Government Healthcare Fail: Medicare, Social Security Hurtle Towards Insolvency

health-care-medicaid-medicare-protest Stephanie KeithReuters
Stephanie Keith/Reuters

Medicare will become insolvent in 2026, just eight years from now, and Social Security will follow in 2034, just 16 years from now, the Associated Press reports.

With 62 million people dependent on Social Security and 58.4 million on Medicare, the following is no way to run a rodeo…

You pay 6.2 percent of your income to Social Security, and your employer matches that amount up to $128,400 of earned income. Anything you earn above $128,401 is not taxed. Because Social Security benefits are capped at right around $3,500 a month, and the program is supposed to be a personal benefit, it would be unfair to tax people over that income level. Doing so would turn what we are told is a personal retirement plan into just another social welfare plan.

As far as Medicare, you and your employer both contribute 1.45 percent of your income, and there is no income cap. In fact, if you make $200,000 per year ($250,000 for married couples), you pay a .9 percent surcharge.

The problem, however, is that with all the Boomers retiring and the birthrate decreasing (2017 was a 30 year low, there are not enough workers paying into these programs to make them solvent.

Regardless, the whole idea is nuts. Central planners hustling some 60 million Americans into a one-size-fits-all program, is madness.

When Social Security launched in 1940, there were 159 workers (people paying into the system) for each beneficiary (taking money from the system). A mere five years later, in 1945, this collapsed to 42. By 1955, it plummeted to nine. By 2013, we were down to 2.9.

Obviously, the central planners are paying out more than they are taking in.

Please tell us more about “Medicare For All,” Senator Bernie Sanders…

Insolvency, however, does not mean broke, that you will not receive benefits.

As far as Social Security, for the first time since 1982, the government will dip into the trust fund this year to ensure everyone receives a check. But, by 2034, when this trust fund is depleted, there will only be enough tax revenue coming in to cover three-quarters of Social Security’s promised obligations.

With respect to Medicare, after that trust fund is depleted in 2026, incoming tax revenues can cover 78 percent of expenses until 2039.

If this happens, Congress will probably make up the shortfall through general tax revenues, which almost certainly means more deficit spending. Medicare and Social Security are way too popular for politicians to ever allow it to stumble.

What’s more, because people spend their entire working life paying into these programs, they damn well expect to receive full benefits. Social Security and Medicare are seen by the public as forced-investments, as something the government compels us to invest in, whether or not we wish to.

Worse still, many Americans (foolishly) see these programs as their only retirement plan. Counting on these programs, they do not think they need to save money for retirement, so imagine their reaction if the checks stop coming.

Even though Social Security and Medicare are two of the stupidest ideas ever implemented by the federal government (topped only by ObamaCare), we are stuck with them. These programs are not only wildly popular, but even someone like myself — someone who despises the idea of handing this money over to the government when it would do much, Much, MUCH better in a retirement account — I have invested nearly four decades and gobs of money into this scam, and God help the politician who tries to block my full payout.

So, in the end, all this news of insolvency proves is how dumb Medicare and Social Security are. We are all going to  get our checks, though, even if it means sticking future generations (through deficit spending) with the check.

But when you realize just how awful Millennials are, that actually feels like another benefit.

Follow John Nolte on Twitter @NolteNC. Follow his Facebook Page here.

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