My prediction: Look for Republicans prior to November to scare old folks by saying that fiscal pressures from health care reform will threaten their Medicare benefits. And it will probably work. After all, all those affluent, old white folks didn't become Tea Partiers and protest after Dubya and the GOP gave them the Medicare Prescription Drug, Improvement, and Modernization Act in 2003, a massively expensive new entitlement.
By Alexis Leondis
April 20, 2010 | Bloomberg
Rising health-care costs are a top concern for a majority of wealthy Americans, according to a Bank of America Corp. survey.
The study, which interviewed 1,000 Americans during the first two weeks of March with investable assets of at least $250,000, found that 62 percent cited medical costs as a major concern, up from 59 percent in a December survey. The effect of health-care expenses on retirement planning was a concern for 56 percent, up from 40 percent, the survey said.
The number of respondents who said they're worried about outliving their retirement savings rose to 61 percent from 53 percent, according to the study.
"While Washington in the past quarter has been talking health care, health care, health care, these affluent Americans have heard health care, but are thinking retirement, retirement, retirement," Sallie Krawcheck, president of global wealth and investment management for the Charlotte, North Carolina-based bank, said today during a conference call to discuss the survey results.
The capital gains tax will rise to 23.8 percent in 2013, to help pay for health-care changes signed by President Barack Obama March 23. That's because the legislation applies a 3.8 percent Medicare tax on unearned income such as realized capital gains, dividends, interest, rents and royalties. The health-care bill also increases the employee's share of the Medicare payroll tax levied on wages by 0.9 percentage points to 2.35 percent in 2013.
Affluent Investors
Both increases related to the health-care legislation will apply to about 1 million individuals who earn more than $200,000 annually and about 4 million couples who file jointly and make more than $250,000.
Affluent investors are questioning what the health-care legislation means in terms of taxes, Krawcheck said, in a Bloomberg Television interview today.
Almost 70 percent of respondents aged 35 to 50 said Medicare will play little to no role in helping to pay for medical expenses during their retirement years, the study said.
[Score one for rational expectations theorists. If younger people are saving and investing according to this pessimistic belief, then the Medicare crisis truly will be like a bulge of water traveling through a narrow hose as the Baby Boomer generation gets older and sicker, racks up medical bills, then kicks the bucket. The bulge in the Medicare system should work itself out demographically. - J]
Married couples aged 65 can expect to spend on average $197,000 on health-care expenses through retirement, excluding nursing home care, according to a March report by the Center for Retirement Research at Boston College.
The Bank of America survey was done by Princeton, New Jersey-based Braun Research, a marketing research firm for Merrill Lynch Global Wealth Management, a unit of the bank.
Health-Care Reform
In a separate February survey by insurer Phoenix Cos. of 1,835 U.S. residents with a net worth of at least $1 million excluding primary residence, 61 percent of respondents said they agree or strongly agree with the statement: "I am very concerned about paying for health-care expenses in retirement." That compares with 56 percent last year, according to the survey released yesterday.
"The level of concern rose this year, and my hypothesis is that this is due in large measure to all the attention regarding health-care reform," said Walter Zultowski, senior adviser to Hartford, Connecticut-based Phoenix, in an e-mail.
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