First Healthcare Then Retirement

The US made a decision in the 1930s to limit government delivered "benefits" to Social Security-provided retirement income. Paying for other benefits was a personal responsibility, though in some cases employers were encouraged to help. Since then government-provided benefits in the US have expanded but mostly as part of the safety net.

European countries took a different direction. In Europe certain benefits were defined as a right, and the government provided them to everyone. Some here have been disappointed at our more limited approach and attempts to implement the European approach have been ongoing. For example, they were successful in getting Medicare adopted in the 1960’s. Saturday's vote in US House of Representatives on health care shows the current strength of those advocating this philosophy.

It is not too soon to compare what is happening with healthcare to what could happen with the retirement system. The stage was set for the healthcare debate by a vigorous effort to convince Americans that the US healthcare system is fatally flawed. For example, it is now commonly believed by many that people are dying because the US system cannot deliver needed care. Even more are outraged at the treatment of some by health insurers. These messages have been pounded home in the context that somehow healthcare should be free, or at least not inconveniently expensive.

The same thing is happening with retirement. Virtually every day, somewhere, there is an article quoting some expert or authority figure stating categorically that the current approach is failing with drastic consequences to come. Usually, the reason cited for the failure is the “recent” transition from traditional defined benefit plans to defined contribution plans-- even though the high point of the private employer defined benefit system was 25 years ago. They ignore the enormous sums that are being set aside, even with market volatility, to help Americans after they retire-- more in total and per capita than any other country in the world. Instead of being proud of how we have reduced the poverty rate among those 65 and older from 25% in 1968 to 9.7% in 2008-- the lowest poverty rate for any group in America--they explicitly state or imply that we must have a massive government intervention to prevent a total catastrophe.

Those in Washington who want to federalize the retirement system believe that the American public can be convinced that the system delivering an outstanding result to current retirees will fail them completely. If they are right, then like healthcare the current retirement approach is hanging by a thread. Every day PSCA works to set the record straight. We need everyone who believes in the current approach to do the same.

David