Can Anglocentrism Save Social Security?

Andrew G. Biggs, a resident scholar at the American Enterprise Institute, argues that The Century Foundation and other progressive institutions mislead the public when we note that U.S. Social Security benefit levels rank near the bottom among the public pensions of economically advanced countries. Saying that he doesn’t much care what places like Greece, Iceland, and Luxembourg do (nor, presumably, Germany, Japan, and especially not France), Biggs believes it is more appropriate to compare the U.S. with the much smaller group of nations that share our “Anglo-Saxon values:” the United Kingdom, Australia, New Zealand, Canada, and Ireland. Biggs correctly points out that the share of an average retired worker’s past income replaced by national pensions in most of those countries is in the same ballpark as the United States.

It seems pretty insular to suggest that the experiences of non-Anglo countries can’t be instructive to U.S. policy, but let’s go along with Biggs’ presumption and focus on only his favored nations while adding a bit more of what the headline of his piece calls for: context.  In assessing how the U.S. government performs in relation to its Anglo counterparts, both for its elderly population and its citizens generally, the biggest budgetary category to examine is health care. Biggs misleadingly mentions that Medicare benefits in the U.S. are generous relative to other countries’ old-age health-care benefits. Actually, we spend so much because our entire medical system is far less cost-efficient than the systems in all of the other Anglo countries, each of which provides universal coverage.

In the widely respected Commonwealth Fund’s latest rankings of the performance of seven health care systems, including Australia, Canada, New Zealand, and the United Kingdom, the U.S. ranked dead last overall. Moreover, we came in last on the specific dimensions of health outcomes, access, patient safety, coordination, efficiency, and equity. In contrast, the U.K. ranked second overall and first in three categories; Australia was third overall and number one in  health outcomes; New Zealand was fifth overall, but first in three categories; and Canada a relatively poor sixth but still superior to the U.S. in most categories. In terms of health expenditures per capita, as of 2007, the U.S. was off the charts at $7,290 versus an Anglo range from $2,454 in New Zealand to $3,895 in Canada.    

Another useful gauge of governmental performance is elderly poverty. After taking into account various governmental support systems, including public pensions and health insurance, what share of each nation’s older population remains impoverished? To attempt to compare apples to apples, the OECD sets its poverty threshold at 50 percent of the median household disposable income for each nation. In the mid-2000s, the average poverty rate for people over 65 years old was 13.3 percent among the 30 OECD countries. For the United States, it was 24 percent. Biggs will no doubt be reassured that the level was even higher in Ireland (31 percent) and Australia (27 percent). But both Canada and New Zealand managed to hold elderly poverty rates below 5 percent, right down there with dreaded Luxembourg and Iceland. The OECD reports that one of the main reasons for the wide gaps is that the basic pension levels in Canada and New Zealand are set above the poverty thresholds (using the OECD’s measure) while those in the countries with much higher elderly poverty rates are well below that benchmark. (See pages 63 and 64 of this OECD report).

Biggs concludes: “Who you compare yourself with is an indicator of who you want to be.” If he agrees that there’s any value in emulating the successes of our Anglo counterparts, then he ought to be a big booster of universal health care and higher baseline Social Security benefits.