Medicare on Track to go Bust in 12 Years or Less

Posted by PITHOCRATES - April 28th, 2012

Week in Review

This election season we had the war on women.  Added to that in the coming years may very well be the war on seniors.  And unlike the war on women the war on seniors will be real.  Especially if Obamacare isn’t repealed.  Because the rising health care costs of an aging population will force rationing and death panels into the health care equation within the decade.  Or thereabouts (see Medicare trustee report hangs on uncertain assumptions by David Morgan posted 4/24/2012 on Reuters UK).

Medicare, the U.S. healthcare program for the elderly, should be able to stave off insolvency for the next 12 years, depending on a number of financial and political assumptions that may prove unrealistic, officials and other experts said on Monday…

But the outlook is based on assumptions that may be unlikely, including a scheduled 31 percent pay cut for doctors in 2013, which Congress is almost certain to override.

The forecast also assumes that a deficit-reduction agreement to slash Medicare spending by 2 percent a year can be sustained over the coming decade and that the U.S. Supreme Court will not overturn President Barack Obama’s healthcare reform law in June.

Do you know why Congress is almost certain to override that 31% pay cut?  Because that pay cut is already written into law.  So unless they override it doctors will lose 31% of their pay on Medicare patients.  And will probably stop seeing Medicare patients.  Which is why Congress always overrides this pay cut.  Because if all our seniors lose their doctors this very large voting bloc will be very unhappy.  And they will make their unhappiness known at the voting booth.  By throwing every incumbent out of office.

Let’s do a little math.  Let’s say someone is turning 65 this year.  And that they’ve worked since the age of 18.  Which means they’ve paid their Medicare payroll taxes for 47 years.  So they paid into the system for 47 years.  A system that can only pay for 12 years of their retirement.  Which takes them to age 77.  While the average life expectancy is about 79 years.  Which means, on average, those turning 65 this year will not be able to consume any health care services in the last two years of their lives.  Of course the bigger problem is this.  What about those who are 53 this year?  Who spent 35 years paying Medicare payroll taxes?  They’ll get nothing when they turn 65.  Worse, they won’t get a refund for 35 years of ‘premium’ payments.  Which means the money we pay into Medicare is not our money.  They spend it on others long before we even become eligible for benefits.  Which will add generational warfare to class warfare as the politicians spend beyond our means to pay for it.  Pitting one ‘greedy’ group against another.  Until they all finally turn on the ones responsible for our financial mess.  The politicians.

Medicare will fail because the population is aging.  And as people live longer they can have more health problems.  You put the two together and it’s a big problem.  You expand Medicare into Obamacare and you have a train wreck.  A shrinking population of healthy, younger people paying ever higher taxes to pay for an expanding population of older, sicker people.  In a word, unsustainable.  

This isn’t Canada.  Or the UK.  We have more people.  Far more people.  The growth in government spending to pay for Obamacare will require taxes the private sector can’t pay.  This growth of government will cross the Rubicon.  And the U.S. will go the way of the Roman Empire.  Brought down by her own unsustainable government spending.  Throwing much of Western Europe into chaos for a thousand years or so.  And the sad thing is that history repeats.  Chaos is on the rise already in Europe.  As people riot in protest against cuts in unsustainable spending.  Which often happens when you take away benefits from people long accustomed to them.  This is a very dangerous road to be on.  And Obamacare is hastening the U.S. down this road to catch up with the Europeans. 

You’d think someone by now would have learned this lesson of history.

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