Is Medicare Heading For Major Financial Problems?
If it’s not Social Security, it’s Medicare. The next biggest obstacle our nation needs to tackle is the growing Medicare problem. Medicare was originally established in 1965 to offset hospital and medical costs for retirees and disabled Americans to prevent medical related bankruptcy and financial hardship. Since 1965, two major issues have arisen, that have been driving the nail in the Medicare coffin.
- Healthcare costs are growing faster than the economy.
- The Baby Boomers are retiring at the rate of 10,000 new retirees a day.
How Much Does Medicare Cost The Government?
In 2011, Medicare cost the federal government 549 billion dollars. Currently enrollments are going up by 3% a year. Imagine what Medicare will cost us in a decade? Medicare, like Social Security, has a hospital insurance trust fund, that will be broke and out of money by 2024.
Will Obamacare Offset Medicare Expenses?
One hope is that Obamacare will help offset some of the expenses incurred by Medicare. While this is true, and has bought Medicare an additional 8 years of solvency, one has to also wonder who is going to pay for Obamacare? Are we instead shifting the finances and the focus to a different program?
Medicare Insolvency Is Not A New Problem
Medicare has had insolvency issues in the past and was originally expected to be bankrupt by the year 1994, and again in 2003. The problem was resolved each time by raising taxes. Other potential Medicare reform may include:
- Pushing back eligibility to age 67
- Make Wealthier retirees pay higher premiums or have higher deductibles.
As it stands right now, Medicare spending will equally 10% of the economy by 2065. That’s huge, and seriously unsustainable. According to the annual Medicare report: “Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the federal budget,”
As a future retiree, with high hopes for the future, it would be wise to think of other financial options besides Medicare to offset healthcare expenses during your retirement. Across the board reform is still possible, but in the meantime it is wise to be well prepared for your future finances and health care needs. For more information on how to better prepare yourself for your future health care expenses, contact a Redhawk advisor near you.