When Democratic President Lyndon B. Johnson proposed a "hospital insurance" (i.e., Medicare) program for senior citizens in 1964, how much did he say the maximum monthly tax per worker would be?
In his 1964 State of the Union speech, Johnson said, "We must provide hospital insurance for older citizens financed by every worker and his employer under Social Security, contributing no more than $1 a month during the employee's working career to protect him in his old age in a dignified manner without cost to the Treasury against the devastating hardship of prolonged or repeated illness." Adjusted for inflation, $1 in 1964 equals $8.95 in 2021, but this tax is now technically unlimited. It is 2.9% of workers' wages up $200,000/year and 3.8% thereafter. Thus, workers who earn $1 million/year pay about $3,000/month for this tax. This tax only funds Medicare hospital insurance, which accounts for 34% of Medicare spending. Other Medicare benefits, like physician services, lab tests, and prescription drugs, are funded by other taxes, premiums, and interest.