Not Obamacare - Oboomercare
We are going to need more Millennials

While I was neglecting my blogging duties last month, the Supreme Court ruled on the constitutionality of the Affordable Care Act aka “Obamacare”.

Unsurprisingly, reactions fell along conventional red/blue fault lines with the left cheering and the right jeering the decision. The reignited debate revolved around several topics: Did the majority get it right or wrong? Did Chief Justice John Roberts bravely rule on the constitutional merits of the law or did he hide behind the fig leaf of federal taxing authority? Did he show judicial activism or judicial restraintIs ObamaCare the biggest tax increase of all time or is it not? Will ObamaCare reduce the deficit or take the deficit to new heights?

As noted in the comments, at least one of these questions answers itself. If ObamaCare costs $1 trillion dollars to provide promised new benefits (it does), and it does not really control costs (it does not), and it really is deficit neutral or a deficit reduction (as the CBO asserts), then simple arithmetic tells us it must also raise $1 trillion dollars of new revenue (which the SCOTUS ruling informs us must be a tax for the legislation to be constitutional). And that pretty much does make it the biggest nominal dollar tax increase in our history.

My views of the original health care reform debate were well documented on this blog including posts here, here, here and here. More interesting to me now is the financial impact of Obamacare across the generational divide.

When candidate Obama announced his intention to run for president, I posted a tongue-in-cheek observation that Obama had declared generational war on the Boomers. As the campaign progressed it became clear that the Boomer bashing was an explicit campaign strategy. The reason was clear. Then and now Obama enjoyed broad support from the “Millennials”. Many credit the younger generation for his election in 2008.

While Obama understandably continues to push generational politics by pandering to the youth vote, ironically it is the Boomers who will primarily benefit from Obamacare at enormous cost to the Millennials that put Obama in office. Nick Gillespie on “The Real Class War”:

“One of the primary ways that President Obama (born 1961) is making the so-called Affordable Care Act affordable is by having you foot more than your share of the bill. 

Think it through for a moment, especially given that younger voters seem to really dig him. The younger you are, the less likely you are to need health care, much less insurance (there is a difference). The smart move for most generally healthy younger people is to take out a catastrophic coverage plan that would cover you in the event of a big accident. Thanks to Obamacare, you’ve got to get covered, either by your parents’ plan or otherwise. The predictable result is that plans for younger people are getting more expensive precisely at the moment they are required by law (finally, a case where correlation meets causation!). That all plans are going to have to conform to higher-than-before benefit schedules ain’t helping things either. Some colleges are dropping student plans as a result. 

And just wait until those price-capped government-run health-care exchanges finally get set up. By law, the exchanges can’t charge their oldest beneficiaries more than three times what they charge their youngest beneficiaries. That’s despite the actuarial reality that the older group costs insurers six times as much. So you’re helping balance the books there, too. Welcome to community rating, kids… 

You’re the mark here, the chump who’s believing in Bernie Madoff even after the grift has been revealed. There’s not going to be a bigger idiot to come along and keep the pyramid scheme alive. ”

And that is just ObamaCare. In a more expansive article in the current issue of Reason, Gillespie and De Rugy detail the full extent of this generational Ponzi scheme. Somebody has to pay, and the financial burden of paying the Boomer’s Social Security, Medicare, and the Prescription Drug Benefit are falling squarely on shoulders of the  Millennials. From “Generational Warfare”:

“Social Security and Medicare, which provide retirement and health insurance benefits for senior Americans, generally without regard to need, are funded by taxes on the relatively meager wages of younger Americans who will never enjoy anything close to the same benefits… 

Social Security and Medicare were created in a very different America as a response to very different circumstances. The old-age entitlements were designed to alleviate problems related to an economy still in transition from rural agriculture to urban manufacturing and post-industrial services. Private pensions and retirement savings were relative rarities, and the communitarian dream of multiple generations living under the same roof—invoked as an ideal by some of the very people, such as Joe Biden and Hillary Clinton, who champion old-age entitlements as a means of “independence” for seniors—was a routine necessity. That’s no longer the case in a country where most retirees are wealthier than the younger people paying for their benefits.”

ObamaCare is not the only Boomer entitlement burden borne by the Millennials. It is but one rock among many in the pack they will dragging up the fiscal hill. Let’s not call it Obamacare, let’s call it O-Boomer-care – the ginormous cumulative burden of the Boomer’s Social Security, Medicare, and Obamacare entitlement benefits that will be paid out over the next 30-40 years. Oboomercare is a back breaking financial load that will be crushing Millennials over their entire working life. The numbers never did add up. And Obamacare just made the pre-existing load a lot heavier.

This generational Ponzi scheme, like all Ponzi schemes, will work only as long as enough new suckers can be found to “invest” so that the older “investors” can cash out with their money.

The Greatest Generation kicked off the con with Social Security and added Medicare, but they understood the game. They made a lot of babies – the Boomers – so it is/was relatively easy for us to pay off their benefits. We Boomers expanded Social Security, Medicare and added prescription benefits, but we’ve barely made enough Gen-X babies to pay for it. Still, thanks to the Millennials, it looks like we may squeak through and get most of our payoff (well, at least us early Boomers).

The Milliennials can take credit for piling on the additional Obamacare benefits, as they are the ones that elected him. But they are just not making enough babies to have any hope of securing their own entitlements. The cold hard fact is that we Boomers will be extracting the remaining potential winnings from their paychecks for as long as they are working.

I think this generation needs a new name.  I submit for your consideration – Generation “Stung or perhaps The Dumbest Generation.

Like P.T. Barnum almost said…  “There’s a Millennial born every minute, and two Boomers to take ’em.”

X-posted from The Dividist Papers

Business Oboomercare and The Generational Sting