We geezers-to-be are already starting to retire, but many officially "retired" Boomers are starting some sort of second career as they exit career #1. They'd like to find "work-as-personal-fulfillment" and all that sort of thing, yet many find themselves limited to a less-than-wonderful job at Wal-Mart or Home Depot, Staples or Walgreens.
Still that's not the big problem. The big problem comes when they get too old to contribute labor to the workforce in any way, shape, or form. Then they'll be living off the productivity of their juniors, at a time of life when their, the seniors', medical expenses can be expected to grow and grow and grow.
McArdle:
And indeed there’s no getting around these facts: in 1945, the year before the Baby Boomers began entering the world, each retiree in America was supported by 42 workers. Now each retiree is supported by three. When the Boomers are fully retired, each of them will be supported by just two.
What happens when currently optimistic Boomers finally face the hard realities of their savings accounts? Will they ask for more from the government? At a bare minimum, seniors already struggling with their finances are not apt to look kindly on benefit cuts. Yet the cost of the benefits we’ve already promised them will weigh heavily on the workers expected to support a half-Boomer apiece.
Social Security is the comparatively easy problem to solve. It will go from consuming 4.3 percent of GDP in 2007 to absorbing about 6.2 percent in 2030. That’s a big jump—if the cost were spread evenly, it would be equivalent to about a 5 percent increase in payroll taxes for each worker—but by and large, the economy will be able to cope.
Medicare is a different story. Health-care costs now consume about 16 percent of GDP, but projections by the Department of Health and Human Services suggest that by 2016, that will have risen to almost 20 percent. [David Wise, head of the National Bureau of Economic Research’s aging program,] speculates that closing the Medicare budgetary gap would require a tax increase of something on the order of 8 to 12 percent of total payroll. That is a massive tax increase—$4,000 to $6,000 a year on a $50,000 income (again assuming the tax were spread evenly). Many economists and budget analysts have drawn up plans intended to fix Social Security, through some combination of benefit cuts, higher retirement ages, and tax increases. But almost no one claims to have any good ideas about Medicare.
As oldstyleliberal mentioned in Samuelson: Rx for Health Care, by 2030 health-care costs will most likely eat up 25 percent of GDP! A quarter of every dollar's worth of products made by Americans will be earmarked for medical bills alone. A hefty portion of that will go to pay the medical bills of Medicare recipients.
In other words, we're presently tied to a railroad track with a locomotive bearing down on us at breakneck speed. And "no one claims to have any good ideas about" how to loosen the rope.
The presidential candidates have said very little about Medicare. The Republicans want to chip away at the various reasons why health care costs in America are rising so fast, and that's good. Also good is the Democrats' insistence that all Americans who want to be insured can be (or, in some of their proposals, must be). But no one is talking about how something else — something really big, and something fairly painful, politically — is going to have to be done, and soon, to keep Medicare from killing the goose that lays America's golden eggs.
No comments:
Post a Comment