Social Security, Medicare and welfare: It's complicated

Q. Can you write a column that is headlined “Welfare in trouble”? There must be potential shortfalls in the future for welfare since it is a totally unfunded program, unlike Social Security and Medicare, which are 100 percent prepaid by their beneficiaries.

— M.Q., Austin, Texas

You aren’t the only reader who wrote asking that question. But comparing Social Security and Medicare funding to welfare funding is missing the point. Neither Social Security nor Medicare is prepaid, let alone 100 percent prepaid, as you and many others believe.

Take Medicare Part B. By law, 75 percent of its costs are covered by general revenues. The other 25 percent is supposed to be covered by premiums.

Whether the entire Medicare program is fully funded depends on whether Medicare employment tax revenues and general tax revenues rise fast enough to offset actual costs. Right now, according to the chief actuary, we’re operating with imaginary …
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