Tuesday, May 31, 2011

Rethinking Social Security and Health Care for the elderly in light of the falling home values across the federation

Keywords or Terms: Elderly; Property and home values; Recessionary Economy; Paul Ryan's Plan; New York District of Buffallo;

For the elderly, the announcement that home values have fallen for the eighth straight month in a row, may just be too much. With many of the retired elderly having their purported wealth tied up in their assessed home value, nothing is more daunting than the current news. About two years ago, the Center for Economic and Policy Research, a Washington advocacy group, projected the average net worth of the bottom 20 percent household headed by the elderly in the age group, 55 to 64 years, fell from $8,300 in 2004 to between $1,200 and a negative $2,600. Many in this group, who have most of their assessed net worth tied up in their home value, would consider the downward trending assessment of home values, more than bad news.

The majority of Americans in the age group of 55 to 64 years and probably over, who have thought of themselves as somewhat financially secured, may be taking a two at the current missive. Considering assessed value of one's property, and a fixed social security income as net wealth is probably dismissive with the current trend of falling property value; not to talk of energy induced inflation pricing at the retail market. If anything, many Americans in the age group 55 to 64 years are wondering, where do we go from here? In a recessionary economy, the elderly on fixed income have suffered so much that you imagine if the system have not failed them this time around. The 2010 enactment of the Patient Protection and Affordable Care Act probably ameliorated the pain of health care inflation and probably stabilized government spending on Medicare and Medicaid. And if Republicans fail to clarify their stance on Representative Paul Ryan’s proposal on Medicare pretty soon, the series of compounding problems of declining home values, out of whack fixed income relative to inflation, will continue to exponentially grow the problems for the elderly.

The blog today takes us in a direction unfamiliar to so many, including those approaching the age of 55 and probably retirement: it wants everyone to rethink social security and health care and why both of these are crucial and important factors in the survival of the elderly. Ryan’s plan to turn Medicare to voucher system, is probably an acknowledgement of the failure of deep thinking; and, this is probably why many in the opposite aisle of congress, find it unpopular. Much as some Democrats are willing to subscribe to all or some cost-saving initiatives as recommended in the 2010 Patient Protection and Affordable Care Act, all of them question Ryan’s proposal to turn Medicare to a voucher system. The uniqueness of Ryan's proposal makes many wonder, if this is not actually a gimmick to privatize Medicare in the long run. The public policy rationale for his plan is remote from a functional financial efficiency to save solvency of Medicare; and this is why, the proposal is a NO GO!

The resentment for Ryan’s plan in the left is only matched by the wrangling within the Republican Party regarding whether to completely embrace the Ryan’s plan or to jettison parts of it. A few Republicans, who have embraced the Ryan’s plan in totality, are questioning themselves after hearing the result of election in New York District of Buffalo last week. Kathy Hochul, a little known Democrat, won the district after making Republican Representative Paul Ryan’s House-approved plan to convert Medicare Care to a voucher system as an albatross on the neck of her opponent for the congressional office. Going by the result of the election, not only is Paul Ryan’s plan a difficult pill to swallow, it is probably the first step to a downfall of any politician that subscribes to it.

Besides falling house values, fixed social security income and the rising energy costs, many in the age group, 55 to 64, consider Ryan’s plan an affront to their welfare and one of them was candid enough to say so. A GOP Presidential aspirant once indicated that the Ryan’s plan is a radical social engineering. Although Newt Gingrich later retracted this assessment of Ryan’s plan out of political expediency for the right to nomination as flag bearer for the GOP in the coming Presidential election, the candidate's assessment gives the elderly an unprecedented argument over what is true and proper in the way many Americans, not only the elderly, must perceive Ryan’s voucher's proposal for Medicare. Generally, a proposal may be offered to correct for mistakes in a program; however, when the proposal is a misrepresentation of material fact, one cannot but ask the honesty behind the proposal.

The elderly public understands the true meaning of Ryan’s plan for them. They know it is a way to dip into their pockets. They know that, in a situation where their Medicare vouchers cannot meet their medical bills, they will have to deep into their fixed meager income to be able to meet all their medical costs. They know that in an economy, where health care inflation is outpacing general inflation, it is nothing more than cruel to railroad Medicare into a voucher system. They know that Ryan’s proposal is not going to protect the quality of care they now receive under Medicare and as envisaged in the 2010 Patient Protection and Affordable Care Act. Worse more, the declining property value over the federation, would not only reduce the net worth of the elderly, it is probably a sure bet, that less money would be available to fill in the gap in the voucher system and health needs' cost of the elderly.

There is probably one realistic way to envisage the current problem of declining property and home values, vis-à-vis, the standard of living of the elderly; many of whom have conceived their net wealth and worth in the context of their property and home values, it is absolutely daunting. Many in the age group, 55 to 64, and many in retirement who are above this age group, must now be contemplating that the longer the economy remains in recession, the more the likelihood, they will have to get back to work, if they are going to maintain a reasonable standard of living or survive. For this group of Americans, the falling property and house values threaten their basic access to the essentials of living. And, if Ryan’s Plan succeeds in congress, then the mandatory cost sharing in a Voucher system for the elderly is more likely to cut deeper into the limited income of those who can barely afford to sustain themselves in their golden years.

Digging deeper into the folly of using property values as part of one's net worth is exemplified by the direct impact of the failure of the housing market for one's net worth. It was reported in New York Times that, Standard and Poor Index of property value fell 3.6 percent from March 2010 to March 2011, the largest year-over year decline since November 2009. If the gains in property values continues to erode as speculated, because of weaker demand for the glut of secondary homes in the market, the worse should probably be expected, not only for employment and uncertainty in the house building industry, but also for the elderly, who have often depended on their property value as a measure of their net worth and or wealth. The elderly who are in retirement or contemplating quiting their jobs to take a breather, had better forget that luxury, they will now have to work, if they have to survive the treachery of uncertainty in the housing market, and probably the vouchered Medicare System. With analyst predicting that residential real estate are likely to remain depressed in the near future because of the additional challenge of global recession, and Republicans planning to railroad the elderly to a voucher system Medicare, the elderly had better fasten their belt, because they are in for a long ride!

Politicians, who depend on the elderly votes during national elections, would not only be in for a rude surprise if this scenario plays out, they may actually meet the huge hostilities from this strong block of voters. If a person's net worth is determined by variables he or she has little control over, they are probably going to default to those things they have complete control over, that is, their right to vote their interest. If the elderly have to rely solely on their social security income and assessed property value as measures of their net worth, it is probably essential that politicians seeking their votes, consider how much the change in property value due to slump in the housing market has affected the quality of life of this group of Americans. To canvass for vote on the pretext that a social security fixed income is enough to weather the storm of a slumping housing market, is like playing Russian Roulette with the lives of our senior citizens. The only thing anyone can hope for now, is a turn around in the housing market and property value to help many of the elderly weather the storm of a recessionary economy. Whether this will totally help improve the net worth of the elderly, is still a toss up! And now to the Republicans chasing the ghost with the Ryan's plan, a word of advice: Don't bite the finger that feeds you!

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