Retirement Reform Blog

New on the blog!  A corny economics joke: “How many economists does it take to change a light bulb?”  Answer:  “One, if you assume a ladder.”

If you fail to see the humor, this joke reflects the sometimes dubious assumptions in economic theory when making predictions and forecasts.  The latest example is the just-released Medicare Trustees Report.   (For a summary of the Social Security/Medicare Trustees Report, click here.) Obama administration cheerleaders are ooing and awing over the projected unfunded liabilities (the difference between the payroll taxes and seniors’ premiums used to fund Medicare and the benefit payouts.)  According to the 2010 report, the Medicare shortfall into the infinite horizon is expected to be just $36.6 trillion, less than half of last years’s reported liability of $89.3 trillion! What is going on here?  Some highly skeptical assumptions based on the provisions laid out in Obamacare, that’s what.  For example: Read the rest of this entry »

For those of you who have not had the opportunity to pick up a copy of the 2,074-page ObamaCare law (H.R. 3590) for some light reading, the National Center for Policy Analysis (NCPA) has published a short, two-page analysis on the new long-term care entitlement program discussed in the law (see “The New Long-Term Care Entitlement“). Read the rest of this entry »

A few weeks ago, my 73-year-old mother received a letter from her internist announcing his retirement from the medical profession.  Being that the man is 78 years old, this comes as no suprise.  However, he had originally planned on working a few more years until he realized that Medicare reimbursements were not enough for him to stay afloat.  Now my parents are worried about finding a new doctor.  They think that further Medicare cuts resulting  from ObamaCare will create a shortage of doctors who are willing to take Medicare patients. Read the rest of this entry »

The terms “filial responsibility” and “filial support” refer to an adult child’s obligation to render care to aging parents.  Before Medicare and Social Security, children were obliged to meet their filial responsibilities by filial support laws.  These laws gave children the primary responsibility in caring for elderly parents – neglecting to do so could yield financial consequences.

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Over the past several days, I have read some articles about the fact that next year's Social Security benefit payments will not be increasing as they normally do to keep up with inflation.  This is what is known as the cost of living adjustment (COLA).  According to some politicians and advocates, with rising health care costs, seniors are getting the short end of the stick unless an increase is in order.

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As if the Democrats' proposed health care bill is not enough to send a person to the urgent care clinic, there is a lesser-known move that has garnered attention among those concerned about the growing entitlement burden: the House voted this week to approve a package which would eliminate the "Medicare trigger."

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Much attention has been given to the out-of-pocket health care costs seniors will likely incur during their retirement years.  (See our recently published Brief Analysis on this topic.)  A Fidelity study found that the average senior retiring this year at age 65 will need $240,000 during his or her lifetime to pay Medicare premiums, out-of-pocket costs, and the like.

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It is bad enough that the federal cigarette tax will more than double under the Obama Administration, disproportionately affecting the poor.  But now low-income seniors may pay more for their health insurance.  The Centers for Medicare and Medicaid Services is reducing payments to insurers for Medicare Advantage plans.  Medicare Advantage is a private plan in which the government reimburses insurers rather than physicians.  It allows seniors to buy into plans that provide more benefits than traditional Medicare at a lesser cost.  These plans are particularly appealing to low-income seniors.  However, reducing payments to insurers will force insurers to recoup the payments elsewhere, most likely by increasing seniors' premiums.  (Read more here in the Wall Street Journal)

An estimated 9 million seniors are covered on Medicare Advantage.  In 2004, America's Health Insurance Plans (AHIP) estimated that almost half of Medicare Advantage enrollees had incomes of less than $20,000 a year.  Lower costs was the primary reason that enrollees chose Medicare Advantage.  If the new administration truly wants to provide health insurance for all, it could start by not chipping away at a program that already provides coverage to 9 million.

In the spring, the Social Security Trustees released their annual report on the sad state of Social Security and Medicare.  To sum it up, both programs have a combined total of nearly $102 trillion in unfunded liabilities.  This means that we would need to have that much money in the bank today, earning interest, in order to pay Social Security and Medicare benefits to all current and future retirees into perpetuity.

But suppose both entitlement prograns ended tomorrow – no more payroll taxes collected, and no benefits paid to next generation retirees.  What would happen to that massive debt?  Not to ruin the holiday spirit, but according to NCPA Senior Fellows Andy Rettenmaier and Thomas Saving in their latest study, we would still owe our current retirees, baby boomers and younger workers who have accrued benefits a staggering $52 trillion!  Santa has a tall order to fill this year.