Editor’s note: A version of this article first appeared at Forbes.com.
Last summer, Barack Obama riled a lot of entrepreneurs when he got carried away at a campaign event and told any American who had built up a successful enterprise, “you didn’t build that.” An even greater backlash awaits any politician who dares to tell Medicare recipients, “You didn’t pay for that”—for there are far more seniors than entrepreneurs in our country.
Time after time during Election Year 2012, seniors and near-seniors reacted to the slightest mention of Medicare reform with indignation and the emphatic insistence, “Don’t you dare touch Medicare; I’ve paid for it!” There is only one problem with that statement: In a mathematical sense, it isn’t true.
The amount that American workers have paid and are paying into Medicare isn’t enough to fund all the benefits that are being paid out to seniors under Medicare. The trustees of Medicare have stated that the promises they have made exceed their projected revenues by tens of trillions of dollars. Senator Tom Coburn (a physician in private life) has estimated that the average American couple contributes approximately $110,000 to Medicare over their working careers and receives over $330,000 of Medicare benefits. On Feb. 20, USA Today cited Urban Institute data pegging those same figures at $88,000 and $387,000, respectively. There are differing estimates of the size of the gap, but clearly Medicare suffers from an unsustainable funding deficit.
Let me hasten to say that I have sympathy for those who make the “I paid for it” case. Through decades of their working lives, millions of seniors paid into the system and were promised that Medicare would be there for them starting at age 65. These citizens played by the rules, acted in good faith, and held up their end of the bargain.
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