Disability News

Social Security and Medicare Projections: 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.

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