Thinking of retiring in a few years? Beware of what is likely to come.
Government has created a massive, new and costly benefit called the Affordable Care Act (ACA). At the same time, government has been burnishing existing programs to rapidly convert people into beneficiaries. Taxpayers will soon be hijacked to pay the unprecedented costs, and those approaching retirement will feel the pain most acutely.
The Social Security Disability program had 6.6 million beneficiaries at the end of March 2006, but the headcount grew to 9 million at end of Dec 2014, a compound annual growth rate of 4.5 percent. It’s hard to imagine that the population of disabled people is expanding at such a rapid rate. More likely, underwriting standards were loosened.
In 2014, Medicare covered 48 percent of the health care charges for those enrolled in Medicare. Medicare Part-A (hospital insurance) charges no premium if the beneficiary already paid Medicare taxes on income for 40 quarters. That Medicare tax on income was 1.0 percent in 1968, and is now 2.9 percent applied to income, without limit.
In 2009, the Medicare Part-B (medical insurance) premium was $99.60. Today, Medicare Part-B premiums are geared to income and start at $104.90 for those with incomes of $85,000 or less. Premiums top out at $319.70 per month for those with higher earnings. Medicare intends for these rates to increase for everyone. The base for Part-B rates will reset from $104.90 to $120.70 a month in 2017, and rates for those with higher income will rise accordingly. The self-employed who are Medicare eligible feel the cost most of all.
The Supplemental Nutrition Assistance Program (SNAP, aka “Food Stamps”) had 46.7 million beneficiaries in 2014. A 12 percent compound growth rate of beneficiaries resulted in twice as many beneficiaries as in 2008. While there are hungry people in the US, it is unlikely the cohort is growing at 12 percent per year. Something is clearly amiss.
The Medicaid program served 65.7 million beneficiaries in 2010 and 68.0 million in 2011. Those years were before the hugely expansionary Medicaid component of ACA was implemented.
The ACA is designed to cost $940 billion over 10 years, but that is merely the designed rate of loss. The odds are the real losses will be higher, and we already know that the 2016 premiums for ACA will increase substantially.
Medicaid, Medicare and ACA may not be setting up “death panels,” but they are very concerned by the aggregate spending on miracle drugs such as Harvoni and the high volume of costly hip and knee replacements. Medicare has already set up a quality-enforcement process that cuts some reimbursement out of a hospital bill if the patient needs readmission. While that is not an outright ban on any procedure, it could easily be tightened to a degree that hospitals and physicians refuse to perform some risky procedures.
The Social Security tax was 7.8 percent in 1968, but is 12.4 percent in 2015. As of December 2014, there were 39 million retirees drawing a monthly average of $1,328.58 in social security benefits. Social Security began the process of making itself more affordable by increasing the age for retirement eligibility from 65 years to 67 years, but that is unlikely to be enough. The AARP favors means-testing social security and the Heritage Foundation favors raising the eligibility age. Those tactics will harm Americans who are approaching retirement age most of all. It is far more difficult to steal from those already receiving benefits.
The obvious tactics for staunching multiple hemorrhages caused by the popular programs such as Food Stamps, Medicare, Medicaid and Social Security are to increase premiums, deny coverage for some people or treatments, and choke back on payments to providers such as physicians and hospitals. That is precisely what will happen, and most of this butchery is aimed at the welfare of soon-to-be retirees.
If they don’t work together to wrestle control over government kleptocrats, they will be the first to be victimized.
Alan Daley writes for The American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. For more information about the institute, visit www.theamericanconsumer.org or follow us on twitter — @Consumerpal.