Tuesday, May 10, 2011

How to Fix Farewell Ranch

Many people see Medicaid as a program for low-income single mothers and their children.

But in fact most Medicaid spending goes to care of the elderly and disabled, not to single moms and their kids. More than eight million people over age 65 rely on the program, typically people in nursing homes or those getting long-term care from a visiting nurse.

Oddly enough, Medicare, which is supposed to take care of those over age 65, does not cover most long-term care, such as in a nursing home or assisted living facility. But Medicaid does cover such care.

Although they may not have thought about it when they were 40, many older people — without their adult children living nearby — will end up in such facilities. Grogan said people over age 65 "don't know how important Medicaid is until they need long-term services."

She added, "If you look at the elderly who end up relying on Medicaid, a lot of them were middle-class people their entire lives and they have children who are solidly in the middle class."

Long-term care is so expensive that "people spend down their resources and do estate planning" — thus shielding some of their assets — so that they can qualify for Medicaid, she explained. "There's absolutely no way a middle-class family can save adequately for the expenditures that are needed if you have a parent who needs that type of care."

Robert Saldin, a health policy expert at Harvard University, said Medicaid "is widely misunderstood and thought of as merely a program for the poor. In reality — and for better or worse — Medicaid has become a broad-based program with two-thirds of its spending going to the elderly and disabled. Many of the elderly on Medicaid spent their lives in the middle-class before they had to pay for a nursing home. But Medicaid's reputation hasn't caught up with this reality."

Now, with social security systems bankrupting the US and facing bankruptcy themselves in other industrialized countries, what can be done to fix this mess?

(1) No, Virginian, you can't retire.

Any social security system of the future can be nothing more than disability insurance. If you're able-bodied with two less than totally arthritic hands, and haven't made and saved enough money to support decades of idleness, you'll have to work past 65, 75, and 100.

Social security may have worked in a society where people worked from, say, age sixteen to age 65 and were worm food by 70. But you can't expect to retire at age 65 if you only finish college at, say, age 25, but live to be 80 or older. How do you expect to make enough money in forty years to live another twenty years with the same standard of living without working?

(2) Your social security check just bounced.

A dude accosts you on the street, "Hi. I'm a victim of Bernie Madoff. Give me my money back or I'll murder you."

Good idea?

The point is that those who paid into social security can only get their money back if it is robbed at gunpoint from others.

The criminal government is bankrupt, and no one has any right to get any more back from the government than what they can get out of the auctioning off of the government's assets.

(3) Your grandpa is your responsibility.

In 2007, the top 5% of income earners paid over half of the Federal income tax revenue. However, as of 2004, the top 5% hold 59.2% of wealth. The top 1% of income earners paid 25% of the total income tax revenue. Again however, the top 1% hold 23.5% of wealth. According to a conservative media group, it was "predicted" by an unnamed source that forty seven percent of Americans would pay no federal income tax in 2009 (though they still pay federal payroll taxes). Note, though, that this percentage does include some people without job income (e.g. children, retirees) along with the low-income workers to whom this applies.

So the rich pay the lion's share of taxes, and care for the elderly is the budget buster. Basically, we're all palming off our parents on Bill Gates and company.

But we can't go on doing that. It's just not sustainable demographically.

People live longer and have fewer children, so fewer young people will have to look after more old ones. It's doubtful that the wealth of the Bill Gates will increase fast enough to keep up with that.

Plus, if you raise taxes on them to pay for social security, it's bad for the economy and wealth creation. For every fool like Gates that works and pays taxes and lets you bully him into donating his taxed money to charity, too, there's one who goes Galt.

So people will have to look after their own parents, when there are children and they have the means to do the looking. Let's face it, our parents paid for us for eighteen years, so in their old age, it's time to give back. (One instance where the old bromide "to give back" actually makes sense.)

Anyway, you should be glad even if you're eighty, can't afford to retire, and don't have any children to look after you. Would you rather go back a century or two, when you would have been expected to raise twenty kids (most of whom would have died on you in infancy), would have toiled at backbreaking labor for fifty-five years, and then would have kicked the bucket at age sixty?

No? Well, I didn't think so.

And don't pull the "not kind to the elderly" card on me, or Ryan, or anyone trying to fix this mess. Social security systems and states are not quite bankrupt yet, in the sense that lenders are still willing to advance them money.

There's no majority to get rid of those systems before they are utterly bankrupt or the government is overthrown in Revolution 2.0. So today's elderly will not have to face the music in their lifetime.

It's the young that will have to live with the consequences of this mess, paying social security taxes and getting nothing back. So if I'm insensitive, I'm insensitive to my sort. It's the old people that are insensitive by not thinking of future generations.

Farewell Ranch. The only way to ride into the sunset.

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