Thursday, August 13, 2009


A ponzi, or pyramid scheme is really very simple. You take investors money promising a payoff in the future, and pay the oldest investors off with revenues from the newer investors. Works well, as long as the new investors out number the older, existing investors. Unfortunately for Social Security and Medicare, the newer investors are starting to not outnumber the older investors, thanks to a generational "baby boomer" bubble which hit last year.
While it may be a bit of an over exaggeration to call these two government programs ponzi schemes, comparisons can certainly be drawn. Social Security has been saved due to the reduction of benefits, and an increase in the ages you can receive benefits......a clever twist to be sure; keep moving the target date in which your older investors can start to realize the benefits they were promised initially. Even with these changes, older investors will begin to outnumber newer investors in 2016, and if left alone, will go bankrupt in 2037.
Medicare is another story entirely, it kicks in when an investor reaches a certain age and officially retires from the workforce. Medicare has been paying out more than it is taking in already (starting last year), and experts say Medicare will go under in 2017. These estimates are drawn on the inevitable fact that the bubble of investors reaching retirement age is ever expanding through the baby boomer generation, and will statistically get worse over the course of the next decade. The only possible saviors to Medicare are three increase in workers delaying retirement and working into their seventies (which is happening), an increase in investor deaths before the age of 65 (which is not), or raising additional revenue through taxes (which may be inevitable to insure the programs solvency). A fourth almost unthinkable option is to withhold tests and health care services through the authorization process, thus saving money.
This year alone, medicare is covering over 45 million of our elderly and disabled citizens, and without this program it would be a health care crisis for them of staggering proportions. Clearly as more and more Americans, who have paid into this system in good faith begin to retire, we must take steps to insure they can reap the benefits of a program they have paid into every time they have drawn a pay check.
That being said, with these programs reaching insolvency relatively quickly, it must be asked why we are even considering a health care insurance system prior to tackling these hurdles. I have yet to hear this argument expressed in Congress (at least by any GOP leader...unfortunately a current oximoronic term), and should be voiced loud and clear amid the present low brow "Obama is Hitler" demonstrations at our town hall meetings.
President Obama has pledged to look into Social Security and Medicare as soon as we resolve our health care debate. I say we need to discuss the current programs before adding on another enormous program. I am all for a national health care system, but the timing is just not right. First things first.
And that is the world...."The World According to Kimba" Thanks, as always for reading.

1 comment:

Papa Giorgio, M.A.T.S. said...


Glad you are back in the swing of things. By the by, I am done writing my book. Am waiting for my co-author to pump out his two chapters. I am going back over my chapters as best I can -- I put out a clarion call to any and all who have the gumption to help edit typos and jumbled sentences. I have 6-chapters, even if someone volunteers to take one and make sure I am not a complete dunce would be great. Obviously this doesn't include you, however, if your wife is bored or you wish to recruit others, holler. I am done going back over two chapters for a final time and they are up for grabs. Have any friends of family email me: