Introduction: The Biden Administration can point to several legislative achievements and executive orders. However, actual long-term permanent progress in several areas including expansion and improvements in health coverage, reduction of student debt and the cost of college, increased incentives for retirement savings, and efforts to stabilize the Social Security and Medicare Trust funds has been small.
- The number of uninsured is higher than in 2016 and will increase due to the phase out of the COVID era Medicaid extension.
- The improvement in the state-exchange health insurance premium tax credit, enacted during the Biden Administration, is scheduled to phase out in 2025.
- The continued high reliance on employer-based insurance will result in a rapid increase in the number of uninsured once an economic downturn occurs.
- The long-term trend towards households having to pay an increased share of out-of-pocket health care costs persists and has not been addressed.
- The growing use of high-deductible health plans has forced more Americans to reduce retirement savings to fund health savings accounts.
- Many Americans remain reliant on short-term health plans, which do not insure people with pre-existing conditions, do not assure access to health care for essential health benefits, and do not protect household from large financial losses. The Biden Administration has not rolled back the Trump-era expansion of short-term health plans.
- Many Americans with narrow-network health plans do not have sufficient access to specialists and top hospitals.
This memo reviews some of the limitations of the Biden Administration’s health care record and proposes some modifications.
Student Debt and College Costs:
- The one-time debt discharge proposed by the Biden Administration may not be upheld by the Supreme Court for a variety of reasons.
- A one-time student debt discharge does not alter the trajectory towards higher student debt levels and higher college costs.
- The payment shock from the termination of the COVID-era student loan payment freeze will reduce consumer spending and could facilitate a recession.
- Low levels of on-time graduation remain an important factor in high student debt burdens.
- Many student borrowers leaving school prior to the completion of a degree have a difficult time repaying their student loans.
- The Biden Administration proposal for expanded Income-Driven loans is complex and less effective than interest rate reductions.
- Proposals for increased assistance for students at two-year college are useful but could reduce access to four-year schools by low-income students.
Go here for a discussion of Biden-era student debt proposals.
- Recently enacted improvements to 401(k) plans in the Secure Act 2.0 do little to assist people at firms that do not offer a 401(k) plan.
- It would be useful to create an automatic savings option for workers at firms without a 401(k)-plan similar to the automatic 401(k) savings option.
- An extremely high percentage of young adults have disbursed funds from their retirement plans early in their career.
- Incentives for people to disburse funds in a 401(k) plan prior to retirement remain high and pre-retirement 401(k) disbursements are unlikely to fall.
- The recently enacted automatic contribution rule may steer some workers into 401(k) plans even if a Roth IRA or some other savings vehicle is a better option.
- Many 401(k) plans have limited investment options and high administrative fees.
This essay describes ideas on how to expand private retirement savings and deal with the impending short falls in the Social Security and Medicare trust funds.
Go here for more details on why IRAs should be expanded.
Recent legislation on private retirement savings described here appears to do more for the investment industry than for savers.
- A high percent of workers nearing retirement with low levels of retirement savings will be highly dependent on Social Security during retirement.
- Projected shortfalls in the Medicare and Social Security trust funds would lead to automatic benefit cuts in 2031 and 2033 respectively under current law.
- No one in Congress is working on a bipartisan solution to the impending Social Security and Medicare trust fund shortfalls.
This memo describes the linkage between Social Security reform and efforts to expand private retirement savings. Work summarizing different Social Security reform proposal will be available shortly.
Concluding Remarks: The case for renominating Biden largely hinges on the view that the President is the best candidate to defeat former President Trump. However, as discussed here I do not believe former President Trump will be the Republican nominee in 2024 and President Biden does not match up well against a younger Republican challenger, especially one willing to break away from parts of the Trump agenda.
The 2024 election should be about how we move forward as a nation. A candidate should talk about how issues like how we can change insurance rules so people don’t lose their health insurance during job transitions, how we can lower student debt burdens for the people who are most likely to experience payment problems, how we can assist workers in saving more for their retirement and how we can improve the financial condition of entitlement trust funds prior to the implementation of automatic benefit cuts. I have reached the conclusion that Governor Whitmer or Governor Inslee are better able to move the country forward on these issues than our current president.