There are lots of problems with the Medicare program, but here's another one (beyond the entitlement mentality baggage, and the ease of committing fraud against it). The program is currently designed to pay out MORE to you in benefits than you put into it...
An interesting AP article (picked up here by Forbes) points out this fatal flaw. The quote from the article -
"Consider an average-wage, two-earner couple together earning $89,000 a year. Upon retiring in 2011, they would have paid $114,000 in Medicare payroll taxes during their careers.
But they can expect to receive medical services - from prescriptions to hospital care - worth $355,000, or about three times what they put in."
FOR COMPARISON
"The same hypothetical couple retiring in 2011 will have paid $614,000 in Social Security taxes, and can expect to collect $555,000 in benefits. They will have paid about 10 percent more into the system than they're likely to get back."
Much of the problem is the rapidly rise in healthcare costs. According to the study referred to in the AP article, an average woman, who earned an average wage who retired in 1980 could have expected to have $74,800 in healthcare expenses between retirement and passing through the Ivory Gates (keeping a positive outlook here). Same woman retiring in 2010 will likely see $181,000 (both numbers are 2010 dollars, so overall inflation is not a factor here).
To me, that's staggerring. Granted, healthcare has come a long way since 1980, but that represents more than a doubling of per-retiree healthcare costs in 30 years...
And the reality is, Medicare was NOT built to cover that. In the next 20 years, the number of Medicare recipients will almost double, and the ratio of people paying in to those receiving benefits will drop from 3.5 today to closer to 2.3.
Read the full article here. Not a rosy picture. Seems we probably should have focused some more effort on cost savings during healthcare reform, at least for Medicare.
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