I have just posted a book called Health Care Policy: Politics vs Reality, a draft, which is an edited compilation of my White Papers since January. You may find it of interest since it places all of the factors on the table.
I especially enjoy my comments on Medicare. I state:
There have been many arguments that Medicare is broken. We will show here that such a
statement is far from the truth. Indeed Congress is broken and is literally stealing money
from Medicare. We will do this with a simple example.
"1. Assume that a person starts work in 1970 at the salary of $16,000 per year. They get
raises of 5% per year until they retire at 65 in 2005. Their final salary is $107,000 per
year.
2. Each year they have contributed 3% of their gross salary to the Medicare fund. That is
gross with no cap. Assuming the fund invests the contribution at an average 6% rate for
that period and it is compounded then in 2005 they have $165,000.
3. Now they retire at 65 and they have an actuarial life of 12 more years. Medicare costs
an average of $12,000 per year as we show below. The net present value of these 12
payments of $12,000 is $100,000.
4. But, and this is an important BUT, they have contributed $65,000 more than they will
ever collect! Where did the money go? Congress spent it!
5. This gets worse the more you make. In the following chart we show how the
contribution explodes as salary explodes. Remember the costs are the 12 years times
the $12,000. They are the same for everyone. The more you make the more the
Government collects."
I think all those at or near Medicare age should think of this fact. You more than paid for it and Congress just appropriated your money for themselves!
I especially enjoy my comments on Medicare. I state:
There have been many arguments that Medicare is broken. We will show here that such a
statement is far from the truth. Indeed Congress is broken and is literally stealing money
from Medicare. We will do this with a simple example.
"1. Assume that a person starts work in 1970 at the salary of $16,000 per year. They get
raises of 5% per year until they retire at 65 in 2005. Their final salary is $107,000 per
year.
2. Each year they have contributed 3% of their gross salary to the Medicare fund. That is
gross with no cap. Assuming the fund invests the contribution at an average 6% rate for
that period and it is compounded then in 2005 they have $165,000.
3. Now they retire at 65 and they have an actuarial life of 12 more years. Medicare costs
an average of $12,000 per year as we show below. The net present value of these 12
payments of $12,000 is $100,000.
4. But, and this is an important BUT, they have contributed $65,000 more than they will
ever collect! Where did the money go? Congress spent it!
5. This gets worse the more you make. In the following chart we show how the
contribution explodes as salary explodes. Remember the costs are the 12 years times
the $12,000. They are the same for everyone. The more you make the more the
Government collects."
I think all those at or near Medicare age should think of this fact. You more than paid for it and Congress just appropriated your money for themselves!
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