Low hanging fruit for Representative Ryan and Senator Murray

October 8, 2013, the Senate Committee on Homeland Security and Governmental Affairs reports $4.5M in fraudulent disability claims due to collusion by a judge, an attorney and multiple doctors.

November 1, 2013, the Office of the Inspector General reports the Centers for Medicare and Medicaid services paid $23M for deceased beneficiaries between 2009 and 2011.  This accounts for less than one-tenth of one percent of total payments.

September 14, 2013 General Accountability Office reports from December 2010 - January 2013 36,000 beneficiaries received improper disability pay in the amount of $1.3B.  This accounts for less than one percent of beneficiaries and disability payments during the time frame.

Representative Paul Ryan and Senator Patty Murray are leading a group of legislators trying to come up with a budget deal prior to the next fiscal deadline.  Much talk has been about increasing revenues, cutting budgets or reforming “entitlement” programs.  While reforming Social Security, Medicare and Medicaid are necessary, these headlines show reform has many forms.  Before cutting payouts, Representative Ryan and Senator Murray should look into increasing funding to these institutions.

It may seem counterintuitive to increase funding when trying to decrease the budget, but funds to increase systems to reduce improper payments would save much more than their cost.  Improved databases, applications and training can prevent the above from occurring with such regularity.  Increased tracking and investigation could uncover devious plots to take advantage of a system designed to support those who need it the most.

With that, significant reductions in outlays could be achieved without reducing benefits to those that need them the most.  When dealing with budgets in the billions, it is easy to lose sight of $4M or $23M being lost without keeping focus on the fact these are very large numbers.  One can find the evidence of this loss of focus can be seen in the reference to one-tenth of one percent of total payments.  Before cutting benefits to seniors, active duty military and single mothers, Representative Ryan and Senator Murray can attack some low hanging fruit.

Tough medicine needed for Social Security

The nonpartisan Congressional Budget Office announced Federal debt could match GDP in 25 years. In large part, this is due to the continuation of large increases in costs for “entitlement” programs.  Without cuts to those programs or increases to revenues (i.e. taxes), the fiscal stability of the US economy is in jeopardy. It is time to take some bad medicine.  It is time for Congress and the White House to issue an apology to everyone under the age of 40 (which includes this writer).

Social Security is not an entitlement.  It is a Depression Era promise the US Government made to its citizens; we will not allow Americans fall to the wayside.  It was written in a time with unemployment rates never seen before, or since; rampant poverty; and where each successive generation was not only larger, but also outlived the previous. But, look at the title Social SECURITY; not Social PENSION, Social RETIREMENT PLAN or Social THE GOVERNMENT WILL TAKE CARE OF YOU UNTIL YOU DIE. The intent was never as the plan has largely been implemented.

Today’s demographics cannot support a top heavy system with a larger population receiving outlays than the ones making contributions; especially when the population receiving outlays has life expectancies far greater than when the law was written. An annuity basic: the longer the annuity has to pay the larger the principal OR installment payments (i.e. taxes).  Because of this, when I was a financial planner, contrary to my training which taught building a retirement plan depended on employer plans (pension or 401k), personal investment and Social Security, I advised clients to depend only on employer plans and personal investment.

I, with many of my Generation X, Y and Millennial brethren, have no expectation we can rely on Social Security in our golden years.  It is time to make the necessary changes, write the apology and tell these generations not to plan on having it.  The key word is plan. This is not a call to repeal Social Security.  The program itself needs to exist for SECURITY.  However, lines need to be drawn, and adhered to, on total wealth.  It is absurd to think Warren Buffett receives a Social Security check.  More absurd is to continue to allow $1.3 Billion in mis-payments.  Increased funding for technology and personnel to verify enrollment, claims and payments will save tenfold the cost.  These are simple, common sense changes that can save the Social Security system as a whole, and will directly contribute to stabilizing the US economy.

For those in these generations that contend it is not fair to continuing paying into a system they are not guaranteed to receive a benefit from, the payment will come either way.  Rather to plan my own retirement and pay into Social Security at a decreasing amount over the next 20 years, then continual increases to the general tax rate which in the end would strip away a much greater amount from my weekly check.  The total cost in increased tax revenue and extra costs associated with economic instability will be far, far greater.

*Matthew R. Jewell: Currently a Contracts Manager for a large organization; former financial planner and holder of Series 6 & 63 Securities, Life and Health Insurance Licenses; Bachelor's Degrees in Mathematics and Economics from the University of Detroit Mercy and Master's of Business Administration from Wayne State University 

A Government shutdown is not leverage

Is the United States the greatest country with the best medical care in the world? An affirmative answer to this question is incongruent with allowing a large population of US citizens to subsist on little to no health care.  Albeit a clumsy effort, the Affordable Care Act attempts to address this incongruence. Either we act like the greatest country in the world, or continue on a hypocritical path. 

A primary argument of detractors to the Affordable Care Act focuses on the increased costs and expense borne by taxpayers. Based on this reasoning, the Act has foisted billions onto the national debt that will subsequently be saved with its repeal. This is a fallacy in that these costs already existed, paid by consumers, state and federal governments.  Prior to passage of the Affordable Care Act, a similar amount of costs were passed onto consumers as a hidden tax through: laws preventing hospitals from turning away people in distress; 4000% variances for the same joint replacement surgery; excessive and sometimes unnecessary prescription costs covered by the faceless healthcare insurer, unseen or unconcerned by the consumer; and lack of preventative care leading to increased Medicaid, Medicare and Social Security Disability claims. Unable to avoid or unwilling to limit these costs, hospitals and insurers pass these costs onto those that do have the ability to pay. 

No doubt, the final form of the Affordable Care Act and its implementation have serious faults.  The Federal Government provides affordable healthcare to hundreds of thousands of individuals which looks nothing like the Affordable Care Act. Historically, government engineered markets have not proven successful. With that, while the Affordable Care Act recognizes the variance of markets between regions and states, providing States funding if only they follow rigid rules (and some yet completed rules) fails the test of ask me to do it or do it yourself, but don’t ask me to do it and then tell me how. Finally, the bungling attempt to solve the problem of ensuring everyone truly participates and has sufficient healthcare coverage, resulting in a Supreme Court ruling. All of these are serious faults with the Affordable Care Act in its current form.

Even so, attempting to defund the Affordable Care Act in order to starve it is near sighted and misguided.  The Affordable Care Act is a law.  Laws can be changed.  Opponents to the Affordable Care Act have been unwilling or unable to come up with reasonable changes or a reasonable replacement. The current leadership in the White House and Senate will not allow repeal, but may agree to changes. Instead, opponents threaten to shut down the entire Government like a petulant child threatening to take their ball and go home. Ignoring the fact Congress has not passed a budget in 4 years, one of its main purposes, the current Continuing Resolution is not directly related to the Affordable Care Act.  Further, neither is the upcoming battle over the debt ceiling.  Though not as easily measured as within appropriations in the federal budget, complete repeal of the Affordable Care Act would return society to imbalance and insidious hidden taxes tantamount to the cost of the Act itself.

*Matthew R. Jewell -  Currently a Contracts Manager for a large organization; former financial planner and holder of Series 6 & 63 Securities, Life and Health Insurance Licenses; Bachelor's Degrees in Mathematics and Economics from the University of Detroit Mercy and Master's of Business Administration from Wayne State University