Simplifying Savings

Despite their essential role in the economy, personal savings have been declining over the past two decades, reaching a negative rate at the end of 2005, the lowest since the Great Depression.  Moreover, it does not seem that our public policies on savings are succeeding in offsetting those trends.  As the future of Social Security remains uncertain and a growing proportion of baby boomers continue to retire, Americans need to be even more diligent when it comes to their savings plans.  Unfortunately, in the current environment this is easier said than done.

Given the complexity of a great number of savings plans on the market today and a generally low level of financial literacy, benefiting from these plans often requires expert consultation that is unaffordable to a majority of the population.  As pointed out by the Washington Post,  a 1 percent difference in associated administrative fees and expenses could reduce a savings plan account balance at retirement by 28 percent.  Even though the Federal Employee Benefits Security Administration is putting forth great effort to provide the public with more transparent information about various 401(k) fees, it is essential that policymakers bring this topic to the forefront of debates, especially in light of the nation’s current savings crisis.

Arian Hassani | Program Associate

Encouraging Older Students to Finish High School

The New York Times recently reported on an innovative program to encourage older students to receive their diplomas.

Now more than ever, a high school degree is essential in ensuring opportunity. The earnings of those without high school diplomas has declined by almost one third since the 1970’s, and it is expected to continue declining as a developing “knowledge economy” places more value on education and educational attainment. New York City’s move to provide “transfer schools,” designed to cater to students past the traditional high school graduation age, is in effect giving 70,000 students a second chance to pursue lifetime of opportunities. Offering these older students the appropriate environment to pursue their diplomas without embarrassment and stigma from younger students is not only encouraging potential drop-outs to stay in the system, but it is also creating a supportive and empowering social structure that goes well beyond high school education. Now, the City not only knows who its failing students are, but more importantly, it is equipped to help them achieve a milestone that is doubtlessly crucial for their future success.
Arian Hassani | Program Associate

Beyond Employer-Based Health Insurance

In his recent column, “The New Social Contract,” David Brooks argues that”…[T]he old employer-based social contract is eroding and the central domestic policy debate of our time is over how to replace it.” Employers cannot afford the high cost of health care; neither can employees or the government; and certainly neither can the non-traditionally employed American.

Cognizant of this breakdown of the once thriving backbone of health care security for millions of Americans, Brooks echoes the potential efficacy of Butler’s 4 principles of health reform: security, reciprocity, responsibility, and reasonable self-sufficiency.

However, perhaps his strongest principle is the support of alternatives to employer-based insurance. The urgent need for health reform is not just about the absolute cost of the care, but also it is about portability, continuity, and universal, equitable access. It is precisely the civil society-based model of health insurance that has great potential to bridge the gaps in coverage from which many Americans currently suffer. Civil society-based coverage would not force those who like their coverage to make any changes. It would provide portability and effective access to care for those who are not employed full-time by a big business.

Some might argue that this type of reform would diminish the incentive for employers to offer health insurance. So what? What if big businesses altogether stopped providing health insurance? If this civil-society-based system is effective at negotiating reasonable prices, just as large employers have done, then in fact we may be shifting our population slowly toward a more effective way of accessing health coverage.

Alternatively, it might remain true that offering high-quality, comprehensive health care attracts better employees. In that case, employers might surprise even the skeptics and maintain their benefits packages for the same reasons as they did when the “modern American health and pension system” was accidentally born.

Serious Health Care Reform Requires Compromise

Health care has become the centerpiece of many pre-election discussions among politicians. Karl Rove’s recent opinion piece in the Wall Street Journal highlights some of the strengths of the Republicans’ key proposals for health care reform, but no single political team has the complete solution.

Health care reform must bridge what Rove describes as the “deep differences between liberals and conservatives.” It is precisely this type of compromise that has led to a deluge of state-level plans. We should, on a national level, learn from these early-adopters; we cannot afford to continue the no-win game of “liberals” versus “conservatives.”

Despite that disconnect, Rove makes several key points. The tax playing field must be leveled, and health care must be portable. Regardless of one’s employment, every American should benefit from the same tax breaks and from assured continuity in coverage. At the same time, we must assure that there is another mechanism for making the cost of care affordable for those Americans whose income is too low for the tax breaks to be effective. If it becomes easier for Americans to keep a plan for a decade instead of a year, those plans are also more likely to increase their investment in and emphasis upon preventive care. Similarly, if small businesses can pool together to improve their risk stratification, the price of coverage should drop even further.

With the highly variable cost and quality throughout the U.S., it is essential to arm both patients and health care providers – doctors, social workers, physician’s assistants, and others – with accurate, meaningful data on cost and quality. Providers need to make informed decisions that take cost into measured account, without sacrificing quality or sound medical judgment. Patients need this information to make value-based decisions about where and when to access care. As a team, patients and providers can make informed purchasing decisions and improve the overall value of health care in the U.S.

The revolution that we need in health care in this country will not be defined by a single political ideology, nor need it disproportionately favor one stakeholder over another. The key to health reform will be to pool the best ideas from across the spectrum, including market-based, medically sound, politically viable, and patient-friendly reforms. As we build a higher-value, universal system, we have the opportunity to take suggestions from all key stakeholders, and the best policies will come from complex, and painful, compromise.

Marie-Adele Sorel | Health Care Program Associate