Medicare – Can it Last?

Tom Hegna, an economist, always says that longevity is not just a risk, it is a risk multiplier. Nothing could be truer for the Medicare program. In 1965 When the Medicare program began, life expectancy was age 70. (In case you missed the first part of this story: go here.) In 2015 life expectancy is in the mid 80’s. Medicare was not designed to pay benefits for 20, 30 and now even 40 years.

A few sobering facts:

1. A 65 year old male currently pays in around $70,000 in Medicare taxes over his lifetime.
2. A female pays in the same amount.
3. That male receives $197,000 in lifetime Medicare benefits.
4. The woman receives $230,000.

Conclusion: Medicare takes in a lot less revenue than it is paying in benefits. With current zero percent interest rates it is impossible to make up the difference.

Another problem is that healthcare costs are rising dramatically faster than inflation. If the healthcare inflation rate is 6 percent and the inflation rate is 2 percent, healthcare costs are increasing three time faster than anything else. (How much did your health care premiums go up this last year? By how much are they going up this year?) In seven years Medicare will cost this country $1 trillion per year and the costs are rising.

What is the annual budget of the U.S. government? Answer: $3.8 trillion. The unfunded liabilities for Social Security and Medicare are $96 trillion.

Please tell me, where we will the government get that money. Higher taxes? Lower benefits? How about just create the money out of thin air, i.e. just print the money? If the program is going to last, something will happen.

Now it is time for you to make a choice:
A) Wait until the government harms you.
B) Build financial independence?

Let’s talk.

Articles: http://news.investors.com/ibd-editorials-perspective/072815-763828-medicare-medicaid-anniversary-reminds-us-of-programs-failures.htm?mc_cid=99d0060fea&mc_eid=22cfe9edbc

http://www.fool.com/retirement/general/2015/08/02/it-could-be-time-to-say-bye-bye-to-medicare.aspx?source=isesitlnk0000001&mrr=1.00