States Can Build Their Own Alternatives to Social Security and Medicaid
Mike Johnson calls these programs the drivers of the federal debt and says Republicans have a plan for them next year. Fifteen states have already built part of the alternative.
Speaker Mike Johnson said on tape this week that Social Security, Medicare, and Medicaid drive the federal debt and that Republicans “have a plan” for them next year. A plan for the programs he calls the drivers of the debt is a plan to cut them, and the same majority already cut nearly a trillion dollars from Medicaid last summer. States do not have to wait for the cuts to pass. They can build their own alternatives to both Social Security and Medicaid, and they can do it affordably.
For retirement, we propose state retirement insurance built the way Social Security is built, a guaranteed monthly check for retirees and certain other in need populations, funded by contributions that continue above the federal contribution cap and by charges on the largest businesses; the fifteen states already running automatic savings programs with more than three billion dollars saved have proven states can do this work.
For health, the same design: state health insurance funded by an uncapped premium, charges on the largest businesses, and enrollee premiums at cost, holding expenses down by setting what it pays hospitals and doctors, a power Washington and Colorado have already used to lower private plan premiums, with Washington’s WA Cares proving a state can run premium-funded public insurance today.
This piece lays out how each tool works, what it costs, and what to ask your state legislators for. If Republicans succeed, the people of your state stay protected. If Republicans fail, we are left with more social safety net than we started with. Either way, we come out ahead.
Let’s look at what Speaker Johnson said in more detail. On June 8, he told a Louisiana radio audience that Social Security, Medicare, and Medicaid run “on autopilot,” called them the main drivers of the federal debt, and said Republicans “have a plan to do that next year.” When the audio spread, Johnson said he had meant oversight of waste and fraud, and that the people raising alarms were fearmongering.
His record says otherwise. Last summer the same House majority signed the largest Medicaid cut in the program’s history into law, taking close to $990 billion out over ten years, with the Congressional Budget Office projecting ten million more people uninsured by 2034.
The CBO also measured who wins and who loses under that law: the poorest tenth of households will lose about $1,200 per year on average through 2034, while the richest tenth gain about $13,600 per year, mostly from the law’s tax cuts.
The men who already took nearly a trillion dollars out of Medicaid are now telling us, on tape, what they intend to do next year.
One fact makes everything that follows simpler than it sounds. Every state already runs at least one public retirement system, and most of those systems reach well past the state payroll, covering public school teachers and many city and county workers alongside the troopers and snowplow drivers the state employs directly. Every state runs a health plan for its own employees as well.
The experience of managing benefits at population scale exists today; the work is building the public versions and opening them to everyone, in phases. State workers are already covered, and the next phase lets residents join if they pay the full cost themselves. As enrollment grows and funding builds, the state opens no-cost enrollment to a set number of low-income residents.
The final phase is the public retirement insurance this piece proposes, with the full design coming in its own article. The programs described below are the pieces states have already built.
What we propose is retirement insurance run by the state and built the way Social Security is built. Workers contribute from each paycheck while working, the contributions pool in a common fund managed by the same offices that already run the state’s pension investments, and retirees collect a guaranteed monthly check for life. No part of it is a private investment account.
Two funding changes separate the design from the federal one and create a funding mechanism that is simultaneously more robust and more equitable; because here at the Existentialist Republic we love a good opportunity to solve one problem by solving another problem. Social Security stops collecting its payroll tax at $184,500 of yearly income, so every dollar earned above that line contributes nothing additional; in the state program, contributions continue past that line and the rate rises with income. Additionally, the largest businesses in the state pay a share whether or not their workers enroll. The surplus those two changes produce funds no-cost enrollment for the low-income workers who cannot contribute their way to security, paid for with the incomes the U.S. Congress chose to exempt.
The proposal is new; the proof that states can run retirement programs at population scale is not.
Fifteen states now run automatic retirement savings programs for the millions of workers whose employers offer no retirement plan: California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, and Virginia. Minnesota’s opened in January, and Hawaii and Washington are building theirs now, set to launch in 2026 and 2027.
The design is the same in each of these states, and it goes by the name auto-IRA, short for automatic individual retirement account. If an employer offers no plan, the state enrolls its workers in one through payroll, setting aside a small percentage of each paycheck in a private retirement account that belongs to the worker and moves with them from job to job. Workers can opt out at any time, and roughly a quarter to a third do; the rest stay in.
The results are well documented. Across these programs, workers have saved more than three billion dollars in more than 1.2 million funded accounts that did not exist a few years ago. California’s program, CalSavers, holds more than 1.6 billion of that by itself, across 629,000 accounts and 281,000 participating employers.
Oregon started the first program in 2017, and its participants have set aside around 445 million dollars since, contributing an average of about 176 dollars a month. These programs cost the states little beyond administration, because the savings come from the workers’ own wages.
A state-run supplement to Social Security, funded almost entirely by workers themselves, already operates in fifteen states and grows every month. If the idea were unworkable, it would not have spread from one state to fifteen in nine years.
An important distinction we should make is that a savings account is not social insurance; it does not replace Social Security’s disability coverage, its survivor benefits, its inflation adjustments, or its guarantee of a monthly check for life.
That gap is the argument for the insurance program we propose. The savings programs are a fine first step a state can take this year at almost no cost, and they give every worker a second source of retirement income that does not depend on what Congress does next year; and if half measures are your thing then go for it. To me it just looks like extra work for less benefit.
That difference between a supplement and replacement is why the funding design matters. No state has enacted the insurance program we are proposing yet. The nearest precedent is the Washington state funding for WA Cares, which is a public long-term care insurance program, funded through a premium of 0.58 percent on all wages with no income cap, explicitly not limited by the income cap Social Security uses, withheld from paychecks since 2023.
The rising-rate half and the pay-without-enrolling half would be new, and they would be a tax in the plain meaning of the word, one a legislature would have to pass in the open and defend. We think that fight is worth choosing deliberately in the interest of building programs that unequivocally benefit the public and strengthen economic resilience.
Readers who lived through 2005 may hear about a state alternative to Social Security and remember President Bush’s campaign to divert Social Security payroll taxes into private investment accounts, which his adversaries called partial privatization and the subsequent public resistance killed. We opposed privatization then, and what we propose here is its opposite.
Privatization takes money out of Social Security and moves retirement risk onto each worker alone. The insurance program takes nothing out of Social Security; the federal guarantee stays whole and worth defending, and the state pools risk into a common fund that pays lifetime benefits, collected in part from the incomes privatizers shield. The savings programs running today divert nothing either, since the federal program keeps every payroll dollar while the state account adds new savings on top.
Polling has drawn the same line for twenty years: Americans support retirement security added to Social Security and overwhelmingly oppose market accounts replacing its guaranteed benefits. This proposal stands on the popular side of that line.
Now for healthcare, which costs a state more to take over than retirement does, and the reason is structural.
Medicaid runs on a shared arrangement between the state and federal government (cooperative federalism/Tier 0). The state puts up part of the money and the federal government matches it, usually paying the larger share. Replace that federal match with dollars from the state’s main budget and the cost rises sharply, which is exactly why several states that tried to fund expanded coverage that way have had to cap enrollment, add premiums, scale benefits back, and in some cases end coverage outright this year as the costs expanded.
The lesson from those states is about the funding source, though. Coverage paid from a state’s general budget competes with schools and roads every session and loses when revenue dips; coverage paid from its own dedicated premium does not.
So for health we propose the same architecture as the retirement program: state health insurance, funded by a premium on all wages with no income cap and a rate that rises with income, with additional charges on the largest businesses whether or not their workers enroll, and by enrollee premiums for those who can pay, with no-cost enrollment for low-income residents as the dedicated funding grows.
To run it, the state charters its own insurance company, owned by the public, the way North Dakota chartered its own bank. That step sounds bigger than it is. In Ohio, North Dakota, Washington, and Wyoming, the state government is already the sole seller of workers’ compensation insurance, collecting premiums from every employer in the state and paying every claim. A state that runs the only workers’ compensation insurer inside its borders already runs an insurance company; the proposal applies the same form to health. Not one federal dollar is load-bearing anywhere in that design.
How does a program like that sustain itself? The same way private insurers do. The seven largest for-profit health insurers took in nearly $1.7 trillion from their customers in 2025 and booked more than $54 billion in profits; premiums come in and claims get paid, and what remains is profit. The model is reliable enough that the largest of them collected a record $447.6 billion in revenue last year. Our program runs the same model with one change: the margin that becomes shareholder profit in a private insurer stays in the program, lowering premiums and widening the no-cost tier. The state does for public benefit what the companies do for Wall Street.
A state-funded public insurance program exists right now. Washington runs WA Cares, public long-term care insurance funded by a premium of 0.58 percent on all wages with no income cap, funded entirely by worker premiums, collecting since 2023, and paying its first benefits starting in July 2026.
A government-owned insurer already operates at city scale, too. New York City owns MetroPlusHealth, the health plan of NYC Health + Hospitals, selling coverage to New Yorkers since 1985, including a commercial plan for city workers that charges no premium and no deductible. What keeps it from selling to every New Yorker is a licensing interpretation, not anything about how insurance works: the statute it operates under requires its membership to be substantially composed of people in government health programs, and a 2002 memo is the reading that keeps its commercial enrollment small. That licensing interpretation is a result of private insurance companies being absolutely terrified of a functioning and competitive public option that generates revenue using their model, but applied ethically, equitably, and for the public benefit.
Retirement and health insurance can pay for themselves, because workers, enrollees, and the largest businesses are capable of funding them through dedicated streams no president can impound and no national legislature currently controls.
And the funding options run deeper than this piece can cover. A state can create its own public bank to finance the work without sending the profits to Wall Street, and seventeen states and jurisdictions run their own alcohol distribution or retail, systems that return large sums of money to their treasuries.
There is a name for this work. We call it building parallel institutions, Tier 2 of the state response to federal authoritarian capture, also known as Soft Secession, outlined in my upcoming book “The American Reformation.”
And none of this progress belongs to one political party. Public enterprise already runs through the reddest states in the country: Idaho’s state liquor division returned $114 million to state and local budgets in 2025, and New Hampshire’s state liquor outlets have generated more than $3 billion in net profits since 1934. North Dakota has run the country’s only state-owned bank since 1919.
A legislature that already operates its own bank or its own liquor stores has already accepted the principle; the work here applies that same principle to retirement accounts and health coverage. If you live in a state run by Republicans, that is your argument, built from institutions your own state may already profit from.
Maybe none of Johnson’s plan survives. If Democrats take the House this November, the 2027 cuts likely never reach a vote.
But the trillion dollars already cut from Medicaid takes effect in stages over the coming years no matter who wins, and the administration is not waiting on Congress either way: it froze safety net funding for five states in January, and it withheld disaster relief and transportation money from four Democratic-led states in March, forcing attorneys general into court to recover it.
Even if those lawsuits are won, it costs resources and causes damage, which was the goal all along.
So the case for building these programs does not depend on predicting the midterms. If the cuts come, the people of your state are protected. If the cuts die, your state keeps everything it built. We lose nothing by acting now; we gain resilience in every outcome.
The officials with the power to build this are your state representative and your state senator. To find them, enter your home address at Open States’ free legislator lookup, and it returns both of them with links to their contact pages. Send each of them the message below: fill in the brackets, keep it in your own words where you can, and send one copy to each.
Subject: Congress cut Medicaid and Social Security is next. What is our state's plan?
Dear [Representative or Senator and their last name],
My name is [your name], and I live in [your city or town]. I’m writing because [say why this matters to you: you’re close to retirement, your parents rely on Medicaid, you work a job with no retirement plan].
Congress cut nearly a trillion dollars from Medicaid last year, and the Speaker of the House says Republicans have a plan for Social Security and Medicaid next year. If these cuts continue, what is our state’s plan?
I have read that our state has options, from the automatic retirement savings programs fifteen states already run to public insurance programs that states fund through their own premiums. This article lays them out: [paste the link to this article]. I would like to know which of these you would support.
Thank you,
[Your name]
[Your street address, so they know you live in their district]
If your state appears in the list of fifteen earlier in this article, change the ask: thank them for the retirement program and ask where they stand on the health side. And once you’ve sent yours, ask the people in your union, your church, your group chat, and your neighborhood to send theirs.
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