A Medicare beneficiary, on average contributes during his or her working life between 30-35 percent of the value of the actuarial benefits he or she is entitled to receive. The Urban Institute analysis of benefits received, as compared to lifetime contribution adjustments for inflation, changes with the value of the dollar, costs of care, and varied life expectancy for men and women (which is what accounts for the range in percentage contribution). Men who retire in 2011 will have contributed roughly 35 percent and women roughly 32 percent. Combined with returns, Medicare taxes cover just under 50 percent of costs. In addition, costs and contribution vary by location. Medicare expenditures per beneficiary were highest in Louisiana ($8,659) and lowest in South Dakota ($5,640) in 2004. Working Americans contribute to Medicare by paying taxes called Hospital Insurance (HI) contribution and by paying general taxes to finance parts of Medicare other than Medicare Hospital Insurance (Part A). Because the current generation finances a social insurance program for current beneficiaries, part of the solvency conversation centers around what efforts are being made to anticipate and control future costs, and whether the burdens of financing are spread across generations with some degree of fairness of burden.
How Much Does the Government Contribute to Each Beneficiary’s Coverage Each Year?
Is Raising Taxes the Only Method That Congress is Considering to Cover Future Medicare Expenses?