Social Security and Medicare trustees issue warnings
On June 5, 2018, the U.S. Trustees issued reports on Social Security and Medicare. The situation is stark and bleak. According to letters sent to Vice President Mike Pence and Speaker of the House Paul, Disability Insurance asset reserves will fall below 20% of the costs by 2027 (i.e. 9 years) and be depleted by 2032 (14 years). The combined trusts of the Old-Age and Survivor’s Insurance (OASI) and Disability Insurance Fund are projected to be depleted in 2034 (16 years). The Federal Hospital Insurance Trust Fund is projecting deficits every year until the fund is depleted in 2026. This is three years earlier than was predicted in last year’s report.
Here’s a summary of the Social Security and Medicare Trust Fund Reports.
* OASI or DI Trust Fund assets are projected to drop below 20 percent of annual cost within 10 years.
* Medicare’s Hospital Trust will be depleted in 8 years (3 years earlier than predicted in the last report).
Why is This Happening?
While political parties blame each other for the mess, the truth is that the world has changed dramatically since these programs were created.
Baby Boomers are Retiring. 2018-2027 is expected to see a high level of Baby Boomer retirement. By 2030, 1 out of 5 Americans will be retirement age (source: Census Bureau).
People are Living Longer in Retirement. Today the average lifespan in the U.S. is 78 ½ years, with Canadians living until almost 81. In 1960, life expectancies were 67 years. Then you were lucky to live two years beyond retirement. Today, someone retiring at 65 might live 13 or more golden years beyond their career!
Medical Care Costs went to the moon between 1960 and 2008. Between 1960 and 2008, medical costs soared far above GDP growth. Since 2008, medical cost increases have moderated, but are still above economic growth (source: Trustees Report).
The Trustees encourage lawmakers to act now to “increase revenues” (taxes), to reduce costs by modifying benefit levels or eligibility requirements or to use a combination of methods.
Economists say that the problem is quite simple. As Princeton economist Uwe Reinhardt said in a study 15 years ago, “It’s the prices, stupid.” According to a recent report by Dr. Ashish Jha of the Harvard T.H. Chan School of Public Health, medical costs in the U.S. are astronomical compared to other countries.
- Prescriptions cost Americans $1,443/person on average. The average for the other 11 prosperous nations, excluding Switzerland at $939/person, was half that – at $749/person.
- A U.S. heart bypass costs $75,345. You could have the procedure done in The Netherlands for $15,742.
- A CT scan is $97 in Canada. It costs $896 in the U.S.
- U.S. Physicians make double the salary of other prosperous nations, at $218,173/year on average. The discrepancy gets even higher with specialists.
Pricing is clearly the biggest reason that our health care costs are out of whack. Anyone who has visited a hospital or doctor recently can tell you that.
While the politicians debate the solutions, there are a few ways that individuals can fix part of the problem.
If you wish to continue reading more of Natalie Pace’s report on the Trustees’ Report on Social Security and Medicare or to access links to the letters, reports, and data, click here.
Do you have a budgeting, investing or economic questions for Natalie Pace? Simply email info@NataliePace.com.
Natalie Wynne Pace is the author of the Amazon bestsellers The Gratitude Game, The ABCs of Money and Put Your Money Where Your Heart Is (aka You Vs. Wall Street). She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical). Natalie Pace’s great, great grandfathers James Pace and Lorenzo Wright were some of the original pioneers of Graham County. Call 310-430-2397 to learn more about Natalie Pace’s books, private, prosperity coaching, and 3-day Financial Empowerment Retreats.