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Talk about arithmetic problems!

September 11, 2012

Medicare has a problem.  The President and other prominent Democrats have lambasted Republicans for what they claim is “ending Medicare as we know it.”

Here’s a chart from a post on an interesting blog, Coyote Blog (click on chart for bigger view).

Do you really have to be good at math to understand that paying $351,000 in benefits when you take in an average of $116,500 in premiums means you’re losing $234,500 on the average Medicare beneficiary?  According to AARP (and they should know)

In 2011, the first of the baby boom generation will reach what used to be known as retirement age. And for the next 18 years, boomers will be turning 65 at a rate of about 8,000 a day.

So if you’re good at math, that means that Medicare is adding almost $1.88 billion a day in future losses.  That’s $13 billion a week or at little under $700 billion a year.  The federal government took in a total of $530 billion in premiums for Parts A, B and D in 2011.  If the future losses grow at $700 billion a year in a program that only takes in $530 billion in premiums, won’t Medicare soon collapse anyway?  After all, the US takes in just over $1,000 billion from income taxes and Medicare will wipe that out by itself soon enough.

So who’s kidding who.  Saving Medicare means dealing with the astonishing gap between benefits we’ve agreed to pay and the premiums we’re actually collecting.

This isn’t insurance, it’s a huge transfer from the young and the healthy to the old and the sick.

Follow the link for the full post.

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