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Hernando Today

Medicare, S.S. Should Be Top Priorities

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By ADON TAFT, Life to the Fullest

Hernando Today

Published: August 18, 2008

Neither Sen. John McCain nor Sen. Barack Obama is discussing the most serious financial crisis that will face the next president almost immediately after taking office and should have been tackled by Congress long before it reached its now catastrophic status.

We're not talking about the collapse of the housing market and the related decay of key financial institutions. It's not even the growing jobless rate, bad as those situations are.

How does this figure strike you? "Medicare actually has about a $69 trillion current account deficit," says Matt Scanlan, head of America's Institutional Business at Barclays Global Investors and co-author of the report entitled "The Future Shock of Retirement."

To understand the kind of money we're talking about, Scanlan explained on a recent edition of the "Wealthtrack" program with TV host Consuelo Mack, "If you added up the market value of all of the land in the United States and all of the buildings and implements on that land, cars and tractors, you would still be $20 trillion short of that."

The annual report of the trustees of the Social Security and Medicare trust funds released in March warned that already 45 percent of Medicare costs are not covered by the Medicare taxes collected from workers' paychecks and premiums paid by retirees. The difference is made up from general funds and other government revenues.

"An immediate 122 percent increase in the payroll tax or an immediate 51 percent reduction in program outlays or some combination of the two" would be necessary to balance the Medicare budget for the next 75 years, according to the trustees.

On top of that problem, "Congress would have to invest $6.5 trillion today in order to have enough money to pay all of Social Security's promised benefits between 2017 and 2082," according to David C. John, senior research fellow for retirement security and financial institutions at the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation. "This money would be in addition to what Social Security receives during those years from its payroll taxes."

The trustees' report said it would take a 14 percent increase in payroll tax revenues or an immediate reduction of 12 percent in benefits, or a combination of the two, to balance the Social Security budget over the next 75 years.

So what have the presidential candidates proposed to do about such pressing and menacing problems? The answer is nothing, really.

McCain: "We must reform the payment systems in Medicaid and Medicare to compensate providers for diagnosis, prevention and care coordination. Medicaid and Medicare should not pay for preventable medical errors or mismanagement."

And, oh yeah, "if we act today, we can lower health care costs for families through common-sense initiatives. Within a decade, health spending will comprise 20 percent of our economy. This is taking an increasing toll on America's families and small businesses." So he "will look to bring greater competition to our drug markets through safe re-importation of drugs and faster introduction of generic drugs."

For a Social Security fix, McCain favors options to let individuals invest up to 20 percent of their Social Security payroll tax in private savings accounts and the government to invest back into the fund 62 percent of the current annual surplus in the Social Security trust fund, which the trustees say will decline steadily beginning in 2011 and will dissipate somewhere between 2018 and 2028, depending on whether or not you count interest income.

Obama: Insists he has "voted to preserve and strengthen (Medicare and Medicaid) at every opportunity." He co-sponsored the Medicare Informed Choice Act, which did not pass, that would have extended the time a senior could enroll in Medicare programs without penalty and allowed a one-time change in the myriad prescription drug plans.

He opposes raising the retirement age for Social Security and is against private retirement accounts. He supports increasing the maximum amount of earnings, now $102,000, on which the Social Security tax is levied as a way to lessen the threat of insolvency for the Social Security Trust Fund.

I don't see any indication that either candidate has given any serious thought to what are two of the major issues facing our nation: Will there be any Medicare at all by the end of the first term of the next president? Will those entering retirement now outlive the Social Security program?

If you have questions about any issues connected with aging, except medical conditions, please write to Life to the Fullest, Hernando Today, at 13299 Cortez Blvd., Brooksville, Fla., 34613, or send e-mail to adontaft@yahoo.com. Please include your name and address.

Adon Taft is a resident of Brooksville.

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