The Trustees Report intermediate projection for Medicare costs in 2085 is about 11% of payroll.

This is on a bigger payroll than Social Security because currently the Medicare tax is not capped. (If I were a rich person and looking at that uncapped Medicare tax, I'd be lobbying for a cap and a slightly larger tax tax rate up to the cap.)

By 2085 or so the real income of workers is projected, at 1.1% growth per year, to be about 2 and a quarter times current income.

So, an average worker would be making about 90 thousand per year.

Out of that he would pay 11% or about 10 thousand per year for Medicare.

Sounds like a lot and is a lot. But note that his real income has increased about 50,000 dollars a year from what it is today.

And of that he would be paying 10,000 to cover his old age medical costs, which are expected to be... one would calculate about 400,000 dollars. Not that every worker would have such high expenses, but that maybe one in ten workers would have 4 million dollars worth of expenses, perhaps. And presumably you would have no way to know if
you would be the one.

But assuming everything worked out as predicted, you would still be about 40,000 dollars better off each year PLUS have enough money to pay for enormous medical costs that would presumably keep you healthier and give you a longer life after you retired. And there is no way you can avoid the medical costs. Either Medicare or private
insurance will cost essentially the same.

This is, of course, in addition to the Social Security costs that would rise a much smaller amount just to pay for groceries over that longer life expectancy.

So before you cut your head off and scream that Medicare is going to bankrupt the nation and burden our youth, please look at least at the actual costs we are talking about.

About a 5% increase in soc sec for the worker... or a total Soc Sec and HI cost of 30% of payroll, of which the worker would pay half... so 15% or about 13,500, leaving about 76000 for personal expenses, investments and other taxes... or about 35 thousand more than you have today. Your boss would pay another 13,500... but that is money
you would never see anyway and comes out of his share of the joint value added from the worker-boss partnership. He's not getting hurt.

It's a lot of money, and wise people would work to cut the costs. But it is not crippling and may be a better way to enjoy our higher standard of living, by living longer and in better health, than by buying a new Lexus and taking a trip to Las Vegas every year.

And remember, this is you paying for yourself. Our "youth" will pay for their own benefits. Try not to be confused by pay as you go. That is the way nature works.

The original post is on the AngryBear blog at http://angrybear.blogspot.com/2008/05/medicare-2085-and-not-as-scary-num...