les pensées insouciantes

If Plan A in your retirement scheme is Social Security, it’s time to start working on Plan B.

Based on reports last week from the folks responsible for the Medicare and Social Security Trust Funds, Americans—especially those under age 40—need to reconsider their retirement plans.

Absent major action by lawmakers, the annual reports say the combined assets of the Old-Age and Survivors Insurance and the Disability Insurance trust funds will be exhausted in 2033—three years sooner than was projected last year. The Disability Insurance fund will be exhausted in 2016, two years earlier than last year’s estimate.

Come 2033, just 21 short years from now, Social Security will pay just 75% of scheduled benefits, just 75 cents on the dollar. So, instead of getting, say, $1,000 per month from Social Security, you’ll get $750 per month come 2033.

The trustees forecast that Medicare’s hospital insurance fund would begin to run out of money beginning in 2024.

Previously

Just the bad news:

Some bad news: The cost curve is still bending in the wrong direction.

The study says: “Overall national health expenditures under this bill would increase by an estimated total of $222 billion (0.6 percent) during calendar years 2010-2019.”

The estimated effects of the bill on overall national health expenditures is that the share of GDP is projected to be 20.9 percent in 2019 compared to 20.8 under current law — “primarily as a net result of the substantial expansions in coverage.”

Also: the expansion of Medicaid to an additional 18 million people might be tough to achieve; “it is reasonable to expect that a significant portion of the increased demand for Medicaid would be difficult to meet, particularly over the first few years.”

And, “the additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.”

Additionally, as was CBO, CMS is skeptical that there would be savings from Medicare.

To wit: “Reductions in payment updates to health care providers, based on economy-wide productivity gains, are unlikely to be sustainable on a permanent basis. If these reductions were to prove unworkable within the 10-year period 2010-2019 (as appears probable for significant numbers of hospitals, skilled nursing facilities, and home health agencies), then the actual Medicare savings from these provisions would be less than shown in then memorandum. Similarly, the further reductions in Medicare growth rates mandated for 2015 through 2019 through the Independent Payment Advisory Board may be difficult to achieve in practice.”

The “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).”

Should the bill(s) pass in its current form, I’m going to bookmark this article and add an entry to my calendar 5 and 10 years from today to see if we’re at all on track.

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