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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Medicare: A dangerously good deal

By Morgan Housel





It's one thing to talk about the immorality of kicking the can down the road to future generations, but it's another to actually stop kicking


JewishWorldReview.com | It's not surprising that we can't pass a bill to address long-term budget deficits. Effectively all of the growth in projected long-term budget spending is health-care costs tied to Medicare benefits. And -- surprise! -- voters really like Medicare benefits.

According to a 2010 poll by the Tax Policy Center, three-quarters of Americans think entitlements like Medicare will create major economic problems over the next 25 years. But two-thirds oppose reducing benefits, and more than half oppose raising taxes.

Here's why: Medicare isn't just a good deal for retirees. It's an outstanding deal.

According to the Urban Institute, a couple with average wages retiring at age 65 in 2010 would have paid $88,000 in dedicated Medicare taxes over the course of their lifetimes (including their employers' share) but can expect to receive $387,000 in Medicare benefits. A 65-year-old couple retiring in 2020 will have paid $111,000 in Medicare taxes and can expect to receive $427,000 in benefits. These figures are adjusted for inflation and discounted to present value using a 2 percent real rate of return. It's likely that the returns earned on Medicare taxes will exceed what an average investor earns in the stock market (at the expense of someone else, of course) over the course of his life.



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Medicare taxes for most workers are currently 2.9 percent of income, where they've been since 1986. But median wages during that time grew an average of 2.8 percent per year, while medical costs grew an average of 5.5 percent per year. In order to have kept an equal ratio of Medicare taxes to Medicare expenditures over the last three decades, either taxes would need to have doubled or expenditure growth would need to have been cut in half.

But remember the Tax Policy Center poll: Voters by and large refuse both options. This is why we have deficits. It's one thing to talk about the immorality of kicking the can down the road to future generations, but it's another to actually stop kicking. Cans feel really good to kick.

That sentiment will probably grow in the future. In 1970, 10 percent of the U.S. population was age 65 or older. Today that's 14 percent, and by 2030, nearly 20 percent of the population will be eligible for Medicare. How do you think these people are going to vote? Will they easily give up their investment-of-a-lifetime Medicare benefits? I doubt it.

There are a few likely ways this will end. Raising the age at which people become eligible for benefits is one of the more palatable options, but it doesn't do much to the deficit, as a disproportionate amount of health-care costs are incurred when people are in their 70s and 80s. Growth in health-care costs is coming in below what budget analysts expected. If that trend holds, most of the runaway-spending budget forecasts could be proved too pessimistic. More likely, Medicare growth will come at the expense of other government programs -- nondefense discretionary spending is already on track to hit a 50-year low as a share of gross domestic product.

But here's what we know: The budget isn't hard to fix because politicians are evil or because one political party "doesn't get it." It's hard because what drives long-term deficits are programs that offer voters deals they can't refuse. Just pay a little now, and we'll give you a lot tomorrow -- who can turn that down? It's a dangerously good deal.

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Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review. He doesn't own shares in any of the companies mentioned in this article.


Previously:


Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



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