1995-1996 Harry Singer Foundation National Essay Contest

Social Security In The Twenty-First Century

Valley Springs High School, Valley Springs, Arkansas

Teacher: Bill Harness

1st Jamie Wasson           2nd Amanda Brandt        3rd Leslie Richard

"Social Security is a government program designed to provide income and services to individuals in the event of retirement, sickness, disability, death, or unemployment. The Social Security Act passed by Congress was put into effect in 1935 under the leadership of President Franklin D. Roosevelt. The Act has 20 program titles, among them is Medicare. Medicare includes hospital insurance and supplementary medical insurance covering physician's fees.

The myths about Social Security are as confusing as the realities. Realities are that benefits are very costly. Recipients are not likely to accept any reduction in benefits, and long term solvency remains the big concern for our nation.

Many of the controversies over the Social Security system are whether the system is fair or not fair. What 'fair' really means depends on one's point of view. Lower-income workers said that Social Security was unfair for two reasons: One, the higher a person's income, the smaller the percentage that Social Security taxed; two, the tax doesn't apply to unearned income such as interest, dividends, and capital gains.

Higher income workers complained about unfair returns on their contributions and suggested that Social Security favored the lower income workers. Working women complained that Social Security was punishing them for years spent out of the work force taking care of children and elderly parents. Blacks complained that they were being treated unfairly for starting work earlier in life, paying into the system longer, and dying younger.

In 1990, Senator Daniel Patrick Moynihan introduced a plan to cut Social Security payroll taxes and increase the amount of 'take-home' income workers would receive. One goal of Moynihan's plan was to show that Congress and the Administration failed to do away with the United Stated budget deficit, as they spent the surplus from the 1983 Social Security overhaul in order to pay the country's debts.

The bill that Moynihan proposed provided tax relief for all workers and employers paying payroll taxes. A report prepared by the Senate Committee on Aging stated that Moynihan's proposal is to be 'the most controversial and widely debated Social Security issue.' Although Moynihan was unable to forge a consensus around his proposal, he succeeded in building a considerable coalition in its support. Critics feared without a surplus, the Social Security system might become ill equipped for the next century. Free-market advocates believed that Moynihan's bill would be the best choice for the retirement needs of individuals. Free-market advocates also suggested that individuals needed to 'opt out' of the Social Security system and put all or some of their payroll taxes into private retirement accounts. According to Alice M. Rivlin, the big payroll taxes that would be necessary when the 'baby boomers' retire would likely lead to 'intergenerational' conflict, benefit cuts, and maybe a conversion of social security to a means-tested program.

Women have unique problems when they reach retirement age. Most women have to rely on private savings to supplement their retirement. After being gainfully employed for as long as 35 years, today's women can expect the same social security retirement benefits as their mothers and mother's mothers. The retirement income received will not reflect their contributions to the work force. In 1970, women received from social security only 70 percent of what men received. By 1987, the percentage had fallen to 58 percent. Social Security also penalizes the woman in the dual-earner family. Wives who are entitled to both their own and their husband's social security benefits receive only the higher of the two options, and that is usually the husband's contribution.

Homemakers and care givers suffer a greater loss of social security benefits than anyone else. A homemaker who is divorced will receive only one-half of her ex-husband's social security benefits, and most of the time the money received is not enough to meet all of their necessary daily living expenses.

Anyone over the age of 65 years qualifies for the Medicare benefits made available through Social Security. Medicare is divided into two parts:

*Part A covers the hospital room, board, and emergency fees. Part A carries a $676 deductible amount for each hospital stay in a 60-day period. The good news is that depending on how long a person has worked, Part A is usually free (after the individual pays the deductible amount).

*Part B covers outpatient medical bills, has a $100 annual deductible, and costs $36.60 a month. The federal government pays 80 percent of the physician fees and the individual pays the remaining 20 percent.

Even though Medicare is an affordable option, 8 percent of eligible senior citizens are not on the plan. They purchase Medicare supplements. These supplements pick up the 20 percent of the payment not covered by Medicare's Part B. If an individual is under 65 years of age, that person should consider contacting private insurance companies and compare coverage and prices.

The nursing industry offers another possible solution to increasing medical costs. The nursing industry proposes to expand the role of the practical nurse to lower health care and Medicare costs. Practical nurses would work in homes, factories, schools, and community clinics teaching preventive health care. Some groups of physicians object to the nursing industry proposal. These groups say that patients' health care is the physician's legal and ethical responsibility. These groups also say that the nursing plan would force hospitals to discharge patients sooner which, in turn would force Medicare to reimburse the policy holder sooner. Opponents of the nursing industry plan also suggest that the plan would result in a greater need for outpatient clinics.

Medicare and the Social Security program remains one of the primary concerns of our nation. As the average age of the American continues to rise, these issues become even more alarming. This concern will definitely carry forward to the twenty-first century. Congress must continue to fight to keep the Social Security system solvent. Medicare costs will likely increase as medicine and medical care increases. The more aware the public is of the problems involved, the more likely it is that a workable solution can be developed."
Jamie Wasson, Valley Springs High School, Valley Springs, Arkansas

"Imagine a world where children care for their aging parents, neighbors look in on neighbors, and churches and charities aid society's neediest. Picture businesses helping to weave local safety nets for the poor. Envision farmers freed from government constraint planting what they want. And think of individuals and companies paying lower taxes to a shrunken federal government.

Now imagine a world where the elderly no longer enjoy the financial and emotional security of Medicare's subsidized health insurance. Instead of having Social Security, Americans would have to save for themselves or do without in old age. Poor children would be forced to rely on cash strapped charities for food and shelter. Family farms would wither in the face of subsidized foreign competition. And should almost anybody fall on hard times, they would be responsible for picking up the pieces themselves.

The Social Security program in the United States was enacted in 1935. It was one of the many public welfare programs legislated by Congress during the 'New Deal' of Franklin D. Roosevelt. Today, Social Security falls under the umbrella of the Department of Health, Education, and Welfare, a cabinet level department. The following viewpoint of this is taken from the pamphlet Your Social Security published by HEW. In it many of the benefits available to eligible social security recipients are outlined.

Today, Social Security is the nation's basic method of providing a continuing income when the family's earnings are reduced or stopped because of retirement, disability, or death. Nine out of ten workers in the U.S. are earning protection under Social Security. Nearly one out of every seven persons in this country receive monthly social security checks. About 23.1 million people 65 and over, nearly all of the nations aged population, have health insurance under Medicare. Another 2.6 million disabled people under 65 also have Medicare. Nearly, every family, then, has a stake in Social Security.

Through the years since Social Security was enacted in 1935, there have been many changes to improve the protection it gives to workers and their families. At first, social security covered only the worker upon retirement; but in 1939, the law was changed to pay survivors when the worker died, as well as certain dependents when the worker retired.

Social Security covered only workers in industry and commerce when the program began. In the 1950's coverage was extended to include most self-employed persons, most state and local employees, members of the Armed Forces, and members of the clergy. Today, almost all of the jobs in the U.S. are covered by Social Security.

Disability insurance benefits were first paid for July 1957, giving the workers protection against loss of earnings due to total disability. The Social Security program was expanded again in 1965 with the enactment of Medicare which assured hospital and medical insurance protection to people 65 and over. Since 1973, Medicare coverage has been available to people under 65 who have been entitled to disability checks for 2 or more consecutive years and to people with permanent kidney failure who need dialysis or kidney transplants.

As a result of legislation enacted in 1972, social security benefits will increase automatically in the future as the cost of living goes up. Legislation enacted in 1977 made an important change in the way benefits are calculated, restored the financial soundness of the Social Security program, and made other changes in the program.

The two parts of Medicare- hospital insurance and medical insurance- help protect people 65 and over from high costs of health care. Also eligible for Medicare are disabled people under 65 who have been entitled to Social Security disability for 24 or more consecutive months (including adults who have been disabled since childhood). Insured workers and their dependents who need dialysis or kidney transplants because of permanent kidney failure also have Medicare protection.

The hospital insurance part of Medicare helps pay the cost of inpatient hospital care and certain kinds of follow up care. The medical insurance part of Medicare helps pay the costs of physicians' services, outpatient hospital insurance. People who have medical insurance pay a monthly premium. More than 70% of the medical insurance is paid from general revenues of the Federal Government. The basic premium is $8.20 for the 12 month period beginning July 1978.

If someone is eligible for a Social Security or railroad retirement check either as worker, dependent, or survivor, he or she automatically has hospital insurance protection when he or she is 65. People 65 and over who have not worked long enough to be eligible for hospital insurance can get this protection by enrolling and paying a monthly premium just as they would for other health insurance.

The basic idea of Social Security is a simple one: During working years, employees, their employers, and self-employed people pay social security contributions. This money is used only to pay benefits to the more than 33 million people getting benefits and to pay administrative costs of the program. Then, when today's workers' earnings sop or are reduced because of retirement or death , disability benefits will be paid to them from contributions by people in covered employment and self employment at that time. These benefits are intended to replace part of the earnings the family has lost.

Part of the contributions made goes for hospital insurance under Medicare so workers and their dependents will have help in paying their hospital bills when they become eligible for Medicare. The medical insurance part of Medicare is financed by premiums who have enrolled for this protection and amounts contributed by the Federal Government.

If Social Security did not exist in its present beneficent form, we should have had to invent it. It must be preserved intact.

As long as he or she has earnings that are covered by the law, he or she continues to pay contributions regardless of his or her age and even if he or she is receiving Social Security benefits. Funds not required for current benefit payments and expenses are invested in interest bearing U.S. Government securities. The governments share the cost of supplemental medical insurance and certain other social security costs comes from general revenues of the U.S. Treasury, not from social security contributions."
Valerie D. Drewry, Valley Springs High School, Valley Springs, Arkansas

"President Lyndon B. Johnson signed the bill creating Medicare on July 30, 1965. Then, only one-half of America's elderly had health insurance. Medicare is financed by people who have medical insurance and pay a monthly premium. The Medicare fund receives money from one group of people (current workers) and pays out to a different group (retirees). Medicare pays hospital and doctor bills for more than 37 million Americans 65 and older.

There are two parts to Medicare: hospital insurance and medical insurance. These help protect people 65 and over from the high costs of health care. The hospital part of Medicare helps pay the costs of inpatient hospital care and certain kinds of follow-up care. The medical insurance part of Medicare helps pay the costs of physician's services, outpatient hospital services, and for certain other medical items and services not covered by hospital insurance.

Democrats and Republicans say, 'Medicare's cost, which totaled $159.5 billion last year (1994) and is rising at an annual rate of 10%, must be controlled before the great wave of baby boomers begins to hit the rolls around 2010'. President Clinton has threatened to veto a bill that carries out plans to help balance the budget by cutting spending on Medicare and Medicaid by $270 billion in seven years. Naturally, Republicans would prefer to portray their Medicare cuts as an effort to save Medicare, but $270 billion is double what would be needed to stabilize the trust fund. The government can't ignore it; Medicare is too big a part of the federal budget to ignore. It's more than 10% of all federal spending. Medicare is life and death to 37 million Americans. The GOP plan would push patients into competing for profit health maintenance organizations where the freedom to choose doctors is limited. Too many seniors and people with disabilities are going without food and other basic needs to pay for prescription drugs and nursing care because Medicare won't pay for them. With $270 billion cut from the Medicare program our frailest, sickest citizens may have to go without health care altogether. These cuts will kill. These are the results of a telephone poll of 800 adult Americans taken for Time/CNN August 23-24. Do you favor or oppose cutting Medicare in order to balance the budget? (In Favor 28%, Opposed 64%.)

Social Security is our nation's basic method of producing a continuing income when family earnings are reduced or stopped. Monthly checks go to workers and their dependents when the worker retires or becomes disabled or dies.

Social Security was enacted in 1935. It was one of the many public welfare programs legislated by Congress during the 'New Deal' of Franklin D. Roosevelt. There have been many changes in Social Security. At first, Social Security covered only workers in industry and commerce when the program began. In 1939 the law was changed to pay survivors when the worker died. In the 1950's coverage extended to include most self-employed persons, state and local employees, household and farm employees, Armed Forces, and the clergy. About 43 million people are on Social Security. Who gets checks? All kinds of people get Social Security checks young, old, poor and rich. Social Security is financed during working years. Employees, their employers, and self-employed people pay Social Security contributions. Then, when today's workers earnings stop or are reduced because of retirement, death or disability, benefits will be paid to them from contributions by people in covered employment at that time. Nine out of 10 workers in the United States are earning protection under Social Security. Nearly 1 out of every 7 persons in this country receives monthly Social Security checks. The long run of financial problems of Social Security stem from one simple fact: the number of people receiving payments from the system has increased and will continue to increase faster than the number of workers on whose wages can be levied to finance those payments."
Mandy Brandt, Valley Springs High School, Valley Springs, Arkansas

"In 1935 the Social Security Act was enacted. This act was established to provide public programs designed to provide income and services to individuals in the event of retirement, sickness, disability, death or unemployment. Since its beginning, the original Social Security Act has been modified by major amendments more than 20 times. Survivors' insurance benefits were added in 1939, disability benefits in 1956, and Medicare benefits in 1965. Under the administration of President Ronald Reagan, concern for the financial integrity of the Social Security program prompted the passage in 1983 of major legislative changes entailing curtailment of certain benefits, and for the first time, taxation of certain benefits; also legislated was a gradual increase in the normal retirement age, currently 65, to 67 for individuals born in 1960 or later.

Old-Age Survivors and Disability Insurance, Medicare hospital insurance, and Medicare Supplementary Medical Insurance are separately financed segments of the Social Security program. The cash benefits for these programs are financed by payroll taxes put on employees, their employers, and the self employed. The rate of these contributions is based upon the employee's taxable amount, with the employer contributing an equal amount.

The Social Security Act also provides for money grants to states to pay part of the costs of programs for Aid to Families with Dependent Children (AFDC) and of Medicaid (medical assistance) to needy persons who cannot afford the costs of medical care.

All of these programs have been good in the past, but the time has come to rethink the programs. Many factors are causing the collapse of the system: people are living longer, new study shows that a person will live 1.6 years longer in 2010 --and at least 5 years longer by 2065, and baby boomers will draw more than being contributed by the time they retire.

Social Security problems are causing much discussion by both political parties. Senators from both parties suggest that the government could solve some of its budget problems by slowing the growth of Social Security benefits paid to 43 million people.

The Senate Republicans have made a proposal, Medicare Choice, to cut down costs by encouraging beneficiaries to shift into private health plans and by curbing payments to doctors and hospitals. The Senate would also gradually increase the age of eligibility for Medicare, starting in the year 2003. The eligibility age, now 65, would be increased in stages until it reached 67 in 2027. This plan involves increasing the annual deductible for doctor's fees as well as the monthly premium that beneficiaries pay for coverage of doctors' and outpatient services. Under current law beneficiaries must pay the first $100 of costs accumulated each year for doctors' services. The Senate would increase the annual deductible to $150 in 1996 and raise it by $10 in each of the following six years.

The House's proposal, Medicare Plus, is almost the same as the Senate's, but as an alternative to enrollment in the standard Federal health insurance program, a person 65 or older could obtain a fixed amount of Federal money each year to enroll in a health maintenance organization to open a medical savings account, or to buy coverage from a commercial insurance company. The House's proposal plans only to increase the premium, not the deductible.

Under both bills, the monthly premium, now $46.10, would double over seven years, reaching $90 to $93 in 2002. Both parties seek to save the same amount of money, cutting projected Medicare spending by $270 billion dollars over 7 years.

The alternatives to the problems of Social Security and Medicare will affect us all in the future The public must stay informed and know what changes are taking place with Social Security and Medicare. They also must have a backup plan for when they retire and no longer have a steady income."
Leslie Richard, Valley Springs High School, Valley Springs, Arkansas

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