of choosing among your parents your children and your own future. Alternatively, of course, you could let your parent(s) go without the needed care. To state it another way, you are now the death panel.
Scenario C: There is no Medicaid program. Your aging parent needs long-term care. You or your spouse quit work or reduce work hours to care for your parent. One estimate puts the costs (lost wages, lost Social Security benefits, lost private pensions) of doing so at close to half a million dollars. Do you have half a million dollars to spare?
Your parents were legally required to care for you. There is no legal requirement that you care for them and some will abandon their parents. Fortunately, most people feel a strong ethical responsibility to care for their parents. But we all have other ethical responsibilities too, notably to provide for ourselves and our children. That can present a “Sophie’s Choice,” and it is the dilemma social insurance, in this case Social Security, Medicare and Medicaid, was designed to solve. These three programs protect every family from making impossibly painful choices by spreading risk over the entire population.
If there were no Social Security, Medicare or Medicaid, the financial future of every family in America would be imperiled. The target population of these programs is seniors. The spillover effect is the protection of younger family members. It is a collateral benefit to which we pay little attention and that lack of attention is simply wrongheaded. Here is the deal: we pay a part of each paycheck to these programs during our working years. Those programs then protect us, our parents, our grandparents, our children and our grandchildren. You’ll never see another bargain as good as this one.