How Much Is the PPACA Like Social Security?

Today Matt Miller squanders a perfectly good 800 word newspaper column with what can be summarized in a single sentence: people disagree about the PPACA. It’s in the form of an imaginary Crossfire program on the Social Security program, featuring Upton Sinclair, Frederick Hayek, Frances Perkins (FDR’s Secretary of Labor) and a Republican Congressman of whom I’ve never heard, Daniel Reed.

I strongly suspect that Mr. Miller didn’t bother looking up what Upton Sinclair actually wrote about Social Security. This is from the pamphlet he wrote when he was running for governor of California:

So far as concerns the EPIC system, let me add that when our workers on the land and in the factories are making comfort and plenty for themselves, we shall say to them: “It will be the part of wisdom for you to set aside a portion of your product, say 10% a year, to establish a fund for your care when you have reached old age, or in the event that you become ill or disabled. Being self-respecting Americans, you do not want to be dependent upon charity, whether of your relatives, or of the State, or of the Federal Government. You want to produce the wealth yourself, so that later on you can claim it as a right and enjoy it without humiliation.”

Clearly, times have changed. Similarly, Hayek does not appear to have opposed Social Security:

“In the Western world some provision for those threatened by the extremes of indigence or starvation due to circumstances beyond their control has long been accepted as a duty of the community.¹ The local arrangements which first supplied this need became inadequate when the growth of large cities and the increased mobility of men dissolved the old neighborhood ties, and (if the responsibility of the local authorities was not to produce obstacles to movement) these services had to be organized nationally and special agencies created to provide them.

and he applied for (and received) Social Security himself.

For Frances Perkins’s views on Social Security see here. I haven’t been able to locate a statement of Rep. Reed’s views but if this quote by Nicholas Kristof is accurate and representative he was against it.

However, let’s look at the actual question objectively. Is the PPACA more or less like Social Security? I believe it is not very similar to Social Security and, consequently, observations about similarities between the debates over Social Security and the debates about the PPACA are fatuous.

Consider:

  1. The PPACA was enacted into law without a single Republican vote. Social Security secured solid majorities of both political parties.
  2. The original Social Security Act of 1935 was under 70 pages long. The PPACA amounts to nearly 2,000 pages. The playwright and theatrical producer David Belasco once said “If you’ve got a clear idea, it can be put on the back of your business card.” The devisers of Social Security had a clear idea. Either the devisers of the PPACA did not or there’s a lot of extraneous stuff in it.
  3. Social Security has been popular since its inception. The PPACA has never been supported by a majority of the people.
  4. Most people expect to receive Social Security benefits. Most people do not expect to be insured under either the Medicaid expansion that’s part of the PPACA or the healthcare exchanges. I expect that the outside figure is about 5%.

The whole thing reminds me of Will Rogers’s famous wisecrack that the difference between death and taxes is that death doesn’t get worse when Congress is in session. When the Supreme Court found that the “individual mandate” of the PPACA was a tax, it reminded me of that wisecrack.

Update

It was pointed out in comments that as originally written Social Security covered far fewer than it does now. I also thought of some other differences:

  • Social Security checks go directly to individuals. Under the PPACA checks either go to providers or to insurance carriers or underwriters.
  • Social Security has inherent limits on the amount of payouts. There are no comparable limits on insurance payouts which means there’s no inherent cap on the cost of ObamaCare.

It was also pointed out that under the PPACA ex-pats would be required to pay without any possibility of receiving benefits. I don’t honestly know how accurate that is.

9 comments… add one
  • PD Shaw Link

    I’m not sure about 3, but I think an important point is that not very many Americans were covered by SS. Exempt from coverage: farm workers, domestic employees, self-employed, government-employed, professionals, employees of educational, religious or non-profit organizations, and transient/casual laborers. The unemployed were also effectively not covered. The person most likely covered was a factory worker for a large employer. The exclusions were justified for sectors deemed administrative difficulty to administer and enforce.

    Politically, this meant that those required to pay the payroll tax, the least popular part of Title II, tended to be in the more industrialized Northeast, and many parts of the country were largely indifferent. The effect was to allow consensus to be achieved through minimization.

    Note that Obama’s recent speech emphasized that 85% of Americans (the insured) are not effected by the issues with the exchanges. This is a minimization strategy. But all Americans in every sector and region are impacted, even in peripheral areas where the top-down program will not work very well for the foreseeable future.

  • jimbino Link

    There is another huge difference between Obamacare and SS or Medicare:

    You are obligated to participate in Obamacare even if you are not working. Not so for FICA.

    You will receive SS benefits no matter where you are traveling or sojourning in the world, but you won’t see a cent of Medicare or Obamacare benefits overseas.

  • jan Link

    The comments about comparisons/contrasts of the PPACA and SS are mostly spot on. However, regarding expectations of SS, there are younger people who sarcastically expect no benefits from either SS or medicare, considering how they are being soaked up by older generations with little consideration of extended viability for those who follow them. We basically have become a society of ‘What’s in it for me,’ which does little to feed the embers of growth and sustainability for millennials — those who have few jobs and no power …yet.

    I’ve commented a lot about the PPACA. However, with each day the Pandora’s Box, of seeing what is in this miscreant of a bill, opens wider, manifesting for all to see the broader implications of how HC will be transformed — taken out of an individual’s hands and placed into that of the all-knowing government.

    More than grumbling about IT problems, the greater blow has been to unsuspecting individual insurance policy holders. These people, many being self-employed (myself included), have been the ones most surprised in seeing insurance they were satisfied with, could afford, now being taken away for what the government says is a ‘better’ HC plan.

    WTF!

    How can cost-effectiveness possibly be the end-game when a person, with a low-cost HC policy, one that fits within their own budgetary means, is suddenly told they must get a better plan, possibly subsidized by the government — meaning taxpayers? This talking pointing that prevails among dems, of calling people’s current plans ‘predatory’, or ‘bad,’ if they didn’t meet all the criteria of the Obama HC law, is beyond liberal arrogance. It’s reminds me of the Matrix movie kind of government programming that fictional characters fought to get around and even annihilate. But, this isn’t a science fiction film we’re dealing with — one we click on, become terrorized by, and then turn off, returning to normal day living. It’s real life, with elected government officials who are lying, obfuscating, hiding — anything goes — to get around hurdles of truth.

    I just can’t believe this is happening…. so fast!

  • jan Link

    While I’m on a roll…

    I was watching the Sebelius hearing today. She solemnly took the heat for the PPACA malfunctions, by apologizing and ‘taking responsibility’ for the problems — while subtly indicting the IT contractors, who earlier had pointed fingers at the WH.

    This, however, is a rerun of events that have happened sporadically over the past 5 years.

    People in the Obama administration, almost on cue, sacrifice themselves to save the president. But in doing so, they really never own anything but the words spoken! Hillary Clinton took responsibility for Benghazi, and then proceeded to disappear, only to reappear in January ’13 to say “What difference does it make!” Lois Learner looked like she was going to take responsibility for IRS targeting, until she took the 5th, instead. Eric Holder was rescued for the F&F gunrunning scandal by the POTUS’s EO. He was further spared, answering questions about the AP/Rosen reporter transgressions, by other scandals, as he quietly faded into the woodwork of the DOJ. The same thing is happening with the NSA overreach — the president is always away from the tarmac of ‘knowing’ what’s going on.

    Like all the other bureaucrats, Sebelius, may have telegenically stuck her neck out today. Nonetheless, it will mean nothing, do nothing, and the government will continue carpet-bombing the PPACA with regulations that will take HC choice away from the consumer, putting into the domain of a centralized authority.

  • TastyBits Link

    If SS were like the PPACA, SS would have required individuals to obtain an IRA or 401(k), and it would subsidize those who could not afford to contribute.

    SS was limited initially to keep the impact minimal. Universal anything coverage is expensive, and being government run makes it much more expensive than it would be as a private endeavor.

    This gets to the reason universal healthcare is actually universal health insurance. The only way to pay for it is through massive taxes on the middle income people, and it is not possible to retain political power after imposing the taxes.

    By foisting it upon the private employers and insurance companies, a government tax increase is transformed into private price increases. The blame is deflected onto the private sector.

    The scam could never bring down prices. You cannot increase demand while holding supply constant and lower the prices. The idea that “economies of scale” can be used to lower prices is stupid. It cannot. It will not.

    There are two way for it to have a chance of working. First is to increase supply through massive increases in premiums. The second is to limit demand through massive deductible increases. Note what is occurring.

    The insurance companies understand that there is no way to quickly get to a single payer system. As @Dave Schuler has noted, the infrastructure does not exist, but more importantly, the will to raise taxes does not exist.

    The insurance companies may be reviled, but they will be making a lot of money. Given the choice between more money and more love, money usually wins.

    This is about politics, money, and power. It always has been.

  • PD Shaw Link

    Looking at this article that seeks to disprove that Social Security was set up on racist grounds, I see a few historical points to be drawn out:

    1. Almost a third of workers were employed in the agriculture or domestic sector in the mid-30s, which are the two presumably largest sectors exempt from Social Security. (Two-thirds of non-whites worked in these sectors)

    2. Religious organizations successfully lobbied for an exclusion from coverage.

    3. Covered employers and employees sought to avoid paying the payroll tax until the mid-40s when they began seeing tangible benefits, though I would add that wages rose rapidly in the early 40s, so the pain from the lost spending power was erased by higher paychecks.

    4. As of 1991, the IRS estimated that 500,000 of the “several million” who employed domestic workers were in fact complying with the coverage requirements of the 1950 law.

    5. In 1935, Southern Democratic Congressmen were more liberal than their Northern counterparts and generally supportive of the insurance program. (The piece doesn’t go into details, but my impression has been that Southerners dominated the Committee system during the New Deal)

  • 4. As of 1991, the IRS estimated that 500,000 of the “several million” who employed domestic workers were in fact complying with the coverage requirements of the 1950 law.

    As I’ve noted before around here my folks were extremely scrupulous about paying FICA for their domestic help, submitting the paperwork, etc.

    WRT South Democrats, Jacksonians tend not to have problems with the dole or with going into debt. In other words they weren’t socialists, they were Jacksonians.

  • PD Shaw Link

    @Dave, Yes. Populist liberals not technocrats. Spenders not regulators.

  • jan Link

    Maybe this is why Obama was so cooperative and swift to delay the HC mandate for big business.

    The HHS analysis of the markets and the impact of ObamaCare on plan offerings was not limited to just the individual markets. When the employer mandate gets enforced for the 2015 enrollment, as many as 93 million Americans may find that their job-provided coverage will go the way of the individual plans this year.

    The ‘fine print’ creating this havoc and dismemberment of plans is:

    Section 1251 of the Affordable Care Act contains what’s called a “grandfather” provision that, in theory, allows people to keep their existing plans if they like them. But subsequent regulations from the Obama administration interpreted that provision so narrowly as to prevent most plans from gaining this protection.

    “The Departments’ mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” wrote the administration on page 34552. All in all, more than half of employer-sponsored plans will lose their “grandfather status” and get canceled. According to the Congressional Budget Office, 156 million Americans—more than half the population—was covered by employer-sponsored insurance in 2013.

    Such were the calculations made in 2010, should the mandate go into effect for everyone Oct. ’13. Hence, granting a delay to big business for a year was imperative. in order to also delay the impact these massive cancellations would have on the nation — especially pre-election. Deflecting the outrage from individual plans being canceled was considered to be relatively easy, by merely deploying dismissive statements from dem operatives/officials/spokespeople as to the “small” segment of society having “lousy” HC coverage. After all, government can handle minority dissent pretty efficiently by just openly mocking it. However, when the greater bulk of cancellations roll in, it will be far more difficult. But, by then, though, the PPACA will have been rooted for a longer period of time, and the all-important ’14 midterms will be behind the democrats.

    Like Tasty has said, it’s all about politics, with little to do in looking out for the welfare of the people.

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