You’re Old and You Cost Too Much

Before the baby-boomers slam Medicare, Medicaid and Social Security like a run-away train — as in right now, today — 35 percent of the entire federal budget is spent on senior benefits, according to USA Today.

Among young Capitol Hill staff, seniors are known as the greedy-geezers.

The U.S. Taxpayer is paying $38,628 per senior household, per year. These costs have skyrocketed 24% in seven years.

The per senior cost to the U.S. taxpayer is $27,289 each year.

So all the happy talk aside, about health care reform and the uninsured, the black hole of senior spending is exerting its growing-every-day gravitational pull on every taxpayer dollar that hits the U.S. Treasury (borrowed or raised by taxes) — does any elected politician has the courage or the ability to face the problem; let alone make these programs sustainable?

The spending levels on Medicare, Medicaid and Social Security are not sustainable — and are among the root causes of the recent global financial instability.

In short, our inability to modulate spending on senior citizens will be the end of our superpower status — both economically and militarily.

But, these programs are sustainable as long as the American taxpayer is willing to pay the rate of taxes needed to fund them. The problem is that the tax rate is not high enough to fund these programs at a break-even rate, nor are politicians willing to raise them at the rate needed to fund the senior benefits at their growth rate.

Nor are the decision makers and elected officials willing to cut the programs or reform them to match the current tax base.

Therefore, the default position is quiet hand-wringing, hoping to find a magic solution that either raises taxes without people noticing (good luck with that) or reforming Medicare to become a program based on fiscal and demographic and economic realities, rather than an image of what America’s economic power used to be — that is we could spend and spend and spend without any macro economic consequences.

This run-away spending is a huge opportunity for a politician who wants to create an issue to vault to national prominence. Will any elected official in Washington, D.C. take any political risks to stabilize the spending of these programs, through innovative and reasonably pain-free reforms, like, for example, a minimum $500 deductible on Medigap policies?

Ninety-two percent of all seniors have what is called a Medigap Supplemental insurance policy which eliminates any deductible — any out of pocket payment — for Medicare beneficiaries.

While the rest of America is dealing with higher deductibles, Medicare is living in the 1950s, no deductibles for 92% of seniors.

The real kicker is that the fantasy land that is now Medicare is costing the American taxpayer $2,226 more per senior for those 92% of seniors that have no deductible via their Medigap plan. Said another way, those 8% of seniors in Medicare who are without a Medigap policy, cost Medicare $2,266 dollars less each year (according to 2004 data, the most recent available.) The difference in 2007 will be much higher.

It would be in everyone’s interest, including the seniors, to be rational about the economics of these benefits — otherwise when the fiscal pressure builds to the point of Congress actually reforming Medicare, the results will be far more difficult for seniors that would occur now.

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