No, the cap does not increase with the rate of inflation. It is based on National Average Wage Index, which is actually going up faster than the rate of inflation. The result is that more and more of people's salaries are falling under the cap. For example, the cap in 2005 was $90,000. Two years later, it will be $97,500. That increase in the cap is more than the rate of inflation.
Some "saavy" person who owns a company can use a way to reduce his own Medicare taxes and some of the stockholders in the company who are paid in dividends in lieu of salary, but anyone who receives an income, which encompasses the vast majority of people, must pay into medicare at the rate of 1.45% for the employee and 1.45% for the employer's share [or 2.9% for the self-employed] with no cap. It is also interesting to note that the Medicare tax started out at .35% in 1966 and is now 2.9%. In addition, Medicare Part B costs are increasing almost every year for recipients. You can see how OASDI and HI costs have increased from 1% in 1937 on a cap of $3,000 to the current 15.3% today. You can bet that the costs will continue to go higher as will the salary caps.
Also, remember that SS benefits are based on contributions and those at the lower end of contribution scale actually get more in benefits than those at the higher end. The calculation of benefits formula weights the contributions to give slightly more benefits to those who contributed less. And the sad reality is that you really don't own anything. A single person who started paying into SS at 18 and died at 61 with no dependents would have his estate receive nothing except a small burial allowance. It is all a Ponzi scheme, which is unsustainable. In 1950, there were 15 workers for every retiree, today there are 3.3, and in 2030, there will be 2. Couple that with indexing benefits to COLAs and you have a trainwreck ahead.
There are still 15 workers for every retiree -- it's just that 12 of them are living in places like China and Indonesia right now.
It sounds silly, but there's a lot of truth to this. I've long suspected that the burgeoning growth of trans-Pacific trade -- along with China's insistence on pegging their currency to the U.S. dollar (which ensures that their manufacturing costs will always be lower than ours but also ensures that their standard of living will always be lower than ours) -- is largely driven by an overall scheme to perpetuate these unsustainable Ponzi schemes by allowing people in the U.S. to avoid the pain of perpetuating them ourselves.
The goal here is to ensure that people in 2030 who are paying 50% of their income in Social Security and Medicare taxes will actually have a much higher standard of living than people in 2006 who are paying 10% of their income to support these two Ponzi schemes.