Academic journal article Generations

Insuring Health and Income Needs of Future Generations

Academic journal article Generations

Insuring Health and Income Needs of Future Generations

Article excerpt

Shifts in demographics and in how we live.

We recently observed the seventy-fifth anniversary of the largest market crash in America's history, the event that galvanized this country to do more than encourage individuals to be provident, save, and prepare themselves for a rainy day. The big crash taught millions how powerless individuals can be against national economic and social forces. As a result, we have Social security, a governmentbacked insurance program that addresses economic life catastrophes like income needed for a surviving minor child and lifelong income for someone who sustains a disability. Most significantly, Social security provides a small pension in old age that disproportionately benefits workers earning the lowest wages. Social security is based on assumptions that enough heads of households are steadily employed and paying Social security taxes so that life's unplanned catastrophes can be mediated and all participating workers have at least a small pension. The system is purposefully designed to provide some help for times when even the most provident person is helpless: when families lose their breadwinner, when hazardous conditions result in total disability, and when workers with inadequate savings retire or can no longer work.

With relatively modest refinements, the broadest American policy programs to insure income (Social security, initiated in 1932) and health needs (Medicare and Medicaid, initiated in 1965) have been sustained to benefit family units when a member pays into die fund for at least forty quarters (at least ten years), where total disability fits defined conditions, and an old age and survivors pension provides some income security. More recently, a basic heahh insurance for hospital and doctor visits was added to assure healdi security in old age.

As America's social and population diversity increases and its systems for gainful employment and productive family units change, concerns about the future of Social security and Medicare require more than narrow econometric and health-system interventions. Assumptions about who works, whether program benefits address beneficiary needs, and the extent to which these programs should keep up with public expectations must be explored in a broad social context as well. This article describes some ways in which our social fabric in the future may and may not be adequately supported by programs designed for a time when the United States was less diverse with respect to its family structures, demography, and desire for a government role in the economic and health security of workers and their dependents.

A WIFE'S WORK

In 2004, if a wife's work credits under Social security are larger than her husband's, he can benefit from her higher contributions, just as wives traditionally have when their husbands were the primary wage earner of the household. Since die 19705, when divorce rates indicated a less than fifty-fifty chance for the survival of first marriages to old age, beneficiary accounts of high-wage-earning males have been increasingly used to determine the benefit level of more than one surviving spouse. Calculations that account for current and past household arrangements recognize the contributory efforts of the spouse who, by earning less, shared the obligations and lifestyle of the higher-earning spouse, even if the couple is no longer together. When Social security was first established, there were few divorces and marriage was a lifetime commitment. This progressive feature of Social security is not shared by all private pension plans.

Among the many proposals made over the years to address changes in employment and family structure are those that separate a woman's pension from that of her spouse while assuring an adequate and fair benefit amount. Methods of calculating Social security pensions of women whose uneven employment history reflects periods of dependent care (most often, children or frail elderly parents) include providing Social security credits for unpaid, socially necessary work as a family caregiver (Feinberg and Newman, 2004). …

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