Known as “A Pillar of American Retirement,” Medicare has been helping seniors 65 years of age and older and disabled workers fund their medical expenses when they are no longer a part of the everyday workforce. This contributory healthcare program has been, since its conception in 1965, a way to express our gratitude to all who dedicated a good portion of their lives to making America a better place. However, due to a combination of today’s aging population and a declining number of workers willing to put some of their payroll taxes towards supporting Medicare beneficiaries, Medicare is swiftly running out of funding.
Many people have heard about the problems that social security is facing, but not too many are aware that Medicare is facing not only the same funding dilemma, but they are facing one of a much greater magnitude. In fact, Medicare’s funding hole is estimated to be four times larger than social security’s! How big is that, you ask? $29 trillion big—an amount so great that it is often cited as a percentage of the country’s gross domestic product. And, according to experts, it doesn’t look like that amount is going to go down anytime soon; if anything, with an estimated 18 million baby boomers joining the Medicare ranks within the next 10 years, it looks as if that number will only grow.
The U.S. Department of Health and Human Services expects Medicare expenditures to rise from 2.7 percent GDP today to 9.6 percent in 2050, and for it to reach 13.9 percent in 2080! And those numbers don’t include Medicare’s brother, Medicaid. Expenditures of that magnitude today would represent more than half of our country’s entire federal budget!
So, how does this affect you? Though you may believe you are in the clear, and that your children will be more affected by this dilemma than you will, the fact of the matter is that if we don’t get this problem under control soon, you can count on your healthcare expenses to take a colossal bite out of your savings. This is because as Medicare continues to take up a larger and larger percentage of the federal budget, there will only be certain options available:
1) Benefits will be cut. This could mean reductions in how much Medicare will cover, what particular procedures or medications it will cover and who will qualify for certain procedures (for instance, smokers or obese patients might be denied certain procedures because of lower success rates in those patients).
2) Costs will go up. This could look like: increased taxes, increased premiums for Medicare, and even higher premiums on higher-income recipients.
As you age, chances are that you will incur greater healthcare and medical costs, and the price of that treatment isn’t going to be cheap—it’s only going to grow more expensive. However, there are ways to ensure that your medical expenses are covered, outside of Medicare, and that is through supplemental insurance.
At MediGap Advisors, we don’t believe that healthcare should cost you an arm and a leg, and we don’t think that just because our country’s healthcare system is in a state of crisis, you should be too. We do everything we can to help you compare plans and rates so you can find the best Medicare supplemental coverage for your needs, at a price that doesn’t break the bank. To see what we offer and how we can make the whole process easier for you, visit us at our website.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.