The Subsidy Provided Under Medicare to Current Enrollees

Contributions made by or for current enrollees to Medicare will cover less than a third of the costs of their expected lifetime benefits, on average. This subsidy is of concern for two reasons. First, because the subsidy is provided regardless of income, some transfers are effectively made to Medicare enrollees from needier groups in the non-Medicare population. Second, as the ratio of Medicare beneficiaries to the working-age population increases in future years, the current generosity of the program may be difficult to maintain.