SOCIAL SECURITY AND MEDICARE PROJECTIONS: 2006
June 16, 2006
Social Security and Medicare will consume an ever-increasing portion of workers' incomes unless the government either breaks its promises to future retirees or makes significant changes to our elderly entitlement programs, Matt Moore, a senior policy analyst with the National Center for Policy Analysis.
As the 77 million baby boomers retire, spending will grow substantially. Assuming payroll tax rates rise to meet the obligations:
- When today's college students reach retirement age in 2050, paying their Social Security benefits will require a payroll tax rate of about 16.7 percent on their children and grandchildren -- more than one-third greater than today's rate.
- When Medicare Part A (hospital insurance) is included, the payroll tax burden will rise to 25.1 percent -- more than one of every four dollars workers will earn that year.
Taxpayers will also have to pay for three-fourths of Medicare Part B benefits, mainly covering physicians' fees. (Retiree premiums offset a quarter of the cost.) Taxpayers will also foot the bill for 86 percent of the newly-enacted Medicare prescription drug program (Medicare Part D). And they will pay for seniors' medical bills through other government programs, including Medicaid and the Veterans Health Administration.
- The burden of Social Security and all of Medicare (Parts A, B and D) will climb to 33.6 percent of payroll by 2050 -- more than one in three dollars of taxable payroll.
- When other government-funded health care programs for the elderly (such as Medicaid and the Veterans Health Administration) are added, the total burden will reach 37.9 percent by mid-century.
Thus, almost 40 percent of the wages workers will earn in 2050 has already been committed to pay benefits promised under current law, says Moore.
Source: Matt Moore, "Social Security and Medicare Projections: 2006," National Center for Policy Analysis, Brief Analysis No. 560, June 16, 2006.
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