Aging

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Japan: Bigger deficit problems than the U.S.

November 22, 2010 in Economics - General, Public Policy | No comments

The cover of The Economist this week looked at America’s budget deficit.  According to their estimates, “America’s budget deficit in the fiscal year that ended on September 30th stood at $1.3 trillion; at 9% of GDP, the second-largest since the second world war.”  The short run cause of this deficit is the recent severe recession, the wars in Iraq and Afghanistan, and the stimulus spending.  In the long run, however, entitlements will further destabilize the country’s fiscal soundness.  Entitlements such as Social Security, Medicare and Medicaid “…will double the federal debt by 2027; and the number keeps on rising after then.”

Nevertheless, the prospects for Japan look even bleaker.  While the U.S. debt has exceeded 50% of GDP, Japan’s debt is near 200% of GDP.  Further, Japan is aging quickly; the median age in Japan is 44.6.  Although a long life expectancy is a good thing, it will be difficult to support so many older workers without a concurrent rise in the number of workers.  Since the birth rate in Japan is so low (2nd lowest in the world), fewer and fewer youth are entering the job market.  More immigration could help, but it is currently difficult for non-Japanese immigrants to gain citizenship even after working in Japan for many decades.

More from the Economist:

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The High Cost of Growing Older

March 16, 2010 in HC Statistics | No comments

In America, your health care expenses are taken care of when you get older…right?  We have Medicare after all…shouldn’t that pay for all my healthcare expenses?

Not according to a recent article from Yahoo! Finance.  Here are some of the health care costs retirees face:

  • Part B Premiums: For most people retiring in 2010, the Medicare Part B monthly premium is $110.50 per month.  Retirees who earn more than $85,000 annually ($170,000 for couples) pay higher premiums of up to $353.60 monthly.
  • Part D Premiums: These average about $30 per month.
  • Cost Sharing: Medicare enrollees pay a 20% coinsurance rate for physician and outpatient services.  Plus, there is no out of pocket maximum.  Hospital stays have a $1,100 deductible.  If the hospital stay is more than two months, beneficiaries must pay an additional $275 per day for days 61 through 90, $550 for days 91 to 150, and all costs after that.
  • Uncovered Expenses: These include items such as dental care, eyeglasses, and hearing aids.
  • Long Term Care: Medicare pays for a maximum of 100 days of nursing home care before retirees absorb the entire cost themselves. When nursing-home costs are included, the amount needed for a typical couple’s medical bills increases from $197,000 to $260,000 with a 5 percent risk of exceeding $570,000, according to Boston College estimates.  Only those dual-eligibles also covered by Medicaid will have their long-term care services covered for the most part.
  • Healthcare Inflation: Median out-of-pocket costs for the typical senior are expected to rise from about $2,600 in 2010 to $6,200 in 2040 in constant 2008 dollars, according to a recent Urban Institute report.

The morale of the story is either be rich (and have lots of money stashed away) or be poor (and have Medicaid take care of your long-term care expenses).

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