Tuesday, November 09, 2010

Debt Per Taxpayer

The Debt Clock tells me the national debt per citizen is over $44,000. It is over $126,000,000 per taxpayer. Total debt per citizen is about four times that. It is $176,000. Current unfunded liabilities are over a million dollars per person.

Our savings are a scant $9,703 per citizen. This is barely twice the interest we pay on the debt which is about $4,600 per person.

A devaluation of the dollar and higher interest rates could easily throw our economy into a tail spin.

This sad situation is not the result of a moral default of the American people, but is a result of the stupid way we've structured our financial world.

In efforts to buy power, our political and business leaders structured our economic system so that we use pay-as-you go schemes supplemented by debt financing for necessities that should be financed through savings.

What I want to do with the Medical Savings and Loan is to take the massive premiums we are paying for pay-go insurance and place it into a structured savings program.

The current savings to debt ratio is $9K/$176K.

Insurance premiums are over $10,000 per year. A student coming out of college is likely to pay over a half million in insurance premiums and deductibles over a working career. The structured savings program would put over half of that money in the savings accounts with the other half going to grants and loan defaults.

As people tend to be healthy when they are younger and require medical attention when they are older, one would see a phenomena where a large number of people had a large amount of money in their medical savings account. If the system worked the average policy holder would have about $20K in savings with some people having upward to $100K in savings.

Were the entire US to switch to a Medical Savings and Loan paradigm (something which I am not demanding), we would see savings balloon and a more reasonable savings to debt ratio of $30K/$176K would emerge.

The Medical Savings and Loan is not totalitarian. It is not like silly health care exchange systems that must force everyone into a complex scheme for some perceived benefit. The Medical Savings and Loan simply provides financial tools that allows people who wish to self fund their care take a stab at the challenge.

People who switched to the MS&L for self-funding their care would increase their savings and decrease their personal contribution to the debt problem.


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