All is not well in the welfare state.

• Author: Emord, Jonathan W.
• Position: Life in America

THE ISSUE OF WELFARE and entitlement reform has simmered on the back burner for decades. As the political leadership of the Federal government remains dysfunctional in the midst of a crisis in which Social Security and Medicare are near financial insolvency and welfare payments mushroom, it may be difficult to appreciate that, indeed, there is a way out of this mess. There is a practical way to reduce dependency on entitlements and increase employment, but it involves dramatically reducing the size and scope of the Federal government, while simultaneously reengineering tax policy to serve as a catalyst for the growth of free markets in health care and retirement.

Without question, the latest entitlement, ObamaCare, is unaffordable and must be repealed. The taxes that stem from it already are weighing down the economy. In the next few years, ObamaCare taxes will hammer small businesses and tens of millions of Americans into greater economic strife. In addition to a devastating 2.3% excise tax on medical device companies, increases in Medicare taxes, and higher insurance premiums, 30,000,000 to 40,000,000 Americans not presently insured will be forced to pay between $5,1300 and $15,000 per year for private health insurance of be hit with a much smaller "tax" for the choice of not buying health insurance. If ObamaCare is not repealed, the destruction it win work on the economy and on the quality of medical care in America will be profound. It is a cumbersome anchor astride a ship of state that already is underwater.

Medicare should be changed to a needs-based system, eliminating from the rolls those who have the financial wherewithal to pay for their own medical expenses. Those who, via direct payment or insurance, can afford routine care should pay for it and those who also can afford catastrophic care should pay for that as well. In exchange, each such person opting out of Medicare should experience a recurring tax deduction, reimbursing him or her over time for all contributions paid into the system. Those who die before they are reimbursed fully should have the payback continued as a tax deduction apportioned by will or intestacy under state law for future generations.

Corporations that provide health insurance for their employees and for nonemployees should experience a $1.50 reduction in Federal income tax for every dollar expended to pay for such insurance. Individuals likewise should receive the same tax benefit. Such a move would encourage the private sector to take on the role of health care provider, creating a competitive patient-centric free market out of a top-down, rigid, bureaucratic program.

Those who benefit from the transition...