I RECENTLY came across a political ad which featured an elderly man telling politicians to stay away from his Medicare. After all, he paid for it, the ad suggested. That struck me as interesting.

Medicare's scope has expanded quite a bit since today's older Americans started paying taxes. Part D, which covers drug benefits, was introduced just six years ago. It is partly funded by premiums paid by current retirees, but mostly through general revenues from the Treasury (from current and future tax-payers). So for much of his working life, the gentleman in the ad paid taxes toward a different, smaller programme.

More generally health care is a peculiar good, and health insurance is an unusual product in that it guarantees a basket of services which is always improving and getting more expensive. In some ways it’s like buying fire insurance on the best house in your town in the 1970s and paying premiums on it for forty years. Were the house to burn down today, would you be entitled to a benefit equal to the value of the old house or the value of the current best house in town? I can’t imagine an insurance company that would offer a contract on the latter. But that is how health insurance works: both the government-provided and private varieties.

Now in a contractual sense retirees that have paid their premiums are obviously entitled to that ever-improving basket of goods. That does not mean that they have really paid for it. According to the Urban Institute an average-earning couple who retired in 2011 would have paid about $116,000 in Medicare taxes over their lifetimes, but can expect lifetime Medicare benefits of $357,000 net of premiums. The later one retires, the more generous Medicare becomes. An average-earning couple who retires in 2030 pays $175,000 in taxes, but gets $527,000 in benefits.

Medicare promises hospital care (known as HI), some outpatient services (part B), and (if you opt in to the drug benefit—part D) prescription drugs. When Medicare was created in the 1960s people did not live as long in retirement as they do now. In 1960 a 65-year-old male was only expected to live 12.9 additional years; in 2010 he could expect 16.5 more years. That's a longer period over which to consume health care (indeed, the consumption of health care is a key contributor to the additional years). And as life-extending technologies improve dying is becoming a more protracted and expensive process.

This partly explains why Medicare spending per beneficiary has increased so much. The figure below shows spending per enrollee since 1970: