Wither Work

Germany, after passing legislation in 2007 that would have increased the retirement age from 65 to 67, is now on a course to lower the retirement age from 65 to 63.

Life expectancy has increased in most developed countries by more than ten years from 1960 to 2011, from slightly below 70 years to over 80 years. New developments in health care technology and knowledge are projected to further increase life expectancy in the US to as high as 86 by 2050, with those reaching age 65 in 2050 perhaps living on average to be 90. For reference, the life expectancy for someone born in the US in 1930 averaged about 60 years.

We may argue about the rate of growth in life expectancy but it would seem foolish to make public policy that seems to explicitly presume a decline in life expectancy. (Hello Germany? Are you there?)

Let’s see what happens based on an average static life expectancy of 85 years. We develop to become productive citizens the first 20 years, we work for the next 45 years to age 65, then retire and live to 85. Each of us, on average, must earn and save enough wealth to both pay for the development of our own children for 20 years and then pay for our expenses in retirement for 20 years, or we as a country will go broke. When you borrow money from future generations to pay these costs you delay the time frame within which you may go broke but you increase the probability you will in fact go broke because you have to generate the income and wealth to pay back the loans with interest as well as pay the costs of developing the young and supporting the old (not to mention the costs of supporting the poor, the unemployed, the hungry, the oppressed masses, etc., etc.). An average of 45 years of work and 40 years of assured dependency can’t work financially in perpetuity.

The preceding example analysis omits a further negative impact resulting from public employee union contracts that provide for retirement benefits including lifetime healthcare after only 20 to 30 years of service (see New Jersey as the poster child).

The point is that devaluing work by reducing the legal retirement age makes no sense given actuarial reality. Such policy destroys value. The opposite policy creates value and we in the US should be implementing policies that encourage work throughout adult life.

Both morally and financially we need policy that rewards work, especially work that defers or avoids socialized costs related to retirement health care and living expenses.Toward this end we should be raising the age to qualify for social security and medicare as a function of increasing life expectancy while providing incentives for employment for those above the qualifying age. Such incentives for continued employment may include a reduction in earned income (W-2 income) tax rates with age beginning at the age of social security qualification. The more people pay their own way through work in their older years the greater the financial incentive they should receive to work even longer.

To create a retirement system that is sustainable across generations we need to restructure virtually all government subsidy programs and priorities to value rather than devalue work while removing the expectation that some anonymous someone else will subsidize our later years of life.

Regards, Pete Weldon
americanstance.org

Stereotypical Disrespect

How do we get past stereotypes in our political discourse and responsibly face the real issues? New York Governor Andrew Cuomo is now the poster child for promoting stereotypes to support the imposition of liberal/progressive priorities in law.

Here is the full context of what Andrew Cuomo said during a recent radio interview:

“I think what you’re seeing is, you have a schism within the Republican Party. The Republican Party is searching for an identity. They’re searching to define their soul. That’s what’s going on. Is the Republican Party in this state a moderate party or is it an extreme conservative party? That’s what they’re trying to figure out. And it’s very interesting because it’s a mirror of what is going on in Washington, right?

“The gridlock in Washington is less about Democrats and Republicans. It’s more about extreme Republicans versus moderate Republicans. And the moderate Republicans in Washington can’t figure out how to deal with the extreme Republicans. And the moderate Republicans are afraid of the extreme conservative Republicans in Washington, in my opinion.

“You’re seeing that play out in New York. There’s SAFE-ACT. The Republican Party candidates are running against the SAFE-ACT. It was voted for by moderate Republicans who run the Senate. Their problem is not me and the Democrats, their problem is themselves. Who are they? Are they these extreme conservatives who are “right to life,” “pro assault weapon” “anti-gay”? Is that who they are? Because if that’s who they are, and if they are the extreme conservatives, they have no place in the state of New York because that’s not who New Yorkers are. If they’re moderate Republicans, like in the Senate right now, who control the Senate — moderate Republicans have a place in this state.”

Let’s parse the nonsense. Mr. Cuomo characterizes “extreme conservatives” as those who are “right to life,” “pro assault weapon,” and “anti-gay” and further notes that such people (according to his definition) “have no place in the state of New York.” It is uncertain whether he considers people “extreme conservatives” if they satisfy one, two, or all three of his criteria.

The only one of his three stereotypes that holds water is “right to life.” Yes, Mr. Cuomo, there are millions of American’s (and possibly even New Yorkers:) who believe a fetus has a right to live, and I am sorry that you disagree. It would seem, then, only people who believe a female has a legal right to choose to end the life of her unborn fetus have a “place” in the politics of the state of New York.

Using the phrase “pro assault weapon” undermines the credibility and seeks to diminish the worth of those who believe the right to bear arms to be a core American value prioritizing and protecting the freedom of the individual from state power. Why don’t those who see insufficient evidence to conclude that banning certain weapons serves any purpose other than to unreasonably limit the right to bear arms deserve a “place” at the political table in New York, Mr. Cuomo?

Using the phrase “anti-gay” undermines the credibility and seeks to diminish the worth of those who believe that marriage between a man and a woman creates and sustains the family bonds and parenting union necessary to develop secure, independent, and strong individuals capable of assuming responsibility for their own lives and to willingly undertake perhaps the only true value of life, that being to have and raise children. According to Mr. Cuomo, then, only people who want to diminish the value of marriage between a man and a women and by implication diminish the family have a “place” at the political table in New York.

Mr. Cuomo’s comments promote divisiveness and disrespect that are the real cause of the political conflicts he helps to perpetuate as a liberal/progressive Democrat. Mr. Cuomo needs to stand in front of a full length mirror and look closely at himself, his state, and his party; as should those who gleefully embrace his stereotypes.

Regards, Pete Weldon
americanstance.org

Obamacare as Symptom

I am coming up on a choice to sign up for Medicare. I am healthy with no preexisting conditions requiring ongoing care and I don’t need ongoing drug prescriptions.

I have four choices for healthcare insurance and annual cost exposure in 2014 as follows:

Private Policy: If healthy $4,000 – If sick $17,000. (This choice goes away for 2015.)
Obamacare Policy: If healthy $7,800 – If sick $14,150.
Medicare & Supplement: If healthy $3,260 – If sick $3,260.
Medicare & Advantage Plan: If healthy $1,400 – If sick $6,700.

I am not an actuary but Medicare is like Santa Claus coming to town every day of the year. Not only is it the least expensive choice by far but Medicare with a Supplement policy offers universal access while the other choices have severely limited networks. Looking at the comparative numbers above a guess is that my Medicare coverage will be subsidized by other taxpayers to the tune of at least $7,500 a year.

Heck, even a typical obamacare subsidy recipient at my age making $30,000 in taxable income would pay $2,500 in premium with a $6,350 out of pocket max for a 2014 obamacare policy.

Ah, but you say I paid into Medicare my entire working life! Correct, but that money is almost gone. The Medicare Trust Fund for Part A Hospitalization will be broke in little more than 10 years and over 70% of Part B and Part D funding comes from current general and payroll tax revenues (not from premium payments made by those enrolled).

Obamacare is bad news but the real problem is much bigger. Most of the 155 million working Americans (“working” people) have employer based coverage for their family’s health insurance (covering a total of 170 million people) AND are paying most healthcare expenses for the other 140 million other Americans; roughly 66 million receiving $430 billion in Federal Medicaid support (“poor” people), 50 million receiving over $500 billion in Medicare support (“old” people), plus billions of dollars more available for Medicaid expansion and premium support under Obamacare (“uninsured” people constituting about 25 million people).

The real problem with Obamacare is that it adds to rather than resolves the actuarial problem of healthcare funding across generations and income groups as time goes by.

Mr. Obama and his progressive friends think this funding stress is a great thing because it sets up universal entitlement to healthcare and then forces somebody to pay for it, presuming “the rich” will be “justly” soaked in the political process as a majority receiving subsidies vote to sustain their subsidies. This is just petty political manipulation that fails to address the real problem.

The real problem is that we have protected political constituents and politicians, both more interested in protecting their subsidies and their power than in solving the problem of funding reasonable healthcare across generations and income groups.

When I sign up for Medicare I become a political constituent with a vested financial interest in protecting my subsidy. Should I do it? Should my children pay to subsidize my healthcare with no assurance there will be any money left to pay for their healthcare in retirement? Is this a responsible way to run a country?

Can you help me with my questions?

Regards, Pete Weldon
americanstance.org

Golfer Protection and Affordable Golf Club Act

Here is my edited version of an email I recently received.

The Obama administration has just passed a new law titled: “Golfer Protection and Affordable Golf Club Act” declaring that every citizen MUST purchase a new set of golf clubs by April 2014.

These affordable golf clubs will cost $3,000 per set per year for a single person. This cost does not include taxes, pull cart, electric cart fees, green fees, golf lessons, membership fees, balls, tees, gloves, range finders, and storage fees, maintenance, or repair costs which are in any event limited to an additional $6,350 per year out of pocket max per person, after which the company selling you the golf clubs is required to pay 100% of such costs. The government will subsidize the cost of the set of golf clubs and subsidize the out of pocket maximum if your income is sufficiently low that the government deems you deserve to have higher income people subsidize your golf game (even if you never play).

You will be required to enroll on-line to purchase the required set of golf clubs where you will find a “marketplace” where you will purchase the mandated number of golf clubs designed and constructed according to government standards. Of course, since all the clubs meet identical standards and are required to be produced in the United States the cost (and thus the price) will not vary materially between manufacturers (although manufacturers are permitted by law to offer “Golf Club Plans” that include bags, balls, and other accoutrements at extra cost).

This law has been passed, because until now, typically only wealthy or financially responsible people have been able to purchase new golf clubs. This new law mandates that every American will now have golf clubs of their own, because everyone is “entitled” to new golf clubs.

To subsidize those who cannot “afford” to purchase the mandatory golf clubs, the costs of a set of golf clubs will increase on average 250%-400% above market rates that would otherwise apply. This way, people not deemed by the government as deserving of a subsidy will pay more for something that many other people don’t want but are now required to pay for. Those who refuse to purchase golf clubs will pay an annual tax (that descriptive word being required because of a related US Supreme Court ruling) averaging about $850 (2.5% of income capped at the average cost of a set of golf clubs). Children can use their parents’ golf clubs until they turn 27 but then must purchase their own golf clubs.

If you already have golf clubs, you can keep your golf clubs, period (just kidding; no you can’t). If you like your current golf instructor you can keep your current golf instructor, period (just kidding; no you can’t).

A government review board will decide everything, including; when, where, how often and for what purposes you can use your golf clubs along with how many people can ride in your golf cart and determine if one is too old or not healthy enough to be able to use their golf clubs. They will also tell your golf instructor what to say and what to do so that everyone is treated equally and learns exactly the same things about golf.

Government officials are exempt from this new law. If they want a new set of golf clubs, they and their families can obtain golf clubs free, at the expense of tax payers.

Unions and large companies are also exempt, and you, my hard working middle class friends, are screwed.

Regards, Pete Weldon
americanstance.org

Obamacare Façade Has Crumbled

Perhaps the most interesting result of the bungling of HealthCare.gov is the now transparent reveal that Obamacare is nothing more than an effort to put health care in the United States under complete government control regardless of social or financial cost.

According to US Census Bureau health insurance coverage statistics for 2012 almost 85% or 263.2 million of 311 million Americans already had health insurance coverage in 2012. Roughly 168 million were covered by private health insurance, 86 million by Medicare or Medicaid, and 9 million by other health programs, leaving approximately 48 million not having health coverage for some reason (including those voluntarily declining to purchase coverage).

Why do we need to put health insurance, reimbursement, and determination of care under centralized government control to meet the needs of 15% of our population? Only to satisfy the ideologues determined to socialize all health care (and everything else).

The HealthCare.gov disaster is the tip of the proverbial iceberg.

American’s who have never had coverage for financial reasons now have the option of paying a tax or purchasing possibly subsidized coverage with deductibles and annual out of pocket maximums most are unlikely to be able to afford.

When 85% of Americans see the coverages they don’t need that they are forced to pay for, when they find out their Doctors have not agreed to be part of the plan they can now afford, when they find out how much more they will be paying, when they find out the healthcare.gov “marketplace” is a shame, the game will be over.

Americans need to start working now to replace this disaster with a combination of free market reforms and direct assistance for those in need. The NCPA.org offers some detailed alternatives. Additional simple changes include selling health insurance across state lines and transparent pricing for health care services in advance of care.

Regards, Pete Weldon
americanstance.org