Philadelphia Reflections

Paying for Children

By far the hardest part of healthcare to find a way to pay for, is the newborn child. There is no opportunity for pre-funding, the cost is considerable, and the parents are in marginal financial shape, themselves. No one has proposed a satisfactory solution, except those who say the cost is negligible, which is not true at all. Accordingly, I have proposed we take advantage of another feature of increasing longevity.

The grandparents, who were little more than a theory in 1900, have aged to the point where they often overlap by a generation. I propose we overfund Medicare at birth so that it grows to the size of a considerable inheritance at death. We can then take advantage of the extra 21 years of longevity thus included in the family. Thus an extra $28,000 bequest can be generated from investment income and put in trust for a grandchild as a dwindling asset, sufficient to cover the first 21 years of life. This is the present limit of the statute of perpetuities, and need not disturb it.

Although the details are complex, they follow the pattern of the death benefit, and will not be repeated here, The estimated extra cost is $42 per child, which seems to bring it within the boundaries of what the average person can afford, and/or the government could subsidize, with a considerable margin for error.

Although it is possible to imagine many extensions of the ideas in this short paper, I would caution against going too far without some experience to support it. In fact, what is proposed here, should e tested in an incremental manner.

Originally published: Friday, September 25, 2015; most-recently modified: Friday, May 31, 2019