Ebenezer Scrooge lived a difficult life. Abandoned at Christmas at his boarding college, Scrooge discovered to reside for himself.

This strategy to life led to terrific economic good results. But Scrooge was reviled and had no pals. And the future, properly, the future was even darker.

We know all of this for the reason that one particular Christmas Eve Scrooge was visited by 3 specters. A single his previous, one particular his present and the final his future.

What scared him the most was his future. So, he asked the ghostly specter, was this future set in stone, or could it be changed?

Our nation’s future appears burdened by the increasing fees of entitlements. Social Safety, Medicare, and Medicaid will want to be funded by a shrinking base of workers.

Sign up for our no cost weekday Business enterprise newsletter

So, we ask, is this future set in stone, or can it be changed? There are quite a few policy wonks sounding the alarm on entitlements. There have also been some politicians.

I say “have been,” as in the previous tense, for the reason that correct now these politicians are operating from their previous words.

In his State of the Union address, President Biden mentioned some Republicans wanted to reduce Social Safety and Medicare. This was promptly met with a shout of “liar” and different attempts to appear shocked and disgusted.

This show suggests that Social Safety appears to be the third rail of politics. And however, with no transform, the specters have shown us what the future appears like.

President Biden himself has recommended one particular transform. Wage earners spend six.two% of their incomes to social safety and 1.45% to Medicare. Their employers do the very same.

Self-employed people today spend 12.four% and two.9% of their earnings for the very same bring about. Each sorts of earners do not want to spend the six.two% or 12.four% above an earnings limit.

The president has recommended eliminating the earnings limit. He crossed his heart and hoped to die if he raised taxes on these earnings much less than $400,000, so this added tax would apply only when earnings exceed $400,000.

This creates a “donut hole.” The tax ends at a specific level of earnings, and then returns at $400,000. “Hole” earnings are exempt.

But this would nonetheless be a six.two% or 12.four% tax boost for higher earners. That may perhaps be a second third rail.

Other individuals have recommended raising the eligibility age for Medicare, and the “full” retirement age for Social Safety. Right after all, they say, people today are living longer.

Turns out that not too long ago, Americans have not been living longer. And the Medicare get started age may perhaps be increasingly crucial offered challenges to acquiring economical wellness care.

But we will have to do a thing! A single strategy that gets surprisingly tiny focus outdoors of believe tanks is bending the curve on wellness care fees.

Politicians like to inform us that the United States has the greatest wellness care program in the planet. The truth is that it does not. Americans get reduce excellent heath care at greater fees than the rest of the created planet.

Projections of a bankrupt Medicare and Medicaid assume no transform in the future development of fees. Altering this assumption is a prospective game changer.

There is a thing referred to as the rule of 72. By dividing 72 by a development price, one particular can ballpark how extended it requires for a thing to double in worth.

If wellness care price grows at eight% per year, it doubles in 9 years (72/9). That indicates quadruple in 18 years and development to 16 instances in 36 years.

At development of six% per year it will double in 12 years and develop by eight instances in 36 years. A development of four% will double in 18 years and quadruple in 36 years.

So if we project wellness care entitlement fees out 36 years, the development in price can variety from 4 instances present fees to 16 instances just by altering the annual development assumption from four% to eight%.

What can America do to halve the annual boost in wellness care fees? The capability to answer this query may perhaps be the distinction amongst a solvent Medicare and a Scroogian disaster.

The greatest beneficiary of Scrooge’s changed heart was not Scrooge himself, it was Tiny Tim. Probably some inventive options to our future wellness care fees can save quite a few much more.

Jim Hamill is the director of Tax Practice at Reynolds, Hix &amp Co. in Albuquerque. He can be reached at jimhamill@rhcocpa.com.