A “Lifetime” Measure of Medicare’s Value (Brief 3 of 4)
Although Medicare was established as a “pay as you go” program—with current taxpayers contributing to pay for the costs of current beneficiaries—many observers of Medicare question what individuals pay over their lifetimes compared to what they receive in benefits. Some have gone so far as to equate program “affordability” with having each cohort of individuals pay for itself through its tax contributions.
This brief takes a critical look at this line of reasoning and generates a lifetime measure of contributions and benefits. The authors's measure differs in several ways from most approaches to what Medicare beneficiaries pay versus what they get. Two changes to the benefit side in particular are crucial—and result in quite different findings than are reported elsewhere. (The methodology, described briefly in this brief, and assumptions behind the analysis, are spelled out in greater detail in a forthcoming paper.)