April 28, 2011
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Medicare
With all the political rhetoric about Medicare and Social Security [both are financially supported through FICA taxes] there seems to be a lot of misconceptions about the program.
In the first place, Medicare was designed, as was Social Security, as an insurance program. That means all of those of us who work or worked contribute to it. While these payments are handled by the IRS, you will have noticed on your W-2 form that Social Security withheld is listed separately from income tax withheld. Since 1990, the total FICA taxes withheld from your paycheck amounts to 7.65% of your salary. your employer contributes a like amount - if you're self employed, you contribute the whole amount. A total of 2.9% of that amount is Medicare Hospital insurance. Unlike Social Security, there is no upper limit on the income you have which is taxed. If you make $1M/year, you will pay medicare part A on the whole amount.
If and when you sign up for Medicare part B [pays physician office visits] you will be charged $110.50/mo. which will be withheld from your social security payments [unless you make over $80K/yr. - in which case you pay more]. Medicare part B pays 80% of your office visit costs, after a yearly deduction. You must purchase private insurance to pay the rest. Currently I pay a little over $200/mo for this medigap insurance - which is an interesting commentary of the economics of the private health insurance system.
In addition you may sign up for Medicare part D which pays a percentage of your drug costs. This currently costs me $35.80/mo. and is also withheld from my social security check.
Obviously, as you can see from the above, Medicare is not free and, like Social Security, is remarkably self sustaining. Both social programs currently have healthy surpluses despite the fact that medicare contributions have not kept up with the skyrocketing cost of American health care.
Medicaid, which is healthcare insurance for the poor, is another program administered by the States through federal government grants.
While Social Security and Medicare are items in the federal budget - very large items [they totaled over $1.113 trillion in 2009] they are not part of the deficit - in fact if Social Security funds were not lent to the government at very low interest, the deficit would be higher.
Considering how much more efficient Medicare is than private insurance (a recent $60K operation I had cost Medicare about $20K - medicare doesn't pay at the private rates) - making Medicare universal would surely result in the costs of US health care dropping to those of all other developed nations on earth - many of which have better health care than we do.
Comments (3)
I am a bit out of my depth when it comes to your health care systems. I promote that the ultimate health care system must start in a person's personal life and behaviour. My believe is that if people consciously live a healthier life the burden on health care systems will be much reduced, allowing those systems to better support those who are really in need of health care support.
@Zeal4living - Jurgens, you are certainly right. Unfortunately the US system has traditionally emphasized treatment rather than prevention through healthy living. The recently passed health care bill would put more emphasis on prevention but is much opposed by those with a vested image in maintaining the current for-profit system.
your surgery cost less with medicare because the government refuses to pay the full cost of the procedure, that is why some doctors are no longer taking medicare patients.