When Medicare was first enacted in 1965, men had an average life expectancy of almost 70 years. So the average guy received Medicare benefits for 5 years.
Now the average male lives to be about 75, and the average guy receives benefits for twice as long.
In January of last year, the first babyboomers started retiring. This massive wave of retirees will start receiving Medicare benefits, and be spending so much that Medicare trustees predict funds will run out in 2019.
At the same time, we are spending like crazy, and government debt is skyrocketing. Total U.S. debt is now 60.8% of our gross domestic product, and expected to rise to 79% of GDPP by 2035.
The interest that the Federal government pays is expected to rise from $170 billion/year to $806 billion/year by 2019.
And here we are considering healthcare reform legislation which increases costs, according to the CBO. Given the likelihood that current proposals will ultimately cost way more than currently forecasted, we could be facing overwhelming government debt before we know it.
If something passes without fundamentally addressing rising costs, there will only be one way for the government to deal with the situation: price controls and rationing. Which means a system that delays coverage, has long waits to see doctors, cuts spending on leading edge technology, and denies treatment for many conditions.
This is a real, potentially very serious issue for all of us who may be retiring in the next 10 to 25 years. Which is why it makes imminent sense to be putting as much money as possible into a Health Savings Account. Having a funded HSA will give you an option one day if your Medicare program refuses to pay for treatment you need.
By the way, you must have your HSA-qualified plan effective by December 1 to make a tax-deductible contribution for 2009.