This is Why The Academy is a Mess!

 In the NY Times, the writer from some Business School notes:

With Medicare and Social Security, older Americans are taking far more out of the system than they paid in. Consider how much lifetime Social Security and Medicare benefits have grown. For a typical 65-year-old couple, those benefits, adjusted for inflation, are worth over $1.1 million today, compared with $330,000 in 1960. Benefits rise as each generation lives longer and receives amounts that grow with the cost of living and as medical prices rise and expensive medical treatments proliferate. Yet the lifetime taxes this couple pays into Social Security and Medicare amount to about $650,000.

In a paper I wrote some 12 years ago I did a detailed analysis of Medicare returns. Namely those working to 75 will over pay into Medicare almost twice their resulting benefits. In fact Medicare is a system benefiting the poorly employed. However the longevity of that class is lower so the net effect is minimal. Thus the write fails to note the time value of money. It is NOT the total you invested over 40+ years but the Net Present Value of that money. Namely the money plus imputed interest! 

One would have expected this educator at some Business School to have at the very least considered that. 40+ years of interest is a significant number. A loaf of bread was $0.35 then and now $3.50! That is a significant difference. 

Sloppy student, gets an F!

Medicare and Who Pays?

Over the past few years I have analyzed the falacy that Medicare is a "gift" to those getting it. In the NY Times today there is a piece on the increased costs of Medicare. They state:

Even some affluent beneficiaries could struggle with the higher costs. For those with incomes of more than $214,000 a year, Medicare actuaries say, premiums next year could exceed $500 a month, up from about $335, if Congress does not change the law. Financially struggling state governments are expressing concern because they are responsible for many low-income beneficiaries.

 Now this means that a family making $214,000 in New York or New Jersey is paying the highest income tax for Federal and State and in addition is paying 3% (actually 2.9%) on the $214,000, or about $6,000 per person, plus a MediGap plan of about $4,000 per person, so we have $20,000 per family on a $214,000 salary or almost 10% of the salary going for Medicare in addition to 50 years of contributions!

Whereas some 30 year old with no job and a family gets to ride for $50 per month!

What is wrong with this picture? Oh and yes, there is a deductible as well, and drugs are barely covered. And also these costs are NOT tax deductible! So this is what the ACA has brought, taxing the older folks to pay for the younger ones without jobs. Generational warfare?