Fixing(?) Entitlements

CMS estimates Medicare will run out of money in 2026 so something definitely has to change with the healthcare side. When Medicare was first conceived 65 was set as the age at which it began, now life expectancy is much longer. I don't see how you can fix Medicare without adjusting the age of eligibility. It's hard to see it working without that. Math should be fairly easy - if life expectancy has increased by 5 years since Medicare was conceived, then raise the age of eligibility by five years.

Really, the same should be done with social security because it's the same concept there. People will have to stay in the workforce longer - I don't see any way around that because we need more money coming into the Medicare and SS funds to support those drawing down on them.

This part isn't complicated, it's just politically inconvenient. Nobody wants to be the bad guy to delay benefits to seniors. That's why it won't be voted into place until the public recognizes that the programs themselves are genuinely at risk. Right now it's a figment in the minds of some, but once it becomes a reality for people that they stand to lose their Medicare safety net entirely, only then does it become politically expedient to support it.

In other words, once it's too late. Hope you're all saving your money as effectively as possible. Those capable of supporting themselves on their own two feet stand to come out the other side in decent position. Others will experience difficulties.

https://en.wikipedia.org/wiki/Social_Security_Trust_Fund

https://www.senate.gov/reference/glossary_term/entitlement.htm

entitlement - A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.

Here you go G1, hope this helps.

It does but it doesn't help you.

CMS estimates Medicare will run out of money in 2026 so something definitely has to change with the healthcare side. When Medicare was first conceived 65 was set as the age at which it began, now life expectancy is much longer. I don't see how you can fix Medicare without adjusting the age of eligibility. It's hard to see it working without that. Math should be fairly easy - if life expectancy has increased by 5 years since Medicare was conceived, then raise the age of eligibility by five years.



Really, the same should be done with social security because it's the same concept there. People will have to stay in the workforce longer - I don't see any way around that because we need more money coming into the Medicare and SS funds to support those drawing down on them.



This part isn't complicated, it's just politically inconvenient. Nobody wants to be the bad guy to delay benefits to seniors. That's why it won't be voted into place until the public recognizes that the programs themselves are genuinely at risk. Right now it's a figment in the minds of some, but once it becomes a reality for people that they stand to lose their Medicare safety net entirely, only then does it become politically expedient to support it.



In other words, once it's too late. Hope you're all saving your money as effectively as possible. Those capable of supporting themselves on their own two feet stand to come out the other side in decent position. Others will experience difficulties.Thanks for actually discussing the actual issues. I believe the systemic issues should outweigh politics but I agree with you. Politicians can/will not make tough choices if Joe Public is not pushing it, and as you said right now its a monster under the bed issue, both sides can use it to scare there base by saying the right call words.

I believe social programs should be keyed to (at least) 3 main measurables:
Average life expectancy
Localized cost of living
average cost of preventative care medical figured independently from general cost of living.

If you can find baselines around those statistics and total percentage of federal budget allocated to these programs then you should be able find the intersecting values that keep the system working right.


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Thanks for actually discussing the actual issues. I believe the systemic issues should outweigh politics but I agree with you. Politicians can/will not make tough choices if Joe Public is not pushing it, and as you said right now its a monster under the bed issue, both sides can use it to scare there base by saying the right call words.

I believe social programs should be keyed to (at least) 3 main measurables:
Average life expectancy
Localized cost of living
average cost of preventative care medical figured independently from general cost of living.

If you can find baselines around those statistics and total percentage of federal budget allocated to these programs then you should be able find the intersecting values that keep the system working right.


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Yes and those statistics already exist as part of the Medicare reimbursement formula - Medicare pays based on wage index, so a hospital located in New York gets paid more than a hospital located in Nebraska simply by virtue of the fact that nurses and doctors in New York have higher wage rates than those in Nebraska.

Philadelphia's wage index for example is 1.06, it's hardwired into the Medicare formula, SS could just borrow from the same thing.

And cost of Medical care is available through the Bureau of Labor & Statistics, can just look at the CPI for Medical Care Services. You're right, it should be easy to hardwire this.

Getting several hundred congress men and women to understand how it works is one hurdle, because embarrassingly may do not. And then there's the political hurdle, why support something that isn't a fire yet. But agree, it's not as hard as people think.

CMS estimates Medicare will run out of money in 2026 so something definitely has to change with the healthcare side. When Medicare was first conceived 65 was set as the age at which it began, now life expectancy is much longer. I don't see how you can fix Medicare without adjusting the age of eligibility. It's hard to see it working without that. Math should be fairly easy - if life expectancy has increased by 5 years since Medicare was conceived, then raise the age of eligibility by five years.

Really, the same should be done with social security because it's the same concept there. People will have to stay in the workforce longer - I don't see any way around that because we need more money coming into the Medicare and SS funds to support those drawing down on them.

This part isn't complicated, it's just politically inconvenient. Nobody wants to be the bad guy to delay benefits to seniors. That's why it won't be voted into place until the public recognizes that the programs themselves are genuinely at risk. Right now it's a figment in the minds of some, but once it becomes a reality for people that they stand to lose their Medicare safety net entirely, only then does it become politically expedient to support it.

In other words, once it's too late. Hope you're all saving your money as effectively as possible. Those capable of supporting themselves on their own two feet stand to come out the other side in decent position. Others will experience difficulties.

The retirement age is already gradually increasing for benefits. The easy solution to me is to drastically raise the cap or eliminate it. Right now the maximum earnings subject to Social Security payroll tax is only $132,900. If we want to get serious about expanding and strengthening Social Security I'm down with Bernie's ideas (https://www.marketwatch.com/story/bernie-sanders-says-its-time-for-the-super-rich-to-do-the-morally-right-thing-2019-02-15).

The retirement age is already gradually increasing for benefits. The easy solution to me is to drastically raise the cap or eliminate it. Right now the maximum earnings subject to Social Security payroll tax is only $132,900. If we want to get serious about expanding and strengthening Social Security I'm down with Bernie's ideas (https://www.marketwatch.com/story/bernie-sanders-says-its-time-for-the-super-rich-to-do-the-morally-right-thing-2019-02-15).

I would agree with raising the cap. When the cap was set it was done in a time when $100K was a real high salary.

The age of eligibility and the cap both need to get with the times. We live longer now, and $250K is the new $100K. Put both in line relative to when the plan was instituted and then you've got something. It's a mathematically objective notion too.

raising the cap could be the starting point. its old, and needs adjusted. part of the issue is also congress dipping into the fund. its a great fall back for those who cant budget correctly

Congress didn't take money from the SS fund, that's a myth.


As for Social Security's most pervasive and borderline irritating myth, that goes to the belief that the federal government raided Social Security's coffers and never put the money back. As a financial journalist of nearly eight years, I can confirm that the comment section on most Social Security articles over the years has been riddled with allegations that Congress stole money from Social Security and never put it back -- and that this is the primary reason why the program's asset reserves will be depleted within the next 16 years.

In reality, none of this is true.

The folks who perpetuate this myth strongly believe that Social Security's current asset reserves of nearly $2.9 trillion is a sham. In other words, they don't believe the money is there. They believe lawmakers on Capitol Hill absconded with this money, and that seniors and future retirees will suffer as a result.

The truth is that the Social Security Administration takes this extra cash, which would be earning nothing if it were sitting around in a trust, and invests it in various special-issue bonds, and to a lesser extent certificates of indebtedness, with staggered maturity dates ranging from a year to perhaps longer than a decade from now. By placing this excess cash -- which has been built up since 1983 as a result of Social Security being a cash-flow positive program -- into special-issue bonds and certificates of indebtedness, it earns interest. In 2016, $88.4 billion of the $957.5 billion in revenue that was generated came from interest income earned on its bonds and certificates of indebtedness.

Does the federal government use the cash that's invested in these bonds, as well as non-special-issue bonds, for regular revenue items? Absolutely! Selling Treasury notes is a common way Congress raises money to pay the bills. The thing is, these bonds are backed by the full faith of the U.S. government, and the federal government is legally obligated to honor both the interest payments and maturities as they come along. Every single interest payment on Social Security's special-issue bonds has been paid, and every last maturity has been met with a full repayment.

Just because Congress uses this cash for its everyday expenditures in no way means that lawmakers raided Social Security. The program operates now as it has for decades, and the excess cash that's been built up since 1983 will be there through 2034, according to estimates.

About the only true concern is the U.S. debt level. If national debt continues to climb in relation to GDP, then it could become difficult, many decades down the road, for the federal government to meet its interest and maturity obligations on bonds. The thing is, with Social Security expected to deplete its asset reserves by 2034, it won't have any excess cash in 16 years, so this really isn't an issue.

Long story short, the federal government didn't steal from Social Security. If you want to accuse lawmakers of shorting the American public, slight them for not having yet fixed Social Security's long-term cash shortfall, despite having no shortage of possible solutions on the table.

https://www.fool.com/retirement/2018/05/20/did-congress-really-steal-from-social-security.aspx

I would agree with raising the cap. When the cap was set it was done in a time when $100K was a real high salary.

The age of eligibility and the cap both need to get with the times. We live longer now, and $250K is the new $100K. Put both in line relative to when the plan was instituted and then you've got something. It's a mathematically objective notion too.

Raising the cap is a lot better than raising the retirement age. Even though people are living longer the wear and tear on the body on a lot of manual labor jobs hasn't changed since social security was implemented.

As much as I hate to say it all entitlement programs need more government oversight. Through the years I have come across way too many people abusing welfare and social security disability. The people I know that were gaming the system could have been easily exposed with a little surveillance and a few surprise visits.



Usually the juice isn't worth the squeeze. OIG has bigger fish to fry than Joe Schmoe who may be working a little on the side. (People are actually allowed to work while on disability and/or SSI to certain limits, just to note.)

My issues are when Joe Schmoe is healthy enough to work a full time job, but lazy and gaming the system. People that do that often seem to run in family circles.
I had an employee who had a couple cousins, females in their mid 30's who were on social security disability, claiming to have fibromyalgia. I gave them both all expense paid vacations to Vegas complete with cash to gamble with in exchange for help working a couple conventions promoting our products.

I spent a better parts of 2 weeks with these women and neither showed one sign of being less than perfectly healthy.

As for the welfare fraud I have worked with plenty a guy who fathered children out of wedlock, one guy had 5 , lived with the mother who was collecting welfare on the children he fathered all while he had a full time job that paid a livable wage.

I have just seen too much of this in my small world to not think it strains the system.