I was listening to Diane Rehm show in WAMU, and they were discussing the private accounts or partial privatization of Social Security. In fact, I would probably be ok with that, if you could prove me that it does not mean that if things don't go right for you, you won't be left on the dark. However, that does not seem to be the historical truth in the US.
I used to work as a social worker in Florida, with a case load full of elderly people living off Social Security, and if they were not living in poverty, I don't know what poverty is. Social Security as it is right now, hardly covers the basic needs of many. Therefore, how could it be that those private accounts will take care of that as handsomely as their proponents insist they will?
As always, all I have are questions.
1. The proponent of the private accounts, James Glassman, fellow at the American Enterprise Institute and host of TechCentralStation.com, insisted in saying that the system should have something for those who are "irresponsible," or even get "unlucky." This was just a second after Diane mentioned that the best estimates of the system imply that 80% of people would do well, but 20% would do worse. For Mr. Glassman, those 20% of the population are just "irresponsible" and a very small percentage may be unlucky. My question are: 1. there would be no space for "irresponsibility" since supposedly the system will ensure that everybody will only invest in "very secure" stocks and bonds, therefore, who are those 20% of irresponsible people? Could those be, in fact, the poorest of the society? Is someone making less than 7 dollars the hour and therefore investing a ridiculous amount in the stock market, irresponsible? He insisted in saying that people should take care of themselves, and I don't think anybody would disagree with that, except that now, it has been shown that increasing for instance the amount people could invest in things such as 401K and IRAs do not help the poorest people, because they hardly have any money to invest to begin with.
2. Compare this with the Prepaid College Plans, and the College Investment Trust Funds. The prepaid option implies you pay a certain amount, and you get the four years of education you paid for in advance. That's a state guarantee to you. Sort of like Social Security. However, in the trust funds you will reap the benefits, or the loses of whatever amount you put in. Reality now is: we invested in both in Virginia. We have the guarantee for the prepaid plan, but we have LOST money -literally, not just that the return has been small, but that we have put more money in than there is now in the account- in the trust fund. That's the reality of the market. Period. You may win big, you may lose big. That's why Social SECURITY exists. Because you need to guarantee the people that have worked all their lives and contributed to our society will have a decent retirement, and won't be left to the ups and downs of the market. We bear a common risk, and take a common responsibility. I understand that probably the States may not be able to guarantee their entire promises regarding the college plans, but then a solution will have to be implemented. Probably we will need to contribute more. Probably future investors in the plan will also have to contribute much more. Probably (much needed) caps to the ever increasing cost of higher education will have to be put in place. These are called adjustments, not doing away with the program. Of course, this is a minor problem compared with Social Security, because at the end of the day, college is only four years.
3. If I were to complain about the performance of the "very secure, and stable" blend of stocks and bonds in which the Trust Fund money have been invested I will receive the following answer: "past performance is not guarantee of future performance" and "the stock market, as we all know, took a dip in the late 90s." And that is, in fact, the truth. But that's why we could not put people's retirement in that kind of insecure security, because in fact, now, my daughter is about to go to college…and the money just is not there. We were very responsible, we put as much as we could there, and now it results that we would have been better off leaving the money in a savings account. I'm not complaining -well, maybe a little- because I knew the risks we were taking when we invested. All boils down to RISK.
4. Back to the late 90s. The stock market took a dip, the bubble burst, etc. and many people lost their 401k and their retirement investments. In fact, lets think just in the people that have worked on Enron all their lives and believed they'll have a very comfortable retirement after 30 years on the company. Many thought they had half a million dollars there waiting for them. (Of course, you don't put all your eggs in one basket, and all that, but that's not the point I'm making here.) Well, the company is no more, and they are now asking "you want paper or plastic?" Probably, the market could over a 40 years span actually be beneficial to you, but my question is: what happen to those who, at the time of their retirement, the market just goes down? How could one ask someone, less than 5 years after a market down turn that shook everybody's bank accounts, to just trust the knowledge of the market and put your retirement on its hands?
5. Entire companies are unable to deliver on their pension promises (well, the Bush administration will take care of that by helping the companies partake with those promises without major consequences) because the markets have not been what they expected. But now, we the people, and specially the poorest people should expect that, while the billions of United Airlines did not produce enough return on the investment, our 40 dollars per month will certainly make us millionaires by age 65. Who needs Social Security, anyway?
I make a salary that is way over the poverty level -although I have been down there, too-, and I requested to have 2% taken from it to go to my 401k, and I put another 1% on my IRA, plus 3% to my two daughters prepaid college plans. Well, there is no much left after I do that to take care of the over 10K day care cost, and the summer camps for the kids, so Mom can go to work. And, what is worst, what I'm putting in that 401K will only carry me through retirement if the stock market goes up so high that there is no bank capable to take care of Bill Gates' money. So, I wonder what can poorer people invest on their "private accounts."
I think probably the government should actually force people to save, by forcing them or creating enough incentives for them to contribute to IRAs accounts, and 401K, but don't tinker with the only cushion people have to fall back on. In fact, I would be ok with not taking any money from my SS after I retire if I make a sufficient amount of money to live comfortably without using my SS retirement. There is a price we all need to pay to live in a civilized society. I come from a poor country, and I have visited extensively other poorer countries. Poverty is not fun, and poverty is contagious. There is no such thing as living as a millionaire in a slump. If we don't stop poverty, we would be surprised how it comes back at us.
I'm amazed every time I take the kids to the doctor and pay the co pay and things like that. How uninsured people do? I just learned, for instance, that the orthodoncy to my daughter will cost $2,500 out of pocket -and we have health insurance-. Is orthodoncy in the luxury category?? People are already living without many things that are essential. I guess the next revolution, what Jefferson insisted that was necessary every now and then, will be over health care… and probably social security.
I must say that the other presenter at the show was Jacob Hacker, associate professor of political science at Yale University, fellow at the New America Foundation, and author of a forthcoming book entitled “The Great Risk Shift." He made much more sense, in fact.
How interesting, I was just talking about health care and the poor, and look what I just found:
Posted on Wed, Feb. 23, 2005
Pulling the plug on school clinics
BY NICOLE WHITE
Here inside this pale-pink portable room on the campus of Miami Beach's Fienberg-Fisher Elementary, the everyday pains of being an elementary school student are soothed away.
Nurses dispense medicine for earaches, headaches and the flu, treat those besieged by chickenpox, pinkeye and asthma and marvel at the self-diagnosis of a 6-year-old who tells a nurse practitioner that her stomach pain cannot be from a ruptured appendix. She doesn't have one.
But this and other school-based community health clinics, which serve the children of Miami-Dade and Broward counties' working poor, are in peril of closing.
Others have been quietly laying off employees and cutting back services or have already closed.
The clinic at Nautilus Middle School, also in Miami Beach, is set to close at the end of the month, Fienberg-Fisher in June. Six other clinics have closed in Miami-Dade since 2003, including the clinic at R.R Moton Elementary in Homestead run by the University of Miami School of Nursing.
''We had lines of students all day long,'' said Rosemary Hall, former director of the clinic at R.R. Moton. ``It was a great piece of healthcare that we had there. I don't know what they're doing now.''
Three of the six school-based health clinics in North Broward have closed in recent years: the Seagull School in Fort Lauderdale and Pompano Beach's Ely High School Health Center and Charles Drew Family Resource Center.
At its meeting today, the Miami Beach Commission will discuss giving the clinics in its city enough aid to stay open through the end of the year, said Commissioner Matti Bower.
''Many of these children are from the lowest economic strata in our city -- a city that is believed to be very wealthy,'' Bower said. ``There has to be something we can all do to fix this.''
Ninety percent of the 680 students at Fienberg-Fisher use the clinic. Dozens more from an adjoining day-care center also are registered there.
''They know my child,'' said Cindy Ferraiudo, who watched as her daughter, Danielle Cespedes, 10, was examined by the clinic's nurse practitioner, Linda Washington-Brown.
''They can't do this to us and close this clinic. Too many kids who don't have medical coverage rely on this clinic,'' she said.
SAME FUNDING POOL
The clinics, though located on school campuses in both counties, are run primarily by community-based healthcare providers who all tap the same funding pool: federal and state grants; private donations and in-kind contributions from local hospitals. But with healthcare costs rising and grants not being renewed, providers say they have no choice but to close some facilities.
''We're facing a catastrophe,'' said Kathryn Abbate, executive director of the Miami Beach Community Health Center. The center has used a federal grant to fund much of the services provided at the clinics at Fienberg-Fisher, Nautilus and Miami Beach High since 1996.
The grants used to supplement the clinics at elementary and middle schools have expired. It costs $500,000 annually to operate the Miami Beach clinics in danger of closing, Abbate said.
The choices were grim, said Abbate: scale back services at the two health centers that serve thousands of patients at full service sites or close the school clinics.
''No one wants to close these clinics, but the reality is we have no money to do both,'' Abbate said.
Funding for these types of clinics is complex.
Miami-Dade and Broward schools do not have a dedicated line item in the state budget for healthcare in schools.
In a different era, a school nurse was part of every school's support staff. Today, funding for school health is so limited that even school nurses are rare: According to Miami-Dade school officials, there are 14 nurses spread among the district's 340 schools.
In Miami-Dade, 19 schools receive state funding to provide a social worker on site. Students at these schools also get access to primary healthcare via a medical van that visits as needed.
Another 24 schools -- down from 26 two years ago -- have what providers call a "mini doctor's office'' or full-service clinic on site in which a nurse practitioner can diagnose and dispense medication to students. Those are run by community-based organizations that get their funding from multiple sources.
An example: The John T. MacDonald Foundation at the University of Miami School of Medicine established a $6.5 million grant to provide full-service clinics at five schools in North Miami Beach.
More than half the 8,100 students in the five schools are registered at the clinics, said Patricia Stauffer, program administrator.
''I don't think people really understand the power of being there when kids really need you,'' said Stauffer. ``They're struggling. All of us are just wondering what the future might hold for us . . . but we're plugging along.''
Healthcare providers are lobbying for funding in the near future. But to do this they need to get legislation passed defining what their services would be.
State Sen. Frederica Wilson, D-Miami, has sponsored a bill to do that when the Legislature meets next month.
''There's a true need for this, no question about it,'' Wilson said.
Meanwhile, the work continues.
On Monday mornings, just minutes after the bell declares the start of a new school week, the nurse practitioner and medical assistant at Fienberg-Fisher prepare for their busiest day.
Dozens of kids with ailments stream in. Their parents rattle off the symptoms: fever, runny nose, stomach pains.
Eighty-two percent of the students who have used the clinic since August returned to class, said Fienberg-Fisher Principal Olga Figueras.
Closing a clinic as large as the one at Fienberg-Fisher would be devastating, said Wilma Steiner, the school district's instructional supervisor for health.
''We have found through the years that the most efficient and effective way to deliver health services is where the children are,'' Steiner said. ``It's a win-win all around.''
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