The word, ENTITLEMENT, has been raised high on the flagpole as benefits of Medicare, Medicaid and Social Security. According to the new federal administration, these benefits spend too much money of the Government budget and must be reformed. Fewer benefits, the more money saved, so goes the theory.
This took me to the dictionary to find a true meaning of the word “entitlement.” That’s when I realized the disparate reasoning between what I think and what they think. For clarity, “I or we” equals millions of average Americans; “They” equals the Congress and federal government, intent on scaling back our entitlements.
Which entitlement definition should be used? Originally, America’s entitlements included Social Security, Medicaid and Medicare because “workers paid into the system and became entitled to their benefits.” Other entitlement programs in the United States also include federal employee and military retirement plans, unemployment compensation, Veterans’ Administration programs, food stamps, agricultural price support programs, and CHIP (Children’s Health Insurance Program).
In another interpretation, entitlement means “having a right to something.” Such as, “The belief that one is inherently deserving of privileges or special treatment.”
It all started on August 14, 1935, when U.S. President Franklin D. Roosevelt (FDR) signed into law Social Security, a social insurance program for retired workers aged 65 or older to maintain an income. The 1935 law explicitly forbid federal income taxation on Social Security.
U.S. President Harry S. Truman sent the House a bill that would offer health insurance to those aged sixty-five and older, but it was blocked. President John F. Kennedy tried unsuccessfully too.
President Ronald Reagan in 1983 was the first to sign a law allowing up to 50 percent of social security income to be taxed. In 1993, under President Bill Clinton, the taxable amount increased to 85 percent. Which is amusing because anyone who works pays FICA taxes (Federal Insurance Contribution Act) to save toward Social Security income. Subsequently, we now pay federal income tax on our social security income, which is paid for by a tax on our work income. In emoji language, that would be the yellow face, with one eye closed and the tongue hanging out.
Since 1935, health care costs have escalated (hmmm. Nothing new there), and the federal government believed that Social Security needed improvement to protect the aged against rising health care costs.
Finally, on July 30, 1965, President Lyndon B. Johnson (LBJ) signed into law Medicare and Medicaid as amendments to the Social Security program. Research shows that as health costs increase in old age, income usually declines. At that time in the mid-60s, it was found that slightly over half the 65+year-olds had any type of hospital insurance; private health insurers discontinued policies for the elderly, especially in the high-risk category. Medicare accomplished two things: First, a hospital insurance plan, and secondly, a medical insurance plan that covered physicians’ services and other areas not covered by hospital insurance. LBJ signed the law in Independence, MO where former President Truman and his wife watched. Johnson later said, “I wanted him (Truman) to know that America remembered.”
Medicaid aimed to help the low or modest income elderly, who were living at or below the poverty level, as determined by the federal government. For 2017, the federal poverty level for one person is an annual minimum income of $12,060 to qualify for the Affordable Care Act (ACA) and up to $16,643 to qualify for 2017 Medicaid.
At an annual salary or income of $12,060, a person has $232 a week to live on. I have had grocery bills higher than that. I have not seen a doctor’s invoice for less than $300-$400 for a simple office visit. “Thank you, Medicare.” The current controversy over health care in the United States takes us back to which form of “entitlement” we are talking about, and who’s getting what.
There’s no denying that Social Security, Medicare, and Medicaid entitlements are a vital support for millions of Americans who need health coverage and income in retirement.
Currently, approximately 50 million Americans receive Social Security, another 11 million collect disability benefits, and about 55 million get Medicare. According to the Center for Retirement Research at Boston College, “If people continue to work and pay taxes, Social Security will not run out of money.” Still naysayers predict an end date in 2035.
The so-called dwindling Social Security Trust Fund has been borrowed against often. LBJ first borrowed from social security to pay for the Vietnam War. Next was Reagan for the military buildup in the 1980s. President George W. Bush borrowed $1.37 trillion to pay for the tax cuts to the rich and the war in Iraq. If we borrow money, we must return the money. Not so with presidents. Besides, that’s money we only think we have a right to.