For the past year the future of the American economy has centered on the word “entitlement,” especially in terms of health care. But no one is quite certain about what the word means. Social Security is not really an entitlement because it is a forced savings program that promises you the money you put into an old-age fund will be given back to you when you need it, some time in your 60s. The fact that the government has been using that account as a piggy bank to fund itself without raising taxes and leaving behind government I.O.U.s in place of the funds is another matter. But you are definitely entitled to at least get back the money you put into it.
Medicare is a completely different matter. In this case, you put very little money into a fund (which is also heavily borrowed from by the government), and you expect to get a lot more back. In my view, you are entitled to get back the money you paid into Medicare, and anything more should be considered a gift from a rich uncle (Sam), who is no longer very rich.
In an attempt to resolve this problem, Congressman Paul Ryan came up with a plan that went nowhere but had at least some intellectual merit: You pay into the medical fund for old age, and you get back what you paid in (and a little more) at age 67. The most notable feature of this plan was getting an annual voucher for about $6,000 based on 2012 dollars to be applied for private health insurance premiums after age 67.
At the current Medicare tax rate, the only way to pay in more than $6,000 into proposed trust fund on an annual basis is if you make more than $200,000 per year. Since there aren’t too many Americans making that type of salary, it’s your rich uncle who must make up the difference. Even if you were making $200,000 per year for 40 years and only planned to live another 15 years after retirement, it is still a pretty good deal, as it is forced savings for health-care insurance in the future. Any overpayment on your part will only help those who are not lucky enough to make $200,000 a year for 40 years. Unfortunately, this proposal was politically dead on arrival
The real problem with any health-care entitlement program was pointed out in a well-reasoned article in the May 19th issue of The New Republic — you can’t cure chronic disease, you can only manage it (1). In addition, new research analyses of the current state of Americans in old age indicates that we aren’t doing a very good job of managing chronic diseases (2). Although Americans are living longer, the length of life with chronic disease and loss of functional mobility (i.e. independent living) have rapidly increased since 1998. We are living longer because the elderly are essentially on life support generated by increasingly more expensive drugs that only marginally extend the lives of the very sick. We are not going to cure heart disease, cancer, stroke, and definitely not Alzheimer’s. The best we can do is to help manage their outcomes. Unfortunately, these are also diseases of the elderly, and the cost of increasing each year of life after 65 has risen from about $50,000 in the 1970s to nearly $150,000 in the 1990s. This could possibly be justified if the rich uncle were still rich.
The solution according to the authors of the New Republic article is redirecting the money that we can spend to maximize expenditures on public health care (prevention and elongation of independent living) as opposed to “curing” elderly with chronic disease that usually results in the decreased quality of life (1). The primary beneficiaries of this shift in medical thinking should be children followed by working adults, with the lowest health-care priority going to those over age 80. It sounds harsh, but that is exactly how socialized medicine works in Europe.
So what do you do to protect yourself in the future, especially if you are nearing 65? My suggestion is to start aggressively reducing cellular inflammation by following an anti-inflammatory diet and lifestyle. That’s the only thing you are really entitled to and that will also be the only thing your “rich” uncle can realistically pay for in the future.
References:
- Callahan D and Nuland S. “The quagmire: how American medicine is destroying itself.” The New Republic. May 19, 2011.
- Crimmins EM and Beltran-Sanchez H. “Mortality and morbidity trends: is there compression of morbidity?” J Gerontol B Physchol Soc Sci 66: 75-86 (2011).
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