Clarence Fanto: We all should be concerned about these findings

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LENOX — Government's two most important safety net benefits, especially for those at middle age and beyond, seem to face perpetual scrutiny.

Health care and Social Security are again being debated by politicians and numbers crunchers. What they're finding should concern us all.

The two most alarming possibilities:

- A potential $15,000 annual state tax increase for Massachusetts residents.

- A staggering 20 percent cut in monthly Social Security benefits for all U.S. recipients in about 15 years.

Here are the details you may have missed about Massachusetts "Medicare for All" legislation, a form of single-payer health insurance that's been proposed by state Sen. Jamie Eldridge, D-Acton. He's the lead proponent of a bill that has 73 co-sponsors among the state's 200 Senate and House members.

This proposal is an effort to get ahead of a national Medicare for All proposal originated by Sen. Bernie Sanders, and now supported by some would-be presidential candidates.

Even though Sanders has never put forth an estimated cost of his plan, outside experts have projected a roughly $1.6 trillion-per-year additional burden for taxpayers, taking into account what people would save on insurance premiums for private and workplace coverage, copays, deductibles and other health care spending.

An Urban Institute study in 2016, when Sanders first floated the idea during his campaign for the Democratic nomination, found that financing Medicare for All would require a huge increase in federal taxes, with a wide range of impacts on different groups of people.

The Massachusetts proposal, which faces a steep uphill battle to reach Gov. Charlie Baker's desk, eliminates private health insurance in favor of state control for all payments to doctors and hospitals.

Eldridge, who testified before the Legislature's health care committee this past week, spoke of growing frustration with health insurance companies, which would be eliminated under his plan. No more premiums, copays, deductibles.

But payroll and capital gains tax increases would need to produce $15 billion to $20 billion a year for a new agency, the Massachusetts Health Care Trust, to operate a single-payer system, subject to federal approval.

Eldridge estimated the impact on middle-class families could be $15,000 a year on their state tax burden.

This plan would seem to be dead before arrival, though it's good to know that state lawmakers and Gov. Baker are working on potential health insurance legislation to tighten controls on MassHealth, the state's Medicaid program, while negotiating lower prescription prices.

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As for our Social Security crisis, the system's trust funds to pay out well-deserved benefits to workers who, along with their employers, have paid into the system may be running on empty by 2035. If Congress and the White House do nothing, all monthly checks for beneficiaries could be slashed by 20 percent.

The estimated average monthly benefit for all retired workers in 2019 is $1,461. That would drop to $1,169 under this dire scenario (not including adjustments based on cost-of-living increases.) The Social Security Administration estimates that 21 percent of married couples and 43 percent of single seniors rely on Social Security for 90 percent or more of their income.

At least one out of four U.S. workers have no retirement savings, and most others have far less than what's needed to cover basic living costs, including medical and prescription bills. By 2035, there will be nearly 80 million Americans who are 65 or older, per Social Security projections.

"Old people not getting the Social Security checks they have been promised? That has been unthinkable in America — and I don't think it will really happen in the end this time, because it's just too horrible," Alicia Munnell, the director of the Center for Retirement Research at Boston College, said in an interview with The New York Times. "But action has to be taken to prevent it."

It's hard to understand why this looming debacle is not being debated on the campaign trail, as it's certainly no secret.

"Fifteen years is really just around the corner for people planning their retirements," according to John B. Shoven, a Stanford University economist affiliated with the Hoover Institution and the National Bureau of Economic Research. "The cuts that are being projected would be terrible for a lot of people. This needn't happen and it shouldn't happen, but we've known about these problems for a long time and they haven't been solved. They're getting closer."

If future Social Security payouts are compromised, the least-well-off recipients will suffer the greatest impact. Republicans, who have minimal interest in shoring up the system, like to label these payments as "entitlements." No, they are rights, based on payroll taxes paid year after year by all workers and their employers.

This year, the combined Social Security and Medicare tax rate is 7.65 percent, shared equally by employees and employers with a a maximum of $8,239 for each. People who work for themselves pay 15.3 percent, capped at $16,479.

The obvious solution, at least to me, is to raise or, ideally, remove the cap. Currently, income above $132,900 a year is not subject to the payroll tax, meaning well-paid workers get a break not available to their less-affluent colleagues.

To save the system, requiring payroll taxes at all income levels, no matter how high, could well eliminate the potential Social Security derailment 15 years from now.

While some may advocate reducing, or even eliminating, Social Security benefits for the most affluent retirees, that's not fair either.

Congress prefers to kick the can down the road whenever possible. But for retirement income, the road goes off the cliff for everyone now under 50 and for current recipients still around in 2035 unless a Capitol Hill task force is formed to come back with proposed solutions under a reasonable deadline.

When it comes to following the money, we all have a big stake in the outcome.

Information from The Boston Globe and The New York Times was included in this commentary.

Clarence Fanto can be reached at cfanto@yahoo.com or on Twitter @BE_cfanto. The opinions expressed by columnists do not necessarily reflect the views of The Berkshire Eagle.


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