Early Retirees and Obamacare Redux: How Texas Teachers & Jon Huntsman Employees Are Milking the System
In August, I blogged about a little-known part of Obamacare designed to help cover the health insurance of folks lucky enough to retire years before Medicare coverage kicks in at age 65. The $5 billion proved so popular that the administration shut down the application process and its funds have gone to a wide variety of retirees in the private and public sectors.
That program is back in the news today thanks to the AP focusing on a couple of specific beneficiaries of that program: Texas public employees (where Rick Perry rules) and Huntsman International (the family firm of the former Utah governor and GOP presidential hopeful).
The Teacher Retirement System of Texas, a statewide system for public education employees, received more than $70 million as of Sept. 22, according to the federal Health and Human Services Department. The Employees Retirement System of Texas, which covers state employees, received about $30 million.
Huntsman International, the main operating subsidiary of the family-founded chemical conglomerate, is also collecting subsidies [to the tune of about $1 million.]
The AP is interested in playing gotcha ("It highlights the gap between dire Republican rhetoric about the pragmatic impulse to cash in on a new government benefit,"), which I find less interesting than the fact of the program's existence. Here's how it works:
…more than 400,000 companies [offer medical coverage for early retirees too young to collect Medicare]. Add state and local government agencies, as well as union plans, and the number swells. Indeed, the Obama administration's subsidy program got so many applications it stopped accepting new ones after approving more than 6,000. The program pays 80 percent of the claims amount for early retirees ages 55 to 64 whose care costs between $15,000 and $90,000.
The largest beneficiary of the program is the United Auto Workers, who have snagged over $225 million so far.
"Some people have described this program as 'Cash for Clunkers,' in the sense that if you want it, you have to get in line first," said Paul Fronstin, an economist with [an insurance] research group. "There was a lot of advice given to be first in line." The original Cash for Clunkers was an Obama administration program that paid people to trade in gas guzzlers for more fuel-efficient transportation. It created a marketing sensation before running out of cash.
What can you say about a program so poorly designed that it runs out of money so fast it has to be shut down? Err, maybe it wasn't a good idea in the first place. Maybe that run on resources indicates that there's a basic design flaw that strongly mitigates the thing being put in action. I'm just spitballing here.
A couple of days ago, in a brilliant post, Matt Welch got at some of the sociological and historical laziness of Occupy Wall Street types who think that it's never been so tough to be so young and beautiful. This early retirement benefit underscores the real generational battle afoot: Between people lucky enough to be cashing out of work careers with all the bells and whistles shining brightly and the rest of us who can only look forward to working longer hours, weeks, and years with no guarantees other than reduced benefits and higher taxes. Worse still, those of us under 50 are being told that our sacrifice is part of some generational covenant so it can't be questioned even as we're being told that we'll be on our own, either via reduced benefits or fiscal implosion.
I don't mind saving for my own retirement or paying for my own health care; in fact, I want to do just that. Those of us who can pay for this stuff should do so at every stage of our lives. But I also want the ability to opt out of a system that is totally going to screw me (and my kids). Which puts me squarely with a majority of Americans, it seems.
For centuries, wealth flowed from the old and relatively rich to the young and relatively poor. Nowadays, the direction has been reversed. Via FICA taxes, the young and relatively poor give money to the old and relatively wealthy (you not only make more money when you're older, you're sitting on all sorts of assets accrued over time). Every study of Medicare and other entitlements that are not particularly means-tested shows that we can't have both a safety net and an entitlement system that sucks in huge amounts of cash and then gives it to people regardless of need. I think it would be a better world and a fairer world—and a richer world—if the government took in enough money to help the poor and indigent (whatever their age) and let the rest of us keep more of our money and make more of our choices for our futures.