Sunset Provision for Social Security and Medicare? – Part 2

In last week’s post I started to discuss clauses found in some laws that are called “sunset provisions”.  They are essentially expiration dates for a law.  We’ve seen them in estate tax laws.  The current federal estate tax exemption is scheduled to “sunset” in 2025, unless Congress votes to extend.  The key here is that if the current law expires, the previous estate tax law and exemption go back into effect.

What caught my ear was talk about sun setting other programs, such as Social Security and Medicare which I had not heard about previously.  Back in March Congressman Rick Scott put forward his “11 Point Plan to Rescue America”.  In it he suggested that all federal legislation should sunset every 5 years.  As he explained, “if a law is worth keeping, Congress can pass it again.”  He didn’t specifically mention Social Security and Medicare, however, they are federal laws so presumably they could be included.

In recent years, Washington has become so gridlocked that government shutdowns seem to be an almost annual occurrence.  In this climate, the thought of every federal law automatically expiring unless affirmative action is taken by Congress to extend it is a bit unsettling.

The chaos it could cause is not hard to envision.  Let’s look, for example, at how it might apply to Social Security and Medicare.  Social Security is the primary source of income for many Americans.  Medicare provides health insurance coverage for most Americans over the age of 65.  If these laws expire with no action by Congress, there wouldn’t be anything to replace them.  So where would people get the income to replace what they would lose from Social Security?  How would they pay their medical bills?  How would the health care system function with this type of uncertainty?

The impact of a sunset provision would be very different than it is in the case of federal estate tax law because there is nothing to fall back on if Social Security and Medicare expire.  No previous law or program exists and even if it did, implementing it would take time. So, while sunset provisions can work in some cases it probably doesn’t make sense in others.