Paul Craig Roberts is wrong. Both Social Security and Medicare are welfare programs, not insurance.
Insurance is based on sound actuarial principles.
Paul Craig Roberts’ essay, American Communism Has Come Home To Roost, errs fundamentally in claiming that Social Security and Medicare are insurance programs rather than welfare. Calling them “insurance” is a semantic maneuver designed to mask their true nature: compulsory, redistributive government transfers enforced by law. Genuine insurance is voluntary, actuarially priced, and contractually linked to risk. Social Security and Medicare meet none of these criteria.
Participation is mandatory, contributions bear little relationship to individual risk or return, and benefits are determined politically, not contractually. Current workers do not save for their own retirement or medical care; they finance current beneficiaries on a pay-as-you-go basis. That is the defining feature of welfare. The fact that benefits are tied loosely to prior earnings does not change their redistributive core, any more than progressive taxation ceases to be redistribution because rates vary by income.
Moreover, these programs routinely transfer resources across generations and income groups, often in ways unrelated to need. Medicare provides subsidized health care to affluent retirees, while Social Security taxes low-income workers at regressive rates. Ludwig von Mises warned that such politicized redistribution undermines personal responsibility and fiscal sustainability.
Labeling Social Security and Medicare as “insurance” does not make them so. It merely obscures their welfare-state logic and shields them from honest scrutiny, reform, or replacement by voluntary, market-based alternatives.
In the final analysis, Social Security and Medicare undermine financial independence making retirees dependent on two programs that would be illegal if offered by investment firms or any other private entity.
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Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. He is also an Associated Scholar at the Mises Institute. His book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin’s autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022. He is also the author of Why the Federal Reserve Sucks.
Your observation about Social Security's regressive taxation structure deserves deeper examination. While you correctly note that the system taxes low-income workers at regressive rates, this occurs through several mechanisms that compound the burden. The payroll tax applies a flat rate up to a wage cap, meaning earnings beyond approximately $168,600 (2024 figure) are exempt, effectively lowering the overall tax rate for high earners as a percentage of total income. Meanwhile, lower-income workers pay the full rate on their entire income—which they can least afford to spare.
But the regressivity extends beyond just the rate structure. Low-income workers tend to have shorter life expectancies and thus collect benefits for fewer years, receiving a lower lifetime return on their forced contributions. They also have less capacity to supplement Social Security with private retirement savings, making them more dependent on a system that treats them least favorably. This creates a perverse outcome where those who can least afford mandatory contributions receive the poorest actuarial value.
The framing of Social Security as "insurance" rather than welfare obscures this fundamental inequity. True insurance would price risk individually and allow voluntary participation. Instead, we have a system that extracts resources regressively while providing benefits progressively—a combination that undermines both economic efficiency and personal autonomy while claiming the moral high ground of social protection.
I am 64, and not even considering applying for Social Security any time soon. If I work till I am 70, and make similar amounts of money that I have in the last few years, my monthly Social Security payments will be nearly three times what they would be if I applied now. They still would be barely enough to live on, and that only if I have no health problems. I could move out of the country to somewhere much less expensive, but that is not what Social Security has been said to be for. I have wanted it to end, ever since I first understood how it distorts everyone’s thinking, and that it would eventually not allow a decent living for seniors. That was at the age of eleven in 1973. Other people have not been able to see this because they don’t want to. The law establishing it was passed in 1935, but it was first debated in the Senate in 1933. If you read the transcripts of those debates it is clear that all of the Senators, with no exceptions, understood that it was a very bad idea, and yet two years later they passed it. Even at this age, and with no other retirement plan, I want Social Security to end asap. Of course that wouldn’t help much without all of the other socialist programs ending as well. Medicare, Medicaid, and mandated insurance have not only raised our health costs to an incredible degree, it has caused it to become sick care rather than health care. Every one of these programs is too corrupt to even reform. In 2008 I had surgery that was paid for by Workers Compensation. I actually was injured at work, and so this was a legitimate payment. However, I only had to sign my name once, and no one ever asked to see my ID. That indicates an extreme ease for fraudulent activity. Ending these programs over time would cause great difficulty for many millions of people. Ending them suddenly would of course be even worse. However, the way things are going, a monthly Social Security check will eventually not even buy a loaf of bread.