As the company I work for prepares to roll out our new health insurance plan (and premiums) it hit me like a ton of bricks -Health Insurance as we know it today will collapse within the next 10 years.

I’ve written about Synthetic Financial Disasters before and I wrote six key things that would happen when Boomers retire from the workforce:

  1. A retired person no longer draws a salary nor does he/she pay as high a level of taxes as during their work year. (The major negative here is the elimination of payroll tax contribution, lower income tax contribution)
  2. A retired non-working person no longer contributes money to his/her 401k and thus subsequently does not support/inflate the various financial markets
  3. A retired non-working person no longer adds to Growth Domestic Product. There is LESS productivity in America because of the shrinkage in workers. Yes, they will continue to consume and spend money but this is NOT PRODUCTIVE contribution
  4. A retired non-working person begins to WITHDRAW money from their investments. Imagine 4.3 million people each year withdrawing $2500/month each year –that’s $10,750,000,000! That is only the first year 2011; add an additional 4.3 million or 10 billion each year after than until 2024 when the bleeding slows down
  5. A retired non-working person begins to take social security benefits. Many will be in for a shock when their paltry checks aren’t enough to feed them, clothe them, medicate them or pay for living expenses. What will happen? They will vote for more tax increases to pay for increases in social security.
  6. A retired non-working person will begin to heavily utilize Medicare/Medicaid. Let’s face it, growing up during “boomer” times many people acted very unhealthily; Boomers smoked in their teens, they lived thru the 60’s drug revolution, sexed themselves through the 70’s, fattened themselves through the 80’s, and indebted themselves through the 90’s. The boomer population doesn’t have the healthiest lungs, livers, bones, or hearts so they WILL tax the healthcare system heavily. Who’s going to pay for all that medical help?

It didn’t occur to me to include the most blatant and obvious problem with boomers leaving the workforce!

Once retired, Boomers won’t pay company health insurance premiums!  Boomers will switch over to medicaid/medicare and possibly pay those premiums but employers will be left with a depleting pool of workers to pay into the health insurance system!

If 4 million people retire each year beginning in 2010 and the average monthly health plan cost $300/month then you’re looking at a loss of $1.2 billion dollars in monthly premiums.  Keep in mind that currently 40 million people don’t have health insurance and I suspect that the majority of those that do are the more senior seasoned workers that have families to support so there is no real offset in these statistics.