PERSPECTIVE ON NATIONAL HEALTH : People Will Pay If All Benefit : Social Security’s success, fiscally and politically, points the way for other national insurance programs.

If there’s anything the doom-and-gloom critics of America’s welfare state can’t stand, it’s a social-welfare program that is big, popular and effective. We’re talking about Social Security--a program whose success challenges virtually all of the assumptions of conservative ideologues about what’s wrong with social-welfare policy: It is big rather than small, it is run by the federal government rather than local communities and it provides relatively generous benefits to the middle class as well as the needy.

According to conservatives and some neo-liberal critics of government ineptitude, this should be a recipe for disaster. Indeed, critics of Social Security have worked overtime for two decades to persuade the voting public that the program is on the brink of financial disaster. According to these critics, Social Security should either be scrapped or fundamentally overhauled.

Between 1973 and 1983, we were treated to a chorus of warnings that Social Security was going bankrupt. There was a “crisis” in the program, we were warned, requiring drastic reforms. In fact, this “crisis” was easily averted through the enactment, in 1983, of relatively modest adjustments in Social Security benefits and taxes. Hardly missing a beat, the critics soon took up the refrain that Social Security was now threatening us with disaster for the opposite reason. The program’s trust fund was growing like Topsy, with a total surplus projected to reach almost $12 trillion by 2030.

This growth is the obvious and intended result of the 1983 reforms. We are building up the trust fund to help pay the future retirement benefits of the baby boom generation. Rather than creating a “crisis,” the surplus demonstrates the public’s prudence--its willingness to pay higher than necessary Social Security taxes now to provide for our collective future. Moreover, the money we are setting aside helps finance economic growth, just like private savings.

The false claims of crisis have unfortunately had an effect. Social Security remains the most popular of all public programs in the United States, but the public is now apprehensive that it won’t be there when they need it. This unwarranted fear deprives Americans of one of the major intended benefits of the program--a sense of security about their future.

If anything is a safe bet in this uncertain world, it is the survival of Social Security, which can claim both sound fiscal health and unparalleled political support.

But false claims about something fundamentally amiss with Social Security have also prevented us from drawing appropriate lessons from the program. Precisely because of its success, the program deserves to be examined for what it can tell us about addressing other social problems.

The key to Social Security is its popularity, which rests on the fact that it is a program whereby taxpayers earn important benefits for themselves rather than providing only for others.

Social Security is not a “means-tested” program targeted to the poor. It is a program of “social insurance” offering the equivalent of life insurance, disability insurance and old-age pensions for all workers. It is mandatory in the same way and for many of the same reasons that other important employee benefits are mandatory--to prevent freeloading, to spread risks, to increase administrative efficiency and to ensure that even the shortsighted and hard-pressed among us make provision for the future.

These principles are applicable not only to pensions, but also to more problematic areas of American social policy--public assistance for the able-bodied poor and medical insurance for those not otherwise covered.

Social insurance programs are more effective at relieving poverty than means-tested programs. Programs for the poor, seen as handouts, lack broad public support and tend to be under-funded. It is easier to overcome these limitations when relief of poverty is a byproduct of more popular public programs.

The elderly used to be the most impoverished age group in the American population. Now they are the least likely to live in poverty. Social Security reforms have made the difference. In Canada, no one is impoverished by medical-care expenses.

In addressing America’s poverty problem, the universal social insurance approach may prove more fruitful than selective anti-poverty strategies.

It would be easier to win public support for a tax increase to finance universal health insurance than for a more limited program to fill the gaps in our existing health insurance safety net. No one likes to pay taxes, but we don’t mind as much when we get value back for what we give.

Taxpayers view Social Security as giving good value (even though the vast majority receive no immediate benefits from the program). A universal health insurance program, the polls suggest, would command similar support. In contrast, a program of health-care benefits exclusively for the uninsured (with no benefits for most people) would be seen as a dead loss by a majority of taxpayers.

American social-welfare policy is not the unrelieved bog of good intentions gone awry that its critics suggest. We are doing many things right, and in some areas our successes have been stunning. To go forward we must develop the capacity to view both our successes and failures objectively--to learn from what we are doing right how we can remedy our shortcomings.