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Sun., Jan. 9, 2011

Medicare return overstated

The recent AP article about Medicare costs (“Medicare beneficiaries reap robust returns,” Dec. 31) claims a couple paying $114,000 in Medicare taxes would receive $355,000 in benefits.

I see no adjustment for inflation. If we simplify their Medicare contributions by using the inflation-adjusted value for the midpoint of their careers, their $114,000 is worth about $195,000 today.

In addition, the benefits they receive will be spread over the next 20-30 years. Who knows what the dollar will be worth then? If we use the same inflation adjustment in reverse, their benefits will only be worth about $208,000 in today’s dollars.

The article also states that Part B Medicare services are mostly paid for from the general fund. But nowhere is credit given for taxes they paid into that fund.

So with adjustment for past and future, the couple will have paid $195,000 in Medicare taxes for $208,000 in benefits. Surely in all the taxes they paid we can find a minuscule percentage that will cover the remaining $13,000.

There’s no denying that the retirement of the baby boomers will add to Medicare costs. But to imply that they will be receiving vastly more than they paid for is grossly erroneous.

Larry Blanchard

Spokane Valley

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