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U.S. Sen. Bob Corker, R-Tenn., suggested in a USA Today column that Medicare reform should be part of the solution.
Corker, who is up for re-election this cycle, argued that Medicare is on an unsustainable path, in part because Medicare beneficiaries are receiving far more benefits than they are paying into the system. "According to a recent study by the Urban Institute, a married couple each making $43,500 per year will contribute $119,000, including their employer contributions, into Medicare during their time in the workforce and receive $357,000 in Medicare benefits over their lifetimes," Corker wrote. "Common sense tells us this math doesn't add up: Medicare beneficiaries are receiving far more in benefits than they are paying in."
The statistic was so striking -- that the government pays twice as much in benefits as people pay in Medicare taxes -- we wondered if the senator was correctly characterizing the study’s findings.
On Nov. 1, PolitiFact Ohio looked closely at the report after U.S. Sen. Rob Portman, R-Ohio and a member of the "super committee" that ultimately failed to approve a deficit reduction plan, cited the same statistic.
For years, the Urban Institute, a policy think tank that focuses on issues such as taxes, social programs and justice, has been calculating the disparity between the lifetime value of Medicare benefits and the taxes paid into the program. The institute’s most recent report by fellow Eugene Steurle, a former Treasury Department official, and the institute’s Stephanie Rennane, was published early this year and subsequently updated.
Essentially, the study calculated how much a single person or a married couple at various income levels would pay into Medicare during their time in the workforce and how much in benefits they would receive over their lifetimes. For a two-income couple in which both partners earned an average wage ($43,500 each in 2011) and retired in 2011, the study concluded they would pay $119,000 in Medicare taxes and receive $357,000 in benefits.
The disparity was even larger for a single-income couple.
"Over a wide range of scenarios, beneficiaries retiring at age 65 in 2011 can expect to receive dramatically more in total benefits than they have paid in dedicated taxes," the report concluded. "If only one member of the couple had worked, we calculate a six-fold difference between contributions and benefits since both spouses are eligible for Medicare yet only one has paid taxes."
The disparity has been noted by other researchers as well. One study by the Congressional Budget Office in 1983 found an even greater disparity than that cited by the Urban Institute.
We find that Corker’s description of the study merits a True rating on the Truth-O-Meter.
Urban Institute, Social Security and Medicare Taxes and Benefits Over A Lifetime, June 20, 2011.
PolitiFact Ohio, Retiring couples get $3 in Medicare benefits for each $1 paid in, Rob Portman says, Nov. 1, 2011.
Urban Institute, How Lifetime Benefits and Contributions Point the Way Toward Reforming Our Senior Entitlement Programs, Aug. 1, 2011.
Congressional Budget Office, Scaling Medicare Benefits to Income, May 1983.
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