Wednesday, April 27, 2011

The Health Care Train Wreck

Government health care for retirement is not very well thought out. Some of us have already had a dry run with an aging parent or grandparent.

For example, a married couple that retire at age 65 with 300K of savings in the bank probably have at least $12,000 apiece or $24,000 total per year to live on from Social Security. The government health insurance provided for seniors would probably cost about 8 to 12 thousand per person per year for a private plan of equivalent value. To say the least, it would be unaffordable to most retirees. The government insurance is real, but invisible to the recipients. Uncle Sam pays all.

Let’s go forward 10 years to age 75. At this point, a lot of retirees are ready for a rest home and these homes charge a minimum of about $4,000 per month per person. So with a married couple, that’s about 100K a year (the 300K in savings will go fast). Someone unfortunate enough to come down with Alzheimer’s disease, figure about $8,000 a month in a rest home (100K per year). Studies have shown that during the last months of a person’s life, they could rack up 180k in medical bills (in intensive care). The government gets to pick up the tab here too.

Social Security was a lottery ticket, when it was implemented. Everyone paid in but very few lived to collect. Living to age 65 today, is almost a given. Now, we have Medicare and Medicaid added on to retirement benefits. Where are the government funds coming from to pay for future elderly health care? Ask one question, how much in total did the retirees pay in taxes over a life time? Does it warrant the government payments being made in their behalf?

How much longer can the game go on? Entitlements already exceed tax collections. Who do we "throw under the bus," our kids? How about a Democrat or two?


dearieme said...

Isn't part of the problem simply that Americans (more than others?) seem to feel entitled to live for ever? Or, more precisely, expect near-limitless sums to be chucked at the problem of extending their lives by a few weeks, those weeks to be spent unconscious? It's unaffordable for your nation or for any other.

Anonymous said...

Hire your employees from the Home Depot parking lot every morning.
No health care premiums, no payroll taxes to pay, no work comp to pay.
And best of all for the workers,
no income taxes to pay. said...

Regrettably, I believe the kids are screwed. We've been setting them up for the fall for some time now. Wish it weren't so.

Anonymous said...
This comment has been removed by a blog administrator.
Jim in San Marcos said...

Hi Survival

I don't think the kids will be touched. They have no savings to be lost to hyper inflation. The National debt is so big, that I don't see this can being kicked down the road another 3 years. It will collapse like a house of cards, we just don't know when.

Perspective is another thing to consider. I mentioned before that I saw a young girl (21) buying a pack of Virginia Slims for $6.50. I remember buying my cigarettes as a kid (Lucky Strike) for 21 cents a pack. I can see the inflation and she can't, they've always been this price for her.

Jim in San Marcos said...

Hi Dearieme

Welcome, haven't heard from you in a while.

I think that everyone will take what they can get, the problem is, they weren't supposed to be able to take as much as they do.

We have to blame the idealists in Congress for this mess. The problem is, they created it and have no way of controlling it. And as you point out, the taxpayer is already choking on the bill.

Where do we go from here????

Jim in San Marcos said...

Hi Anon 5:00

I don't normally delete comments, but from time to time some posters tend to say things that other readers would tend to take offense to. I delete them only to keep the very few who read the comments from wasting their time.

I welcome opposing views, so feel free to chime in. You don't have to post as anon, you can check Name/URL and type in what you like, it is easier for other to reply.

All I ask is that you treat all of the readers courteously who will read your post.

dennis said...

I have an annual blood test done. Every year like clock work it goes up 10% to 15%. As far as I'm concerned you can line the democrats and the republicans up under that train. I'll drive.

Anonymous said...

Again this all ties to money.

What do you do when your currency is being destroyed? No sense in going to another currency as they will all fall when the USD crashes. There is no where to turn, no way to escape. We are cornered like a rat. They have us by the short hairs. Anyone with dollars is doomed.

When I look at where the Fed Reserve and Congress are sending us there just seem to be any escape or way to sidestep the coming blast.

I don't know. When the USD becomes so hot that everyone is trying to get rid of it, who will be the winners?

the ones with real estate?
the ones with gold?
the ones with businesses?
the ones with nothing?

Jim in San Marcos said...

Hi Dennis

I like the idea, it sounds very bipartisian. A bus would be better, you can steer so you don't miss anyone;>)

Jim in San Marcos said...

Hi Anon 11:06

I think that most of us will survive OK.

Most probably we will lose all of our savings and retirement funds. This won't affect you if you are broke.

If you have massive amounts of wealth in real estate, cash in the bank, million dollar homes, you be hit the hardest. That sounds rather obvious, but it is different than what you think.

If you have a job, you will have a payroll check to buy food and housing.

The super rich on the other hand, will have a demand for cash flow to support their real estate, businesses and extravagances. Real estate is highly visible and taxes are not going to disappear. No one will be in the market for real estate at blue blood prices. The rich can live off of their assets as long as they don't have to sell them. They are rich on paper but in the new market, they won't be able to raise cash any easier than you and I.

The 50 million dollar Van Gogh might be worth every penny, but find someone with the cash to sell it to. Price reality won't be so abstract as it used to be.

View it as a cleansing cycle, where the playing field gets leveled for everyone. It is part of the Kondratieff Wave theory that I subscribe to. My Second blog post way back when talks about it.

Of course if you are old and comfortably retired, your world will be turned upside down. Be real nice to your kids, you may have to move in with them.

Some gold and silver is OK to have, I wouldn't buy it at today's prices, but figure that home ownership is probably the equivalent of about 175 oz of gold and you can live in it.

Hope this sets your mind at ease. It doesn't do much for me, cutting the lawn at my age is getting more pain full. Take care.

Anonymous said...

I want to ensure that I understand this well,,, I"m trying to figure out how to protect myself the best I can from the coming PERFECT STORM of economic depression and energy problems that will soon hit us,,, Regarding your response to Anon 11:06,,, losing all of one's retirement funds and savings would be devastating,,, is this because inflation will wipe out the purchasing power of the money retirees have in their savings and retirement accounts? and higher taxes will also add to their loss?

I'm thinking about myself here,,,

would the following be a solution or at least put you in a better position if you were a retiree or close to retiring,,, 1) take your money (nestegg) out of savings and be active with it,,, in other words put it to work (doing small real estate projects, buying things that you can resell for more money, starting a small business that can bring in some regular income, etc.),,, 2) keep doing this for as long as you can to build up and increase your own money supply (try to double or triple your money over the next few years or so),,, 3)then when inflation really begins to go high take all of your money and put it into some tangible assets that will sort of ride the inflation wave (like a few single family homes that you can rent out).

Jim in San Marcos said...

Hi Anon 1:39

I don't think that starting up a business right now with the economy in the dumps, will give you much of a return.

My sister just got back from Florida, they were looking for a home to buy to live in during the Colorado winters. You can buy a home down there for about 35K to 40K that will rent out for $800 a month. They were looking for something closer to the beach so they didn't buy one this trip.

Real estate for rental income at Florida prices give a pretty good return on your money. An $800 monthly return on a 35K investment is about a 25% return. As a rule of thumb, take the monthly rental rate and multiply it by 100. If you can buy the house for less than that, it will positive cash flow. Of course one hurricane or a Tennant that turns the rental into a meth lab could raise your blood pressure up real quick. Rentals are not for everyone.

I tend to buy what nobody wants. You get better deals. Most of the time they will want it back later.

I do think that whatever happens, the government will have to take responsibility for the silver foxes. Their exotic vacations they planned for retirement may be in front of their TV.

rob in ns said...

You all should move to Canada and get some of our free health care. We are having election today and we might end up with a New Democrat government. These guys are like their namesakes in states on steriods. Anyway their Dear leader Jack Layton is promising more doctors and less wait times. Sad thing is expenditures right now are increasing at something around 8% per annum and this is with a conservative government in charge. Anyone with a brain knows this is completly unsustainable but when the vast majority refers to our system as being free it won't end well.

I'm guessing at some point in future the proverbial bus will be headed for ditch but with gasoline at $1.37/litre it better happen soon as I'm getting a little too old to be pushing.

Anonymous said...

Anon 1:39 to JISM --
Thanks for the feedback. Could you also answer the other questions I laid out?

This is what I said in last post:::
I want to ensure that I understand this well,,, I"m trying to figure out how to protect myself the best I can from the coming PERFECT STORM of economic depression and energy problems that will soon hit us,,, Regarding your response to Anon 11:06,,, losing all of one's retirement funds and savings would be devastating,,, is this because inflation will wipe out the purchasing power of the money retirees have in their savings and retirement accounts? and higher taxes will also add to their loss?

Jim in San Marcos said...

Hi Anon 1:39

Here is something I wrote in 2008 it is an example of what has been done already Squirrel Economics 101 The comments are a good read also.

Our government is a little like the son of a rich family who squanders the family fortune. They are none the wiser until they get ready to spend it.

I'd add more, but I'd be getting into my next article

Jim in San Marcos said...

Hi Rob

Health care seems like the deal of the century for the individual on an idealistic plan. The trouble is, realism tends to creep in. People fly from Canada to the US for open heart because they can't survive the wait. And in Great Britain, I hear that you dont have to wait more than 18 weeks for cancer surgery now.

I like cash on the barrel-head for all transactions. No money, go fly a kite. Of course, that so inhumane for the guy that lived it up until he got old, go figure.

Government has to face up to the fact that it can't offer health care. Government sponsorship doesn't make it any less expensive, it just makes it easier to abuse.

Hopefully, maybe us "old people" will get to steer the bus insead of push it.

Anonymous said...


This is an excellent read from
David Walker the Former Comptroller General of the United States (1998-2008). What he says needs to be done is true. If we don't this country will see more trouble than it ever has in its entire history. A long read but well worth it. Fiscal Sanity in the United States: A Way Forward

Anonymous said...


Sorry I've been posting Anon. Unfortunately, in this day and age, everything a person writes can be saved for their entire lifetime. Anyone, including Government, or someone trying to sue you, can look up every post you have made for the last x years, and use it to make their case. Facebook is a gold mine for intelligence collection now, for example. Sorry to diverge from the topic, but you did mention it. :)

Great Health care topic, well done.

Jim in San Marcos said...

Hi Anon 9:28

Thank you for the link. He goes into more detail than I do.

Jim in San Marcos said...

Hi Anon 6:24

Thank you for the complement.

You touch on an interesting point. Face-book is a real no-no. They can data mine your date of birth, your mothers maiden name and where you were born. With that much info and $5 you can get a copy of their birth certificate.

With a regular post to this column, I can track it somewhat. I don't pay for premium coverage so I don't know the last octet of your IP address. But if you were in a foreign country, the time you posted and the IP address would render your subscribers address.

Software and music makers are very particular about people sharing their files. I downloaded an Adobe file from Emule and got an email from my service provider to stop sharing the file or they would give Adobe my name. I deleted it.

A lot ot the internet uses Spiders to search for content. So if you said something that was considered a threat, they could still track it even with an Anon tag.

The real problem with blog comments is when you say something detrimental about someone else. The Google Spiders pick it up and you can Google it. A mother emailed me requesting that a remark made about her son and his business be deleted from the remarks section. I deleted it, but as I pointed out to her, it is still out there. Where, I'm not sure.

Uploading to Newsgroups could get you shot, your email address is in the post.

So if you wanted to login as "Mr Tuna" on this site, it is really no different than ANON.

Hope this sets your mind at ease.