Baby Boomers May Have to Sacrifice to Keep Medicare Going

Analysis

WASHINGTON -- Baby boomers have long been derided as a bunch of spoiled brats -- a "selfish generation" that pales beside their parents. Yet as the first qualify for Medicare this year, there are signs they may be ready to sacrifice.

A recent Associated Press poll of boomers revealed that many worry they won't be able to rely on the financially troubled government health care program when they retire and would be willing to wait longer or pay more to ensure that Medicare will be there when they and future generations need it. The survey found Americans of all ages willing to accept trade-offs to preserve their future benefits.

For tea party Republicans arriving on Capitol Hill this week intent on cutting entitlement programs that are fueling the federal debt, that may be welcome news.

Until you consider another survey by AP. That one found nearly six of 10 people say years of paying payroll taxes into Medicare entitles them to full benefits when they retire. Anything less, they say, would be bureaucratic robbery.

Eugene Steuerle, an Urban Institute economist, says most people don't get it. He and others have warned for years about the growing and unsustainable imbalance between the taxes paid in for Medicare and Social Security and the benefits taken out.

In his latest calculations, Steuerle estimated that a two-earner couple making $89,000 a year who retired in 2011 will have paid $114,000 in Medicare payroll taxes over their lifetimes. By the time they die, though, they will have received $355,000 worth of medical services, or three times as much as they put in.

"There is no way Medicare taxes pay for the Medicare benefits we're getting," Steuerle said.

He said that contrary to public perceptions, payroll taxes paid today are not stored away but go instead to care for current retirees.

Tricia Neuman, who heads the Medicare Policy Project at the Kaiser Family Foundation, suggested the calculation may be misleading. She said Medicare was designed to be funded not only by payroll taxes but by premiums and general government revenues.

"The truth is seniors have considerable skin in the game and many are spending quite a bit," she said. The sickest and poorest devote as much as 30 percent of their fixed income to health care, she said.

Getting in the Game

Starting Jan. 1, 10,000 boomers will turn 65 each day -- one every eight seconds. In 2011 alone, 2.8 million boomers will get in the game by becoming eligible for Medicare. It's an onslaught that poses the greatest challenge yet to a program that makes up 15 percent of the federal budget and that with Social Security poses the most politically intractable roadblock to reducing the deficit.

The number of seniors and disabled people enrolled in Medicare is expected to rise from 46 million today to 80 million in 2030 when the last boomers turn 65. During that time, the workforce paying taxes to cover benefits will drop from 3.5 workers per recipient to just 2.3.

The spiraling cost of Medicare was addressed as part of President Barack Obama's overall health care reform law. What the administration and health care experts call $500 billion in savings over 10 years by controlling future Medicare spending opponents label "cuts."

There is evidence that opposition to the health care law by seniors is softening as more take a wait-and-see attitude as provisions are phased in. Still, those already receiving government health care through Medicare remain the fiercest critics of the Affordable Care Act.