NCPA - National Center for Policy Analysis

Future Cost of Medicare to Taxpayers

August 1, 2003

The Medicare debate has focused almost exclusively on what form of drug benefit to provide senior citizens. Lost in the debate is what the huge new unfunded liability implicit in the drug legislation. Future taxpayers will have to pick up the commitment to senior citizens, say authors Brian M. Riedl and William W. Beach.

The unfunded portions of the Medicare drug bills currently being considered by Congress would:

  • Cost taxpayers a total of $2 trillion through 2030 alone, with escalating costs thereafter.
  • For example, a 40-year-old head of household in 2003 could expect his family to pay $16,127 in extra taxes until retirement to pay for other people's drug benefit before paying for their own drug coverage.
  • Furthermore, a baby born today would inherit at age 27 an extra tax burden averaging $1,125 per household in 2030.
  • By 2030, benefits for seniors will cost the average household $3,980 per year in higher taxes when combined with Medicare's current $5 trillion projected shortfall through 2030

Most seniors already have private drug coverage. Thus, targeted help to those who need it would make much more sense than a large new unfunded drug benefit for all seniors, say Riedl and Beach.

Source: Brian M. Riedl and William W. Beach, "New Medicare Drug Entitlement's Huge New Tax on Working Americans," Backgrounder No. 1673, July 30, 2003, Heritage Foundation.

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