The Retiree Burden
Being an old man, I get nervous whenever anybody starts talking about pensions, health care, or anything like that. So when this morning's paper reported that G.M. had lost money, the sentence about health care being a heavy burden on the company caught my eye.
G.M. (General Motors for short) is an old company. Old companies have a lot of retirees. In fact, when an old company gets in trouble and downsizes, it can have more retirees than active employees on its payroll! (I'm afraid the company I get my pension and health care from has already reached that point.) That can make it hard for the company to compete with upstart companies that don't yet have many retirees. And that in turn can make it hard for the company to keep up with its pension and health care obligations.
Pensions are hard for a company to keep up with, because people are living longer than they used to. Look at people who retired 20 years ago, at the age of 65, when they weren't expected to live much past 70 or 75. Now here they are (many of them, anyway), thanks to the miracles of modern medicine, still collecting their pensions (at the company's expense) at the age of 85! Pensions depend on the same life expectancy tables as life insurance. But life insurance companies have it easier. When people live longer, they keep on paying premiums longer before they die and collect on their insurance, so the insurance company gains. Insurance companies also sell annuities, which are like prepaid pensions, and they lose money on those when people live longer, but at least they have a balance; the profits on life insurance make up for the losses on annuities. Companies like G.M. have only the losses. And just when they thought the profits on their stock market investments would help them pay out on their pension obligations, the stock market took a dive. And when they thought their profits on production and sales would help them, the economy stalled.
Health care burdens are even worse. Longevity is increasing gradually, but the cost of medical care is increasing by (as they say) leaps and bounds. Each new miracle of modern medicine costs more than the previous one. He who falls ill and is cured today, lives to fall ill and be cured another day. The costs keep mounting. The back strain that put me in the hospital for over a week, the bleeding ulcer I got from the Vioxx I was taking for arthritis, my coronary bypass, and so on and so forth, all these things add up, and it's mostly paid for by employee benefits.
Why is our government talking about an "ownership society"? Nobody wants to own these problems! The Constitution was written to (among other things) "promote the general welfare." These are problems the government should own. Laying them off on private individuals or private companies does nothing to "secure the blessings of liberty for [them] and [their] posterity."
G.M. (General Motors for short) is an old company. Old companies have a lot of retirees. In fact, when an old company gets in trouble and downsizes, it can have more retirees than active employees on its payroll! (I'm afraid the company I get my pension and health care from has already reached that point.) That can make it hard for the company to compete with upstart companies that don't yet have many retirees. And that in turn can make it hard for the company to keep up with its pension and health care obligations.
Pensions are hard for a company to keep up with, because people are living longer than they used to. Look at people who retired 20 years ago, at the age of 65, when they weren't expected to live much past 70 or 75. Now here they are (many of them, anyway), thanks to the miracles of modern medicine, still collecting their pensions (at the company's expense) at the age of 85! Pensions depend on the same life expectancy tables as life insurance. But life insurance companies have it easier. When people live longer, they keep on paying premiums longer before they die and collect on their insurance, so the insurance company gains. Insurance companies also sell annuities, which are like prepaid pensions, and they lose money on those when people live longer, but at least they have a balance; the profits on life insurance make up for the losses on annuities. Companies like G.M. have only the losses. And just when they thought the profits on their stock market investments would help them pay out on their pension obligations, the stock market took a dive. And when they thought their profits on production and sales would help them, the economy stalled.
Health care burdens are even worse. Longevity is increasing gradually, but the cost of medical care is increasing by (as they say) leaps and bounds. Each new miracle of modern medicine costs more than the previous one. He who falls ill and is cured today, lives to fall ill and be cured another day. The costs keep mounting. The back strain that put me in the hospital for over a week, the bleeding ulcer I got from the Vioxx I was taking for arthritis, my coronary bypass, and so on and so forth, all these things add up, and it's mostly paid for by employee benefits.
Why is our government talking about an "ownership society"? Nobody wants to own these problems! The Constitution was written to (among other things) "promote the general welfare." These are problems the government should own. Laying them off on private individuals or private companies does nothing to "secure the blessings of liberty for [them] and [their] posterity."
posted by GrumbleGrouch at 3:28 PM
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