social security and medicare
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The Real Crisis Jim Luke LCC Faculty PD Days May 17, 2011. Social Security and Medicare. Econproph.com http://econproph.com/presentations/. THE BOOMERS ARE OLD!. “Socialsecuritymedicareandmedicaid are busting the budget.” “WE HAVE TO DO SOMETHING SERIOUS AND CUT BENEFITS NOW!”. - PowerPoint PPT PresentationTRANSCRIPT
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Social Security and Medicare
The Real Crisis
Jim LukeLCC Faculty PD DaysMay 17, 2011
Econproph.com
http://econproph.com/presentations/
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THE BOOMERS ARE OLD!
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THE BOOMERS ARE OLD!We are constantly told that:
“Socialsecuritymedicareandmedicaidare busting
the budget.”
“WE HAVE TO DO SOMETHING SERIOUS AND CUT
BENEFITS NOW!”
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Nonsense.
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Nonsense.
Social Security is OK.
Medicare per se is OK.
Healthcare is broken.
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Nonsense.
3 very different programs.
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Life is risky. SS is social insurance.
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SS not threat to gov’t. budget.
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Who needs Social Security?
• 1 in 4 households• 90% of people 65
– 66% half or more of their income
– 21% all their income
• All of us eventually, either direct or indirect.
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The SS Trust Fund.
• 2 Functions:– Cash flow (checking acct)– Pre-pay Boomer bulge.
• Trust fund not needed.– Current taxes = current bfts
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Projected Shortfall: 2040-2085
• 28 years from now
• Assumes reduced taxable payrolls*
• Then still pay 83% of scheduled bfts– Higher in real terms
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For Social Security to be “bankrupt” and NOT able to pay any benefits….
…GDP must be near zero and nobody is working.
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Social Security solvency is positively correlated with more employment and higher real wage
Bruce Webb. Angry Bear blog
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Social SecurityIs NOT In Trouble
andDoes NOT Need to Be Cut
econproph.com, march 6
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Medicare • Potential spending problem in 2020’s
• Medicare not really problem – Medicare is cheaper than private insurance.
• Other developed countries show an aging population does NOT significantly raise healthcare spending.
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Healthcare Is The Problem
• US: $7,538 per person per year
2.5 x average
• Higher prices
• Higher usage per person
• Varied quality
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Healthcare Is The Problem
• Incentives wrong: no checks-balances
• Admin costs: 15-30% (double others)
• High error rates• Monopolistic pricing &
wage power• 1/3 of Nursing Time is
Documentation
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Medicare Is Solution
• 3% admin costs vs. 15-40% private
• Possible bargaining power
• Best practices
• If all were in Medicare: – Save $58 to $400 billion per year