How It Works: Part 1 (of 2)
Benefit funding
Replace welfare's current spider web with benefits for ALL citizens, efficiently delivered.
Under this ComingTogether Plan, the benefits would be funded via electronic transfer to providers of regular credit and debit cards. The advantages of this are both compassionate and conservative: participants would no longer be a visible "class" with associated labels such as "lower income" or "poor" or "poverty-level" — since all citizens would participate. Also, since transactions would be made using ordinary credit or debit cards, this would eliminate the stigma of using government-issued stamps, coupons, or special public assistance debit cards.1
At the sales register, the vendor’s credit card processing would separately total the expenditures on items eligible for each federal benefit, along with the total amount spent on items not covered by any government program. The totals would be transmitted to the credit card company. The credit / debit card company would then debit the balance available for each of the government benefits for either the amount eligible for that benefit or the balance available, whichever is less.
Any amount not debited to a government benefit balance would be handled as a normal credit / debit card transaction, or the consumer would have the flexibility to pay those amounts some other way. The beauty of this approach is that the transaction expenses at this point are covered by the currently existing fees paid by the merchants to the credit / debit card companies, not by our tax dollars.
Benefits included
The benefits would be designed to cover the same types of things as current welfare programs, including Temporary Assistance for Needy Families, Food Stamps, school lunch programs, housing programs, Earned Income Credit, Medicaid, Medicare, etc. All of these programs would be rolled into this ComingTogether Plan, but consolidation would not stop there. With a program such as this in place to be sure that every American citizen has funding for basic living expenses, this plan would obviate the need for unemployment insurance. The minimum wage law and all the regulations associated with that would be eliminated. The "Compassion Card" or "U.S. Share Card" account (or whatever the focus groups decide to name it) will give every citizen the security of a financial baseline backed by the U.S. Government.
It is proposed that the federal benefits for food and housing be a flat rate per citizen, say (for purposes of discussion) $5 per day per citizen for food and $6 per day per citizen for housing. The food benefit could be spent on the same things that are eligible for food stamps today; i.e., paying for the food, not for preparation (restaurant meals and “TV dinners” would not be covered). The housing benefit could be used for rent, mortgage, utilities, or repairs on a primary residence. Both food and housing benefits could be applied to nursing home costs and homeless shelters.
A transportation benefit may be considered. It could be used to pay mass transit fares or to pay for gasoline and other automobile expenses. In many American communities, availability of transportation is the primary divider between economic classes. Under this ComingTogether Plan, that barrier could be lowered.
The medical benefits would be age rated, but that would be the only factor used to determine individual benefits. The amount could be used for health insurance or directly on any expense currently deductible under the Internal Revenue Code.
For an insurance carrier to be eligible to participate in this sector of the program, they would be required to provide a policy containing a minimum set of benefits to any citizen at a premium not exceeding the benefit amount for that citizen’s age, provided that the citizen obtains coverage promptly upon becoming eligible, or if the citizen is changing from another carrier. The insurance companies would, however, be allowed to consider the citizen’s health and lifestyle in offering greater than minimum benefits or lower than maximum premium.
Conservatives would approve the provision that each citizen would be allowed to spend more on insurance than this benefit amount if he or she wanted better coverage than the minimum benefits. The medical benefit could also be used to purchase long-term care insurance. Liberals would find appealing the fact that, under this ComingTogether Plan, everybody gets health coverage.
Including this medical benefit would eliminate the need for the federal employee health plans, veterans’ health programs, and the regulation of employer-sponsored health plans. The elimination of employer-sponsored health plans solves the problem we have today regarding the portability of health insurance coverage. The health coverage continuation (COBRA) law and the associated regulations would become moot.
By including in this program the amounts currently contributed by the federal government to education, families would be allowed to put the federal money where it best benefits their children, returning local control to its rightful place: with the consumers. The education benefits could be used for tuition; home school materials; museum, zoo, and fine arts admissions; tutoring; educational software; reference books; GED courses and exams; etc. The education benefits would be available to all school age citizens. It is expected that even public schools would begin charging tuition (in the amount of this benefit) in order to get their share of the federal dollars. To encourage their use for education while a child is school age, these are the only benefits that are proposed to expire if not used.
A general benefit may be considered to cover clothes and other miscellaneous necessities in place of the Temporary Aid to Needy Families (TANF) program and the Earned Income Credit (EIC). It would be a small amount that could be used for most anything not covered by the other benefits in this ComingTogether Plan. It may be useful to define this benefit in terms of what cannot be purchased with these funds, such as illegal drugs, tobacco products, and drinking products containing alcohol.
A death benefit is included in this program to help citizens with final expenses, but the more important reason for including it is to encourage the reporting of the death of a member of the family so that benefits are not continued inappropriately.
NOTE: The new benefits structure is only one "leg" of this plan for reform! Please see Part 2: Taxation which is essential for these proposed changes to have their proper effect.