Samuelson: health care reform and the generational conflict

Robert Samuelson writing in the Washington Post has nailed the major problem not only with health care reform, but other entitlements as well; they are programs that massively transfer wealth from young to old, from productive worker to retiree:

One of our long-running political stories is the economic assault on the young by the old. We have become a society that invests in its past and disfavors the future. This makes no sense for the nation, but as politics it makes complete sense. The elderly and near elderly are better organized, focus obsessively on their government benefits and seem deserving. Grandmas and Grandpas command sympathy.Everyone knows that the resulting "entitlements" dominate government spending and squeeze education, research, defense and almost everything else. In fiscal 2008 -- the last "normal" year before the economic crisis -- Social Security, Medicare and Medicaid (programs wholly or primarily dedicated to the elderly) totaled $1.3 trillion, 43 percent of federal spending and more than twice military spending. Because workers, not retirees, are the primary taxpayers, this spending involves huge transfers to the old.

Now comes the House-passed health-care "reform" bill that, amazingly, would extract more subsidies from the young. It mandates that health insurance premiums for older Americans be no more than twice the level of that for younger Americans. That's much less than the actual health spending gap between young and old. Spending for those age 60 to 64 is four to five times greater than those 18 to 24. So, the young would overpay for insurance that -- under the House bill -- people must buy: Twenty- and thirtysomethings would subsidize premiums for fifty-and sixtysomethings.

Samuelson points to AARP and it's 40 million members as being mostly responsible for this upside down pyramid. As long as old people are politically aware, highly organized, and vote in large numbers, it is not likely that this situation will change any time soon.

The problem, of course, is demographics. In a couple of decades there will barely be 2 workers paying taxes into the system for every retiree who takes benefits out. Compare that with the more than 3:1 ratio that was the case when these benefits were first mandated by Congress and you can see how a future war is shaping up between young and old.

Read Samuelson's entire piece for some critical analysis of the costs of health care reform on the younger worker.


Robert Samuelson writing in the Washington Post has nailed the major problem not only with health care reform, but other entitlements as well; they are programs that massively transfer wealth from young to old, from productive worker to retiree:

One of our long-running political stories is the economic assault on the young by the old. We have become a society that invests in its past and disfavors the future. This makes no sense for the nation, but as politics it makes complete sense. The elderly and near elderly are better organized, focus obsessively on their government benefits and seem deserving. Grandmas and Grandpas command sympathy.

Everyone knows that the resulting "entitlements" dominate government spending and squeeze education, research, defense and almost everything else. In fiscal 2008 -- the last "normal" year before the economic crisis -- Social Security, Medicare and Medicaid (programs wholly or primarily dedicated to the elderly) totaled $1.3 trillion, 43 percent of federal spending and more than twice military spending. Because workers, not retirees, are the primary taxpayers, this spending involves huge transfers to the old.

Now comes the House-passed health-care "reform" bill that, amazingly, would extract more subsidies from the young. It mandates that health insurance premiums for older Americans be no more than twice the level of that for younger Americans. That's much less than the actual health spending gap between young and old. Spending for those age 60 to 64 is four to five times greater than those 18 to 24. So, the young would overpay for insurance that -- under the House bill -- people must buy: Twenty- and thirtysomethings would subsidize premiums for fifty-and sixtysomethings.

Samuelson points to AARP and it's 40 million members as being mostly responsible for this upside down pyramid. As long as old people are politically aware, highly organized, and vote in large numbers, it is not likely that this situation will change any time soon.

The problem, of course, is demographics. In a couple of decades there will barely be 2 workers paying taxes into the system for every retiree who takes benefits out. Compare that with the more than 3:1 ratio that was the case when these benefits were first mandated by Congress and you can see how a future war is shaping up between young and old.

Read Samuelson's entire piece for some critical analysis of the costs of health care reform on the younger worker.