Philadelphia Reflections

Medicare Modifications

Last Four Years of Life Contribution. Some very rough calculations suggest a 3.5% compounded interest return should turn a quarter of Medicare payments (which we already make) should equal the whole cost of Medicare in forty years (age 25-65). However, the last four years of life caper should also pay for half of Medicare cost with an investment of considerably less than a quarter of its cost, because so much of Medicare expenditure is terminal care. Thus reducing the cost of pre-paying ten years of Medicare cost by four years of revenue ought to reduce the residual cost of the other half of Medicare, presumably allowing a 1.75% compound interest rate to be sufficient, and probably more than sufficient.

Contingency Fund. Furthermore, the contingency fund of$ at birth has grown to $ at age 65, so it would take financial catastrophes of major proportions to upset the prediction that this re-arrangement of the payment stream should wipe out the Medicare deficit now covered by foreign borrowing, If unneeded, it can be used to fund the First Years of Life program, with surplus flowing into Social Security. Furthermore, the Medicare premiums now paid by beneficiaries would then be unnecessary. These might be considered contingent contributions to retirement.

Taken altogether, it still would not promise future beneficiaries a luxurious retirement, but it would considerably improve their outlook.

Originally published: Sunday, July 03, 2016; most-recently modified: Friday, May 24, 2019