Mike Kueber's Blog

July 16, 2012

Medicare and socialized medicine

Filed under: Issues,Medical,Politics — Mike Kueber @ 1:13 pm
Tags: ,

While lounging in the apartment pool yesterday with an exceptionally enlightened friend (and insurance agent) and discussing America’s intractable deficit problem, he pointed out that Social Security was never intended to be sufficient to satisfy an individual’s retirement needs.  Rather, it was designed to provide a base of protection that most American’s would supplement with their separate retirement savings.  Everyone knows that. 

Later, when our conversation shifted to Medicare, it suddenly dawned on us we didn’t know whether the same concept applied to Medicare – i.e., was Medicare supposed to completely protect seniors from the cost of medical care or was it merely a base that was intended to cover a portion of an individual’s medical care?  In other words, are senior Americans paying a larger or smaller percentage of their medical expenses that they have historically done?

A little basic research on Wikipedia reveals some surprising facts:

  • Medicare covers 75% of the cost of covered services on average and 48% of average costs for all medical services, and the typical enrollee faces over $3,000, while 10% of enrollees have over $8,300 in out of pockets costs.

From these numbers we can infer that 25% of covered services are paid by individuals through co-pays and deductibles.  Uncovered services includes long-term, dental, hearing, and vision care, plus supplemental insurance.  Sounds like Medicare covers about the same percentage of a retiree’s medical needs as Social Security does for a retiree’s non-medical needs.

While doing this research, I learned that the current Medicare tax of 2.9% is scheduled to increase in 2013 to 3.8% on those individuals who earn more than $200k.  This tax is used to provide Part A Benefits (hospital care), while Part B Benefits (doctor care) are funded by premiums, which are highly progressive – i.e., $99.50 a month for individuals making less than $85k a year to $319.70 a month for individuals making more than $214k a year.  

Thus, unlike Social Security, which has some resemblance to insurance and an earned benefit, it is clear that Medicare is already closely akin to socialized medicine – i.e., from each according to their ability to pay; to each according to their needs.  You have to give the big-government types credit for maintaining the perception that Medicare is an earned benefit.  It may be for some, but certainly is not for most, and that is why it is going broke.

p.s., just like universal health coverage, I think socialized Medicare is a good idea, but it needs to be implemented in a way that our government can afford it.

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