Sunday, August 30, 2009

Tomb it May Concern: The Cost of the Inevitable

It’s a burning, churning debate. Death panels. “End of Life” planning and counseling. Hey, folks, we are all going to die. This means you. If you never have to deal with all this “end of life” decision-making, let’s face it, you will die before your time! So when we are worried about the “old folks” or “we can’t burden the young folks with the cost of extending the lives of the old folks,” who are we kidding?! Absent that untimely, premature demise, “young us” become “old us” every time.

So if you carefully decide that we should limit certain benefits to the elderly, or if we have to convince the elderly to deny themselves “twisting and squirming” painful treatments that don’t buy them that much more time, WE’RE MAKING THAT DECISION FOR ALL OF US! Charles Smith, writing in the AOL’s Daily Finance column on August 25th (“The health care elephant in the room: Medicare”), tells us that our current medical programs, Medicare (for those over 65) and Medicaid (for those at poverty levels), are under-funded and simply cannot survive without a complete financial overhaul. The fear that the current healthcare reform will reduce benefits for the elderly assumes that it is the new healthcare reform that is taking the money away. Medicare can’t work under existing payments structures anyway!

More specifically, Smith notes that “the costs of attempting to stave off the inevitable are rising three times faster than the overall economy, year in and year out.” In short, we have to let the old bastards die without extending their lives, because we’re going broke spending that extra cash to keep them going. Except the “them” is really just “older us.” So the anti-healthcare politicians have got an angle on healthcare reform: it’s all about killing old people or just letting them die an agonizing, untreated death. If we can kill the reform movement, the “oldies” will remain “safe.” Fear can get back the votes that the GOP lost in the last election and take down the Obama administration, creating a “lame duck” in the first year of his administration!

Problem is that even if you “kill” the current vector of healthcare reform, the existing Medicare plan is pretty much heading in the same direction. Add to this nasty mix the fact that since Medicare premiums are rising, prescription drugs significantly uncovered, and the recession will keep the Social Security checks from rising for the next two years (no automatic COL increases), older folks are going to have to pay for the rising cost of prescription drugs (yes, they still are) with less money.

Here’s Smith’s math: “Let's run through some simple arithmetic. The average wage in the U.S. is about $40,000 a year. The Medicare tax is 2.9 percent --1.45 percent from employer and employee, and 2.9 percent for self-employed. Over 30 years (yes, some will work 40 years but others only 10 years, so let's take 30 as an average), that means the average wage earner (and his/her employer) will pay in about $36,000 in Medicare taxes... The average benefits extracted from the system run from $393,000 to $525,000 (due to the benefits extended to non-working spouses, benefits for never-married people may be somewhat lower)… That means each of us who make it to 65 years of age -- which is the majority of us -- will take out 10 to 15 times more than we paid in. That is clearly a huge gap.”

Here’s his arithmetic bottom line: “Any way you slice it, the total taxes and co-pays paid into the system only add up to around $125,000-roughly a third to a fifth of expected benefits paid by the system… We are talking about stupendous sums of money. The current tab for Medicare ($452 billion) and Medicaid ($290 billion) for this fiscal year is $742 billion--more than the entire Defense budget ($707 billion) including the cost of two hot wars and the Global War on Terror. Actuarially, Medicare grows by seven percent a year, decade after decade, even as the U.S. economy's long-term growth rate is about 2.5 percent.”

So in the end, we are going to have to force healthcare reform or let the old bastards – us in the U.S. – die. Ouch!

I’m Peter Dekom, and not reforming healthcare scares me even more.

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