Saving: Medicare Is Worth More Than Social Security For Young Workers

DALLAS, TX, April 27, 2016 – By the time today’s young workers retire, Medicare will spend more on them than they get from Social Security and the two programs combined will replace more than 100 percent of their pre-retirement wages.

“Social Security and Medicare together will replace more than what workers earned before retirement for the average retiree,” said Goodman Institute president John Goodman, who has reviewed the study and discussed its findings with the authors. “In terms of overall spending, government benefits will more than replace their previous wages, even if they haven’t saved a dime.”

In the future, retirees will get a lot more from Medicare than today’s retires, according to the study. The reason: health care spending is expected to grow more rapidly than wages.

An 85-year-old today is the recipient of Medicare spending equal to about 27 percent of pre-retirement wages, on the average. For people turning 65 today, Medicare spending will equal about 35 percent of their pre-retirement wages. For workers entering the labor market today, Medicare will equal 53 percent.

The study was produced by Andrew Rettenmaier and Thomas Saving, economists at the Private Enterprise Research Center at Texas A & M University.

Now for the bad news: These projections are possible only if the growth of health care spending continues to outpace the growth of wages. But that means eventually, health care will crowd out all other consumption.

An alternative is embedded in the Affordable Care Act (Obamacare), which requires Medicare to grow no faster than the rate of growth of the economy as a whole. Were that to happen, the study says that Medicare spending will equal about 40 percent of pre-retirement wages, indefinitely into the future. But that will require Medicare fees to doctors and hospitals to fall increasingly behind private sector fees, threatening access to care for seniors.


About the Goodman Institute

Led by Dr. John C. Goodman, the Goodman Institute for Public Policy Research (GIPPR), is a nonprofit, nonpartisan public policy research organization that promotes private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. Topics include reforms in health care, taxes, and entitlements. Visit



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