One Way to Reform Social Security
This is from a column by Scott Burns and Larry Kotlikoff.
Part B premiums for Medicare are deducted automatically from the Social Security checks of seniors. But if health care costs continue to grow faster than consumer prices generally, Part B premiums will reduce the real value of Social Security over time.
Take an average-income couple, age 30. Medicare premiums will be $12,151 by the time they reach age 65, and $21,146 by age 85 (all at today’s prices). As a result of the implied reduction in Social Security benefits, the couple will have 23% less discretionary income during their retirement years.
Fascinating! The more health care seniors consume, the less Social Security income they will have.
Therefore, the less workers will have to pay in payroll taxes to support the Social Security system.
This furthers the argument for some major changes in the Medicare system and the health care system as a whole. Since about half of health care costs are paid for by a government program (Medicare, Medicaid, VA), and another percentage is paid for through a third party (private insurer), there is little incentive for cost control. NCPA has recently published a Medicare reform plan that would allow beneficiaries to control more of their health care dollars and younger workers to invest in personal health accounts to be used for future Medicare expenses.