What You Pay For Medicare Won't Cover Your Costs

[bonnie]

What You Pay For Medicare Won't Cover Your Costs

WASHINGTON – You paid your Medicare taxes all those years and think you deserve your money's worth: full benefits after you retire.

Nearly three out of five people say in a recent Associated Press-GfK poll that they paid into the system so their benefits shouldn't be cut.

But a newly updated financial analysis shows that what people paid into the system doesn't come close to covering the full value of the medical care they can expect to receive as retirees.

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.

The estimates by economists Eugene Steuerle and Stephanie Rennane of the Urban Institute think tank illustrate the huge disconnect between widely-held perceptions and the numbers behind Medicare's shaky financing. Although Americans are worried about Medicare's long-term solvency, few realize the size of the gap.

"The fact that you put money into the system doesn't mean it's there waiting for you to collect," said Steuerle.

By comparison, Social Security taxes and expected benefits come closer to balancing out.

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.

Many workers may believe their Medicare payroll taxes are going for their own insurance after they retiree, but the money is actually used to pay the bills of seniors currently on the program.

That mistaken impression complicates the job for policymakers trying to build political support in coming months for dealing with deficits that could drag the economy back down.

Health care costs are a major and unpredictable part of the government's budget problems, and Medicare is in the middle. Recent debt reduction proposals have called for big changes to Medicare, making the belt-tightening in President Barack Obama's health care law seem modest. Some plans call for phasing out the program, replacing it with a fixed payment to help future retirees buy a private plan of their choice.

Peel back the layers, and there are several reasons why Medicare benefits and taxes are so out of line. First, the rapid rise in health care costs.

A single woman who retired in 1980, after earning average wages throughout her career, could expect to receive medical care worth about $74,800 over the rest of her lifetime. A comparable woman retiring in 2010 can expect services worth $181,000. Those numbers are in 2010 dollars, adjusted for inflation so they can be compared directly.

Another reason is that payroll taxes cover most, but not all, of Medicare's costs. They are earmarked for the giant trust fund that pays for inpatient care.

Outpatient doctor visits and prescription drugs are paid for with a mix of premiums from collected from beneficiaries and money from the government's general fund. Seniors pay only one-fourth of the costs of those benefits through their premiums.

The system has worked for 45 years, with occasional fine tuning. But the retirement of the baby boomers, the first of whom become eligible for Medicare in 2011, threatens to push it over the edge.

Medicare covers 46 millions seniors and disabled people now. When the last of the boomers reaches age 65 in about 20 years, Medicare will be covering more than 80 million people. At the same time, the ratio of workers paying taxes to support the program will have plunged from 3.5 for each person receiving benefits currently, to 2.3.

"With Medicare, we are all still making out like bandits, shoving all those costs to future generations," said Steuerle. "At another level, we know that this system is totally unsustainable."

[Dr. Shane]

The answer is simple. Open up the border and let more people in. Grow the pie. We need more people paying in.

[Jeannieb43]

That's why it's mandatory that everybody buy into the medical care system. The younger, healthier members will not have to pay as high premiums as do the older people, but having the costs spread among the entire population makes it "doable" for everybody.

[bonnie]

The answer is simple. Open up the border and let more people in. Grow the pie. We need more people paying in.

Sounds like a plan.Let them all in and many wont' pay so we will hvae more.

Maybe it would have been better if they had stayed out of my insurance coverage altogether.Not to sure how much more of Obama;s savings I can afford.

At under 400.00 a month we had good coverage.That covered my husband as a strike victim. Obama's lttle lie of preventing insurance coverage from dropping you because of illness simply was not true. What he took credit for had been law for some time.They could and did raise our rates yearly but could not just pick a number and stick us with it.

We had our co-pays on prescriptions etc till our deductible had been reached and from there nothing else. Now we pay co-pays all year long

We now each pay close to a 100.00

per month for medicare,75.00 each for supplemental and 50.00 each for drug coverage which always has a co-pay till you hit the donut hole and then you pay all for several thousand.Dr visits always have co-pay for every visit.

So for 450.00 per month of government savings I get to pay more.

We tried to prt out of medicare which you really can't do unless you are independently wealthy. No other insurance will pick you up for the 80%.You cannot get supplemental with prescription coverage so you need the additional policy.

So for them feeling they needed to handle my medical care,my medical provdiers get the shaft and I pay more.

My brother was covered under his comany policy and thought he could remain so. He has had to opt back into medicare with a additional premium every month for life for being so foolish.

The taxpayer has had to pick many thousands of dollars for my husbands care thru numerous strokes.The insurance comapny had been doing such fine.

Something has to give and it will be the quality of care we have come to expect.

I wil be going in for hip replacement in Feb.My surgeon has said he does not know what is coming diown the pike but is advising all that should have selective surgeries to not delay to long.

Hip replacement is not considered a necessity as long as there are pain pills and wheelchairs

Government savings are so great

[bonnie]

That's why it's mandatory that everybody buy into the medical care system. The younger, healthier members will not have to pay as high premiums as do the older people, but having the costs spread among the entire population makes it "doable" for everybody.

Our government has no right to mandate you purchase anything. I had purchased insurance,they made that void and charged me more.

Maybe the mandatory purchase of insurance is why I have relatives from Canada coming to the states for fast and timely health care.One cousin pys well over 5,000.00 in taxes to spread the cost around. Yet the US is her choice of medical facility

[Guest]

Bonnie, some people just swallow the lie, hook line and sinker, and ask for more. I don't understand it, so I just shake my head and keep going. Because trying to explain the reality of the situation to them is an exercise in futility.

[Dr. Shane]

Originally Posted By: Shane

The answer is simple. Open up the border and let more people in. Grow the pie. We need more people paying in.

Sounds like a plan. Let them all in and many wont' pay so we will hvae more.

The problem is that we have too many people drawing out of the system and not enough paying in. So there are two simple solutions. 1) One can kill off a bunch of the people drawing Social Security (not a plan I like) OR 2) We can increase the number of people paying into Social Security (now there's an idea).

How do we do option #2? We grow the economy and as jobs are added to the economy we open the doors of immigration to healthy, young workers so that they can come here and pay into the system. Then grammy gets to live and collect her Social Security check. She may have to speak Spanish at the grocery story but that sure beats facing down a death panel.

[Dr. Shane]

Our government has no right to mandate you purchase anything.

Wrong! We are forced to purchase police and military protection. We are forced to purchase public education (even if we don't use it personally). The government has the right to force us to purchase its services. Where Obama-care crosses the line is where it forces us to purchase a product from a private company.

[bonnie]

Originally Posted By: bonnie

Our government has no right to mandate you purchase anything.

Wrong! We are forced to purchase police and military protection. We are forced to purchase public education (even if we don't use it personally). The government has the right to force us to purchase its services. Where Obama-care crosses the line is where it forces us to purchase a product from a private company.

Public or national defense is a little different

Insurance is a pruduct not a service

[bonnie]

The problem is that we have too many people drawing out of the system and not enough paying in. So there are two simple solutions. 1) One can kill off a bunch of the people drawing Social Security (not a plan I like) OR 2) We can increase the number of people paying into Social Security (now there's an idea).

How do we do option #2? We grow the economy and as jobs are added to the economy we open the doors of immigration to healthy, young workers so that they can come here and pay into the system. Then grammy gets to live and collect her Social Security check. She may have to speak Spanish at the grocery story but that sure beats facing down a death panel.

When the government forces people into a unnecessary program that is what you get.Had they left people like my husband and I alone the taxpayer would not have had to bear the brunt of it

[Dr. Shane]

Public or national defense is a little different

There is only one issue. Is it provided by the government or private sector? If it is provided by the government, they can force us to purchase it.

[phkrause]

I have a question for all, what do our congressmen pay? Do they contribute to SS, medicare, etc.? From what I've heard they don't but yet collect? What's with that. And they can retire at 55? What's with that? I would say if that's the case well than that's where we could get more into our SS funds. If more are needed! NO?