Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
Rather, it is the (present value) $40 trillion health care deficit over the next 75 years.

Thanks Hewitt...

Can you clarify that comment? Not that I question it, but I'd just like to clarify what constitutes that $40 trillion number and what the source is.

I know the unfunded liabilities in the social security and medicare program are going to knee cap us (medicare being the fat end of that club). Total unfunded liability and general revenue requirement to make up for the shortfall work out to a present value of $100.8 trillion (see calculation and sources below). With the total Federal tax revenue in 2006 sitting at $2.4 trillion^ and GDP just over $13 trillion, the magnitude of $100 trillion liability is almost absurd. I think there are (ballpark) 110 million households in the US? Each one is on the hook for $916,000 to fund these? The numbers look to work out to an additional tax in the ballpark of 18.1% of income on top of existing taxes to cover the shortfall. No matter what scary statistic you use, this is ugly. I'll avoid the rant these numbers naturally lead to. Particularly the part where the new part D program was introduced with only a mention of its cost during its first 10 years, and yet it suffers from a larger shortfall than the much ballyhooed unfunded social security liability that still hasn't been addressed. (Wait... did I avoid my rant? Sort of. :) )

Anyway, glad you guys brought it up and forced me to update my numbers for the biggest cudgel in my quiver when discussing (lack of) fiscal restraint. It's a heck of headwind in any case.

kevin

- Social Security* - unfunded liability (net of current trust fund): $15.2 trillion (1.1% of GDP, 3.2% of taxable payroll)
- Medicare part A (hospital insurance)** - unfunded liability: $34.4 trillion (2.6% of GDP, 6.1% of HI taxable payroll)
- Medicare part B (doctors visits)*** - required general revenue contribution to cover premium shortfall: $34 trillion (2.6% of GDP, (est) 6.1% of HI taxable payroll)
- Medicare part D (drug benefits)**** - required general revenue contribution to cover premium shortfall: $17.2 trillion (1.3% of GDP, (est) 3.1% of HI taxable payroll)
-------------------------------------------------------------------------------------------------------------
TOTAL: $100.8 Trillion

* source - 2008 trustees report, table IV.B7
http://www.ssa.gov/OACT/TR/TR08/IV_LRest.html#254423

** source - 2008 trustees annual report, table III.B11
http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2008.pdf

*** source - 2008 trustees annual report, table III.C15
http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2008.pdf

**** source - 2008 trustees annual report, table III.C23
http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2008.pdf

^ source - random CBO memo, because I didn't feel like looking around that long
http://www.cbo.gov/doc.cfm?index=8116&type=0
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.