(All plans do not effect those already 55 or older.)
From the government Medicare Trustee report, 2009:
"To put those totals in perspective, fully funding the benefits promised to present and future beneficiaries through 2079 would require permanently and immediately increasing the Medicare payroll tax rate to roughly 13.4 percent of all wages, salaries, and self-employment income."
And, from that report,
Unfunded liabilities for just Medicare $36.4 trillion.
[The total wealth in the United States, $48.8 trillion
including home equities and stocks.
The total Revenue for the federal government $2.1 trillion
The Gross Domestic Product $14 + trillion,
Before expenses, i.e. not "profits".]
This is FINANCIALLY IMPOSSIBLE TO SOLVE WITHOUT CHANGES!
WHICH OF THESE WOULD YOU SUPPORT, IF YOU THINK IT OUT?
The exercise below is, I think, understandable and helpful in giving you what is needed to come to a plan that you believe will work. But the question is now:
Do you think this is worthwhile considering and understanding and then demanding action on?
If the answer is yes, read on for this step by step simple understanding and choosing exercise.
THE SHORTFALL
Current middle class example for a couple:
Pay in in Medicare taxes $114,000
Draw out benefits at a total cost of 335,000
Shortfall: $221,000 (66%)
THE CHOICES OF HOW TO COVER IT
Principle: Somebody has to pay it
(This assumes no good fairy will pay the difference. Stop here if you believe in
the good fairy.)
Choices: Who pays: (If you were making an ethical choice, which of the items below would you pick. If more than one, then put them in priority numbered order.)
___ You
___ Future generations pay for you
(This option will killed them financially when coupled with all the other
taxes they will have to shoulder for all the other spending too)
___ Covered by a richer part of society
___ Businesses, especially the big corporations
___ Someone else other than you or the options above
Note: Those who generate more money will tend to leave the US and reduce economic growth; everything has a cost and a trade off, though wishful thinking hopes there isn't. Only a small portion of high income people are the traders in equities who are blamed for no useful function, but the rest are job creaters and contributors to the growth of the economic pie everyone wants a piece of (and if the pie is smaller, that is a problem for all the social benefits we want). The big corporations are already shipping alot of their operations overseas because of the higher taxes here. Taxing and taking from the rich and/or corporations is a version of "Killing The Golden Goose To Get The Golden Eggs Now" - which of course is nonsensical.
THE CHOICES FOR MEDICARE PLANNING
Which do you choose: You must choose, if you are able to understand - and understanding requires thinking this out, which is what this exercise leads you through.
This refers to money into Medicare, in column 1 and money taken out to pay for medical costs. The "money out" for any one individual might be reduced so that another less well off individual could use those moneys to assure adequate health care.
Any choice you make must be done at a sufficient level to have the $ in equal to the $ out, or there is no financial integrity.
$ In $ Paid Out by Medicare
___ Alternative 1 Increase No change
___ Alternative 2 No change Decrease (inadequate)
___ Alternative 3 (Inc. 1 & 2) Increase Decrease
in varying mixes
___ Alternative 4 No change All covered, but some paying more
(No citizen who can't afford
it has reduced benefits)
Change items below in right mix:
Decrease $ for higher income people,
Use that money for those who need it
Have future payouts start at later age
___ Combination of two of the above alternatives (e.g. Alt. 3 & Alt. 4)
___Alternative 5 Do nothing No change No change
Note: Since the good fairy does not exist, future generations will have to pay (i.e a huge tax) for Alternative 5, which is the one chosen so far by the politicians and the President(s).
THE SOLUTIONS AND THE CORRESPONDING "PROBLEMS"
Alternative 1. To have current benefit levels of Medicare you could increase your Medicare taxes by (approximately) doubling them, so you pay in enough. (This is Alternative 1. The money should go into a lockbox, so it receives interest - otherwise we'd have to pay in more.)
Alternative 2, which is close to Paul Ryan's Medicare Plan, decreases the benefits for some people so less is paid out in total. Of course, that means the people who can afford it (though they might not like it) will pay a greater portion of their costs - though all would be covered on the high end for sure.
The problem with that, of course, is that some people won't be able to do that. So his plan (or whatever responsible plan is proposed by whoever) must cover the poor by paying more for them. To help do this, there is a means testing, where the richest people only get 30% of the benefits, with the next layer of richness getting a greater per cent ... and so on, so that though these people were taxed for Medicare they do not get the benefits they paid for - so, in essence, it is a tax increase on the rich.
Alternative 3, which makes sense to me, is to increase the per cent pay in for all so that the costs out of pocket for them later is decreased. This is responsible saving and paying for benefits.
Alternative 4, which is included in Ryan's plan, requires some people to pay more of their own costs if they can afford it but assures that no poor person is left without sufficient coverage by Medicare payouts. The amount people have to pay of their costs will be high for the very rich and then will decline proportionally to income (i.e. the ability to afford paying for more of their own medical costs, which of course some people don't like). Nobody will have their costs uncovered. (The Democrats accusation that the Republicans 'don't care' and are pushing grandma over the cliff and are eliminating Medicare is totally smoke and mirrors and politics at its worst. Instead, Republicans have had the integrity to address this issue, for which they got hammered politically with false accusations. Those false accusations may help create a non-solution stalemate. You have reasoned out the alternatives above, so you should be able to identify the truth and not believe political smearing.)
Alternative 5 is to just smoke grass and ignore the problem and have future generations suffer greatly to pay for all the liabilities for the seniors. It is essentially burdening our children with the problem. This is the "easy" way, but obviously the non-sensical way - but it is the one chosen so far by the majority of politicians (or they simply "mouth" that we should solve it and then leave doing something for "later").
ALTERNATIVE 6. LOWERING MEDICAL COSTS SUBSTANTIALLY WITHOUT REDUCING MEDICAL BENEFITS
Except for the very poor who will have all the costs covered, everybody else will have an incentive to drive down costs once they are the ones paying for some of them.
People who get everything for free will have no incentive to control costs, so costs tend to be substantially higher. (See how Indiana Governor Mitch Daniels reduced health care costs with the proper incentives: Article.)
This incentive will cause people to shop for, and lower the cost of, health insurance, which will have some cost borne by most citizens with the government paying a portion also, and correspondlingly this will help to drive doctors to do fewer unnecessary procedures and tests to get costs under control. Of course, reducing the costs for lawsuits will help to reduce the excess testing and procedures and stop the waste - but that is a decision that must be thought out separately, but this time in the context of the Medicare person having to pay more if there is no reform.
This, of course, links in with the idea of
Money paid Costs of care
by you
Decreases - due to The Decreases in costs!
HAVING THE GOVERNMENT RUN THE SHOW OR...
This is a touchy subject. One needs to reason this out.
Pick which of these you believe to be true:
___ The government runs things well and efficiently, so they should run the
health care program and not just pay for the benefits to private insurers.
___ Private insurers are a bunch of jackals and will charge too much and cheat
people of benefits
___ The market (i.e. consumers going away from plans that cost too much
relative to benefits) and competition will keep the costs in check, since there
is no monopoly, though the law will require certain regulations.
___ Use private competitors, as the government has been shown to behave very
inefficiently because there are no real incentives to do otherwise (which is not a
fault of the employees, just one of the psychology and reality involved).
___ I will benefit financially by having more efficiency and avoiding excess waste.
BY THE CHOICES YOU'VE MADE ABOVE, YOU DESIGNED A PLAN
You made a choice on:
The pay-in and when and by whom
The payout and who shares in the costs
The method of lowering costs.
NOW IT IS UP TO YOU
Write to your representatives (including the President) and request that a plan be approved asap and then starting the legislative process very, very soon, without tolerating the fighting as an excuse to not move forward [note that fighting cannot occur without two sides disagreeing and that any finger pointing is only political and blaming, which is not constructive and is out of integrity.
Do not vote for any representative who has not made a clear commitment to a plan. The time for rhetoric against those who are proposing plans (and the bullbleep of accusing them of eliminating Medicare, or some version of badness) or ignoring the elephant in the room must stop now j- and the only alternative is to plan, commit, and act NOW. (See Rating Politicians.)
(Stop here as this should have been sufficient to clear this up. You can read on if you want to go further.)
________________________________________________________________
Read on if you wish more in-depth comments, but hopefully what is above is sufficient for adequate understanding to take a stand and to contact your President and legislators to act on this!
THE DISCUSSION ABOUT MEDICARE:
Do not believe the rhetoric about people wanting to get rid of Medicare and hurt senior citizens. Pay attention to the full argument on both sides.
The is the "third rail" and politicians want to avoid taking a position for fear of being criticized and not reelected. It takes courage to confront the truth. Ignoring this and putting it off is a big lie, a political stance that is harmful to the public.
This is one area where proper accounting is needed so people can see what is actually true - and no one should settle until the accounting shows that there is no future problem! This would be included on the Report Card.
Social Security is urgent to fix, but Medicare is even more urgent and important. One can only see that if one understands what a future unfunded liability is. Read the Unfunded Liabilities Explanation section or you'll not have a correct perspective to understand the problem.
Associated Press article What People Pay Into Medicare Won't Cover The Costs - 2 earner couple making $89,000 a year will pay in $114,000 in Medicare taxes but draw out $355,000. Now try to make the math work on that. The total overview is in the box below, but the simplified way to handle this is discussed right after the box. [If you adjust the pay-in for interest earned at 2%, then the accumulation paid in is closer to $150,000, assuming escalating salaries.]
HOW CAN WE SOLVE THIS?
It's simple, though hard.
Money in Money out
Alternative 1 Increase No change
Alternative 2 No change Decrease (inadequate)
Alternative 3 Increase Decrease in varying mixes
Alternative 4 No change
Decrease for higher income people
Use that money for those who need it
Which do you pick? (Not having things be paid for is not an option, nor is leaving people without coverage in retirement an acceptable solution.)
Put on your objectivity hat and drop all prejudice for a moment and take a look at a plan that has been proposed (below) and then suggest how you could improve it. Accept nothing less than a solution that has integrity and is realistic!
HOW SERIOUS IS THIS?
"By 2060, social security and medicare will require nearly three out of four income tax dollars (1 in four by 2020). There will be nothing else left to spend on defense, running the government, welfare, and the rest." The only "solution" would be to have incredibly high tax rates.
"To put those totals in perspective, fully funding the benefits promised to present and future beneficiaries through 2079 would require permanently and immediately increasing the Medicare payroll tax rate to roughly 13.4 percent of all wages, salaries, and self-employment income. (See Appendix A for the methodological details.)"
THE ARGUMENTS AGAINST THE RYAN PLAN
Since this is the "third rail" that politicians don't want to touch and will use to further their political interests, they will often mischaracterize and/or lie about this matter.
It is misleading to say that Republicans don't care and that they are pushing Grandma over the cliff. No proposal yet has not protected those who are older and/or within ten years of retiring.
It is a lie to say the Republicans want to eliminate Medicare, though most politicians will add "as we know it". The "as we know it" will go broke!
Believe no politician who just throws rocks and does not offer any solutions. We do not pay them to not perform and provide solutions.
View the only proposal made, that I am aware of: Path To Prosperity, Medicare, Video and decide if that will work or describe in the blog how you would make it work better or how you'd prefer it be done. A rational, well-reasoned, fact-based solution is possible and you can help make that happen, but only if you do not put politics or prejudice above constructiveness.
