Under Obamacare which promised to make healthcare better for all Americans, you have seen mixed results. Twenty million Americans who did not have health coverage now do. At the same time, health care costs for millions more Americans have increased dramatically.
Have you considered how it has impacted Medicare though? It was supposed to create cost savings of hundreds of billions of dollars. This has been achieved to a point, but at what expense?
It has come at the cost of physician compensation. They are receiving lower co-pays from Medicare than before Obamacare became law. As a result, doctors across the country are simply “firing” their Medicare patients with the excuse that they no longer accept it.
Obamacare has broken the healthcare system so effectively that doctors are better off getting rid of their Medicare patients than taking care of them. Tragically, this is not the worst problem that Medicare has facing it.
Both Medicare and sister safety net program Social Security have been massively underfunded for decades. Today they are quickly burning the cash they had in trust (and loaned to other areas of the Federal Government in exchange for Treasury IOUs). Medicare is worse financially now, despite the cost savings.
The Congressional Budget Office has recently projected the Medicare program will be entirely insolvent no later than 2026! This is only a decade from now.
Unfortunately the news gets worse. Congress has recently begun working on its promised plan to repeal Obama’s much-touted Affordable Care Act. Assuming that the Republican-controlled Congress and Senate will successfully complete the job, President Trump has already promised to sign it, eliminating what cost savings the program had promised Medicare.
It means you will see the forecast insolvency date move up to 2021. The government has a choice of two evils. Either they can maintain the laws and programs that are not working so that Medicare hangs on until 2026, or they enact something that works better, and Medicare will fail financially by 2021.
Whichever they choose, Medicare is done for without a dramatic bailout. This would cost you the taxpayer trillions of dollars to appropriately fund Medicare. The government already has amassed over $20 trillion in debt and loses hundreds of billions per year. If it were a corporation, it would have already failed.
They might “borrow” money from Social Security to plug the holes. The problem is that this program is also nearing insolvency. When it was established in the 1960s, almost 6.5 workers supported each recipient by working and paying into the system.
Nowadays the workers versus these details beneficiaries critical ratio has declined by almost half. There are not enough people working to support the system which takes care of an every increasing number of retired people.
Taking money from Social Security to salvage Medicare a little longer would only move up the insolvency date of Social Security. Sadly, both safety net programs are doomed. Even the annual reports of the trustees with a vested interest in hiding the truth admit they are hopelessly underfunded.
Is Your Portfolio Ready For the Shocks Caused By Medicare and Social Security Insolvency?
The failure of first medicare and later social security will create massive problems for the country’s millions of retirees. Expect the government to knock more holes in the sinking ship of state by borrowing to keep them going for as long as they can.
Either result will have negative consequences for the markets and your standard asset class portfolio of stocks, bonds, and mutual funds. The good news is there is an asset class that shines brightest in financial chaos.
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