Federal Medicare transfers across states: Winners and losers

Medicare currently transfers roughly $200 billion annually to the elderly. The difference between medicare expenditures flowing into the state and ann ual Medicare taxes leaving the state-both on an annual and a lifetime basis -varies widely across states. Lifetime Medicare transfers, defined as the p resent value of benefits less accumulated land predicted) Medicare taxes, a re, on average, $17,386 per household. However, these benefits vary widely across states, so that residents of some stales benefit by more than $40,00 0 per household, while residents of other states actually lose, in the sens e of paying more in taxes than they will receive in benefits. Expected Medi care benefits per dollar of taxes paid varies from $.84 for residents of Or egon to $1.93 for residents of Louisiana. The differences are present even after controlling for a variety of factors such as the migration pattern of retirees, the price of health care, and the underlying health status of pe ople in each state. These variations raise questions about the fairness and efficiency of the Medicare program.