Medicare Taxes not Enough for Baby Boomers' Medical Care
Reporting by David Liu, and editing by Denise Reynolds
The majority (60%) of Americans expect Medicare payroll taxes to offer full coverage for their medical care as retirees, a new survey by the Associate Press-GfK found. But baby boomers should not expect this, a financial analysis suggests.
The analysis predicts a huge gap between what baby boomers would have paid by the time of their retirement and the real cost for the medical care they need. The medical care cost is simply rising too fast for the Medicare taxes to cover all the cost.
Economists Eugene Steuerle and Stephanie Rennane of the Urban Institute said a baby-boomer couple would have paid about $114,000 in Medicare payroll taxes by the time they retire, but they would need medical care that costs them $355,000.
Right now, Medicare covers 46 million seniors and disabled citizens. When all baby boomers reach 65 in about 20 years, Medicare will be then be covering about 80 million seniors. In the meantime, the ratio of Medicare taxpayers to the current beneficiaries would decrease from 3.5 to 2.3.
"With Medicare, we are all still making out like bandits, shoving all those costs to future generations," Steuerle was quoted as saying.
"At another level, we know that this system is totally unsustainable."
Medicare benefits include four parts - part A, B, C and D. Part A covers hospital insurance, Part B medical insurance, and Part D prescription drug coverage. Medicare Part C is a service option.