Tuesday, June 3, 2008

Canary in the coal mine

Our entitlement problems, while enormous, are smaller than those facing Japan
...combined with the estimated trajectories of social-security contributions and taxes, ... the total sum that workers pay to the government and social security [would rise] from 18 percent of household income today to 37 percent by 2035.2
This magnitude of their entitlement burden is bigger than Sweden's (36 percent) and almost as big as Germany's (40 percent). And like our entitlement problems, no one knows how to address them.

Any increase in premiums is likely to encounter opposition from both employers and workers. ... Alternatively, policy makers could raise copayment rates, [already] among the highest in the world. [30 percent for those aged 3-29; 10% for those over 70]
To close the funding gap further would require additional measures, such as boosting consumption tax rates to 11 percent (from 5%) or raising insurance premiums to 20 percent (from the current 8 percent)

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