SOCIAL SECURITY & MEDICARE FORECAST: 2004
June 4, 2004
The 2004 annual reports for Social Security and Medicare examine the short- and long-term health of these programs, and highlight the financial burdens they will create for future generations. If not reformed in a timely and responsible way, Social Security and Medicare will consume an ever-increasing portion of workers' incomes or the government must break its promises to future retirees, says NCPA Senior Policy Analyst Matt Moore.
According to the Social Security and Medicare Trustees' "intermediate" forecast:
- When today's college students reach retirement age in 2050, their children and grandchildren will face a payroll tax rate of 17 percent just to pay Social Security benefits -- a 37 percent increase over today's rate.
- When Medicare Part A (Hospital Insurance) is included, the payroll tax burden will have to rise to 24.9 percent -- almost one of every four dollars workers will earn that year.
- If the federal and state governments' shares of Medicare Part B (Supplementary Medical Insurance) and Part D (the newly-enacted Medicare prescription drug benefit) are added to Social Security and Medicare Part A, the burden on workers will climb to 34.9 percent by 2050 -- more than one in three dollars of taxable payroll.
- When other government-funded health care expenses are added, the total burden will reach 39.17 percent by mid-century.
Thus, about 40 percent of the wages most workers will earn in 2050 has already been committed to pay benefits promised under current law. That's before any bridges or highways are built and before any teachers' or police officers' salaries are paid. If any new entitlement benefits such as more generous prescription drug coverage or long-term care benefits are added, the future burden will be even higher, warns Moore.
Source: Matt Moore, "Social Security & Medicare Forecast: 2004," Brief Analysis No. 476, June 4, 2004, National Center for Policy Analysis.
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