Disinherited. Diana Furchtgott-Roth

would lower GDP by more than 12 percent and wages by 3 percent, and would cost the economy more than 3 million jobs.

      Another option would be a value-added tax of 10 percent, which could bring in between $500 billion and $1 trillion a year. But this would be vastly unpopular.

      These high tax rates are unimaginable and un-American. Something else must be done to bring the financing of Medicare, Social Security, and other federal programs under better control. It is not practically possible to increase taxes enough to get rid of the federal debt. The only solutions are to cut spending or increase economic growth. So far, we’ve had no success with either of these options.

      Take entitlement reforms. Older Americans are too attached to their entitlement programs to cut them, even though keeping the status quo means that young people will pay the price. No president, Republican or Democrat, has succeeded in trimming entitlements. No Congress has passed laws making significant adjustments to the programs. President George W. Bush started exploring Social Security reform in his first term. But it was not until 2004, after winning reelection, that he actively pushed to allow individuals to put a portion of their Social Security contributions into private accounts and then pass the accounts on to their heirs at death. Unfortunately, as with most attempts to take on “the third rail of American politics,” his efforts failed. While his proposals were far from perfect, opponents demonized them before the county had a chance to have a constructive public debate, and so we fell deeper into fiscal disarray. Similarly, some individuals and think tanks have suggested solutions to Medicare’s fiscal woes, but Americans have yet to support enough politicians who want to put any of these ideas into practice.

      One way to inject competition into Medicare is premium support, an idea dating back to the 1997 National Bipartisan Commission on the Future of Medicare, chaired by two retired members of Congress, Representative Bill Thomas (R., Calif.) and Senator John Breaux (D., La.). Thomas and Breaux have retired from Congress, but the Medicare Commission’s premium-support idea appears in the House 2013 budget. Modeled after the Federal Employee Benefits Program, it would allow Americans 55 and younger, beginning in 2023, to choose from a variety of government-approved competing comprehensive health-insurance plans, at different prices with different levels of service. Current Medicare recipients would not be affected. Options could include high-deductible plans carrying lower premiums combined with health savings accounts, or more traditional managed-care or fee-for-service plans. Traditional Medicare would continue to be one option. This would lower health-care costs because when people are aware of prices, they spend less. Now the only ones who usually see the prices are insurance companies and the government, who have put themselves in the position of telling people what health care they should have. But the incentives of third-party payers and patients are very different.

      America is being driven towards bankruptcy. The federal debt is exploding thanks to historical deficits year after year. The unfunded liabilities of runaway entitlement programs, mainly Social Security and Medicare, make America’s fiscal outlook even more frightening. On top of the federal debt and unfunded liabilities, states have their own fiscal problems. Most state debt is the result of unfunded promises as well.

      While the situation is dire, there is hope for reform. The American public has a newfound concern about mounting federal debt—nearly 8 in 10 Americans agree that the national debt should be among Washington’s top three priorities—and some members of Congress are starting to respond to public pressure.⁴² While righting the course of our fiscal ship will not be easy, delaying action will only make matters worse.

      It is the job of those elected politicians at the state and federal levels who said they would tackle the deficit to offer alternatives for debate and discussion, rather than pushing the problem down the road, on the backs of younger Americans. Young people did not incur these debts, and forcing them to face consequences they do not deserve is neither fair nor good for future economic growth.

CHAPTER 2

       PAYING FOR PARENTS’ HEALTH CARE

      In 2010 Washington passed the Patient Protection and Affordable Care Act, which raised the cost of health insurance for the young and required them to subsidize older Americans. It also increased the cost of hiring, contributing to the slowdown in employment growth that is throwing major roadblocks in the way of young people’s careers.

      The Affordable Care Act is a sweeping overhaul of America’s healthcare system that requires nearly everyone to sign up for health insurance and also tells them what kind of insurance they must buy. The law has helped some uninsured people obtain coverage. But millions of Americans have also seen their health-insurance plans canceled, because the plans did not meet the requirements of the ACA, or their plans have become more costly to pay for the roster of newly added benefits. It has enmeshed many in a bureaucratic nightmare.

      Tommy Groves, a young professional working at a small firm in Washington, D.C., was one of the nearly 5 million Americans to receive a termination-of-coverage letter in October 2013 from his health-insurance provider, because his previous plan did not comply with the ACA’s requirements. While about half the states offered to extend cancelled plans for another year, later increased to two years, the District of Columbia required its residents to get new insurance.

      Tommy’s employer gives him a set amount each month to cover his health-care premium. Extra money is directed to a health savings account, whose tax-free funds he can use to cover future medical expenses. Because of this system, common to many small businesses, Tommy had no choice but to grudgingly visit D.C. Health Link and attempt to sign up for an insurance plan on the ACA exchange. He did not get very far. Besides the obvious, embarrassing computer difficulties that became infamous on the state and federal exchanges, massive technological problems with “back-end functionality” also plagued the site. D.C. Health Link was unable to verify Tommy’s identity, and after hours of back-and-forth on the phone with an ACA help center, he was told to send in a paper application.

      In December, Tommy did just that. He still had not heard back at the beginning of January 2014, the date by which he was supposed to be signed up. This deadline was later extended to March 31, 2014. After many phone calls and countless hours on hold over a period of weeks, and despite multiple assurances to the contrary, Tommy was informed at the beginning of February that his paper application had been lost. Finally, in March, close to the March 31 deadline for purchasing health insurance, he was directed to a place where he could sign up in person.

      This attempt, too, did not succeed, as the “navigators” there had been instructed not to accept paper applications any longer. Finally, after hours more on the phone with D.C. Health Link over an additional series of weeks, the online system was able to verify his identity, and he met the deadline for purchasing health insurance to begin March 1, although D.C. Health Link refused to let him backdate the coverage to January 1.

      Aside from the problem of a government agency’s losing sensitive health and identity information, Tommy faced another difficulty. In January, while he was still not enrolled in the exchange, he needed a minor medical procedure. He thought it would be only fair that this expense should be deducted from his new plan’s deductible, especially because his health-insurance provider would remain the same under the new plan. This led to another bureaucratic nightmare in which he had to fight both D.C. Health Link and his health-insurance provider. D.C. Health Link tried to pass off the blame to his health-insurance provider, when those at D.C. Health Link were clearly at fault—it was the government that had failed to create a functioning site and that had lost his application, not the private insurance company.

      “I don’t want everyone who is thrown off their employer’s health insurance to go through what I did,” Tommy told us. “It was miserable and a complete waste of my time. Nobody listens to you. Nobody takes responsibility. The only advice I tell people who are going to be stuck dealing with the health-care exchanges is, ‘Get ready for the bureaucracy.’ ”

      Tommy’s premium