Notes From the Fieldby Martin Weil

March 22, 2013

The Best Birthday Present, Ever

For my upcoming 65th birthday, the Federal Government will start “gifting” me several thousand dollars each year for the rest of my life.  Come April, I am eligible for Medicare, which in effect transfers a significant share of the cost of my healthcare to the Federal government.  I was walking on air when I got my little red, white and blue eligibility card.  This is hands-down the most valuable birthday present I have ever received.

Gone will be a $600 per month (and rising) premium for a high-deductible health insurance plan.  Gone also will be most of my out-of-pocket medical costs.  In place of expenses that typically have run between $8,000-$10,000, I will instead be out-of-pocket $3,000-$5,000 per year.  What to do with this four figure annual windfall is a pleasant dilemma.

As excited as I am at this “found” money – and I am, no kidding – there is this nagging problem. Someone is going to have to pay for the shortfall between the actual (e.g. market) costs of my coverage and what I will pay in Medicare premiums and share of cost.  Studies show this shortfall to average in excess of $100,000 per person over a current retiree’s lifetime. With 50 million Americans receiving Medicare today, rising to a projected 80 million over the next 20 years, it is not hard to understand why Medicare’s own projections show it facing an unfunded liability of $35 trillion.  How the government is going to pay this inconceivable amount over the next 20-30 years is a question that no one has yet been able to answer.

As they say, what cannot go on forever, won’t.  We are going to have to come to terms with the reality that that we either pay more in taxes to sustain current subsidies, find a politically acceptable way to significantly reduce costs and/or trim Medicare benefits. But while I wait for the political forces to figure this problem out, I am unhesitatingly seizing my opportunity to join the millions of American seniors already enjoying their Medicare “free ride,” courtesy of our Federal government.

NB:  The time to sign up for Medicare Parts A & B is the period three months before to three months after your 65th birthday.  You can do so quite easily here.

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