Medicare resdistributes the wealth from young workers to retirees

10:48 am by | 3 Comments

Bryan Lawrence lays out the stark truth about Medicare: it’s a massive transfer of wealth from younger to older Americans. A typical American man who retired in 2011 would receive Medicare benefits of $170,000 over his lifetime, whereas he only paid in about $60,000 (adjusted for inflation and interest). Therefore he’s getting about 3x in benefits what he paid. If his spouse didn’t work she’d get about $190,000 in benefits without having paid in anything. Add it up and there’s a net transfer of $300,000 from young to old.

Imagine the uproar if things were evened out, with oldsters paying the full Medicare premiums themselves, above whatever amount they had contributed. And how about a real reversal where a massive surcharge is placed on the over-65 crowd and transferred to the young through subsidies?

Never gonna happen, right? There’s strong support for the Medicare status quo even among so-called conservatives, so that’s probably true. But if folks start spreading the word about how Medicare is bankrupting the country and is totally unfair to youth, there may yet be progress.

As a start, I would suggest a movement to dump Medicare Part D, the fiscally indefensible drug benefit giveaway to seniors.


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David E. Williams

By David E. Williams

David E. Williams is the co-founder of MedPharma Partners who writes regularly on the Health Business Blog.
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Given the fact that third-party payment (with M&M accounting for over 40% of healthcare's income) is the engine of/for healthcare growth; and the fact that healthcare innovation (ubercostly procedures, medications, devices, etc.) is driven mostly by the needs of those who are insured through M&M; and the fact that hospitals have OVERBUILT out the wazooooooo in anticipation of the silver tsunami's health needs (especially cancer and joint replacements), do you really think that the healthcare community would ever allow what you propose? Just wondering in Cleveland, OH It would force the health care system to work with the resources payers ACTUALLY have, not the GUARANTEED resources of the US Govt. it has, not the resources

Jake Radissen
Jake Radissen

How about calling it a transfer of wealth from the young to the healthcare and pharmaceutical industry? Compared with Europe this country has very bloated healthcare bills to the governmentt on behalf of these seniors (i.e., an MRI costs $3000 in Texas but only $280 abroad). Drug prices are negotiated with government abroad and here get a free pass from Congress. The drug industry says high prices are necessary for "research" but according to The Wall Street Journal 67 out of the 82 most popular drugs of the last decade were developed by government and university labs, not private industry.. By the way, saying "from young workers" in this headline is hardly true. The great majority of these "young workers" pay almost no income tax. The money comes from corporations (and the quite well-off).

Byron Flagg
Byron Flagg

Bryan Lawrence and David Williams are writing about the plain facts. But another plain fact is that not enough people care for it to matter. Check out the graph showing government spending as a percent GDP. Aside from a couple world wars, we've been on an amazingly consistent trend toward socialism for over 100 years. It doesn't matter who or what party is in the White House or in Congress. 100 years of momentum say that by around 2030 the USA will be officially an socialist country.