Ending Medicare
by <http://fff.org/author/laurence-m-vance/>Laurence M. Vance
July 12, 2013
Medicare is government-funded health care for
Americans aged 65 and over and/or those who are
permanently disabled. Like Social Security, it is
funded by payroll tax deductions from both
employers and employees, but only partially.
Unlike Social Security, which has its roots in
Franklin Roosevelt’s New Deal, Medicare began in
1966 as part of Lyndon Johnson’s Great Society.
Initial enrollment in Medicare was 19.1 million
at an annual cost of about $3 billion. Former
president Truman was the first person to enroll
in the program. The House Ways and Means
Committee estimated in 1967 that the new Medicare
program would cost about $12 billion in 1990.
Actual Medicare spending in 1990 was $110
billion. In 2012, Medicare covered 50.7 million
people (42.1 million aged 65 and older and 8.5
million disabled) at a cost of $574.2 billion.
Medicare is the third largest item in the federal budget.
Medicare actually consists of four parts: Part A
(hospital insurance), Part B (medical insurance),
Part C (Medicare Advantage plan), and Part D (prescription-drug plan).
Part A is funded by a payroll tax “contribution”
of 2.9 percent (split between employer and
employee). The original rate was .7 percent on a
taxable wage base of $6,600. Beginning in 1994,
every dollar of an employee’s income began to be
subject to Medicare tax. And beginning this year,
high-income workers pay an additional 0.9 percent
tax on their earnings above a threshold of
$200,000 ($250,000 for married couples).
Participation in Parts B, C, and D is voluntary.
They are funded by a combination of income-based
beneficiary premiums and taxpayer subsidies. Less
than 25 percent of the Medicare prescription-drug plan is funded by premiums.
Enrollment in Medicare is open to all U.S.
citizens or those who have been permanent legal
residents for five continuous years and who (or
whose spouses) have paid Medicare taxes for a
minimum of 40 quarters (ten years). There is
absolutely no relation between the Medicare taxes
paid and the benefits received. Someone can pay
Medicare taxes his whole working life and, if he
is healthy, not receive a dime in benefits. Those
who have reached age 65 and decide not to
participate in the program are not entitled to
get any of their “contribution” back.
According to the newly-released report, the “2013
Annual Report of The Boards of Trustees of The
Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds,”
although total Medicare expenditures in 2012 were
$574.2 billion, total income was only $536.9
billion. The program has run a deficit since
2008. In 2012, the value of the program’s
non-existent (except for accounting purposes) HI
(part A) and SMI (parts B &D) “trust funds” fell
from $324.9 billion to $287.6 billion.
The report goes on to say:
The estimated depletion date for the HI trust
fund is 2026, 2 years later than was shown in
last year’s report. As in past years, the
Trustees have determined that the fund is not
adequately financed over the next 10 years.
Medicare’s actual future costs are highly
uncertain and are likely to exceed those shown by
the current-law projections in this report.
Clearly, Medicare in its present form is
unsustainable. The question, then, is what is the future of Medicare?
The American Association of Retired Persons
(AARP) has examined this very question in “The
Future of Medicare: 15 Proposals You Should Know
About.” Because Medicare “is facing long-term
financial challenges,” a number of proposals have
been put forth to fix the system. The AARP’s proposals are:
•Raise the Medicare Eligibility Age
•Raise Medicare Premiums for Higher-Income Beneficiaries
•Change Medicare to a Premium Support Plan
•Require Drug Companies to Give Rebates or Discounts to Medicare
•Increase Medicare Cost-Sharing for Home Health
Care, Skilled Nursing Facility Care and Laboratory Services
•Generate New Revenue by Increasing the Payroll Tax Rate
•Increase Supplemental Plan Costs and Reduce Coverage
•Raise Medicare Premiums for Everyone
•Strengthen the Independent Payment Advisory Board (IPAB)
•Redesign Medicare’s Copays and Deductibles
•Address the Sustainable Growth Rate (Physician Payment) Formula
•Increase Penalties for Health Care Fraud
•Allow Faster Market Access to Generic Versions of Biological Drugs
•Enroll All Beneficiaries Covered by Both Medicaid and Medicare Managed Care
•Prohibit Pay-for-Delay Agreements
Summaries of each proposal are then provided,
“accompanied by two opinions that AARP
commissioned from experts whose views typically
represent different sides of the issues.” The
experts are a conservative, Stuart Butler of the
Heritage Foundation, and a liberal, Henry J.
Aaron of the Brookings Institution. For proposals
in which “the experts did not provide distinctly
different positions, AARP commissioned experts
from Avalere Health, a leading health care
consulting firm, to provide analysis.”
Although the “experts” commissioned by the AARP
may disagree on certain details of how the
Medicare program should operate, there are two
things they are all firmly united on: (1) That it
is the proper role of government to have a
Medicare system, and (2) That Medicare should be
reformed, saved, or improved. Not once do these
“experts” even question the constitutionality of
Medicare. Not once do they even question the
government making some Americans pay for the health care of other Americans.
While speaking recently at the World Health
Organization, Health and Human Services Secretary
Kathleen Sebelius made these remarks about health care:
Expanding access to health coverage is a
responsibility belonging chiefly to national governments.
One goal that is particularly essential to health
and developmentand something that is a shared
priority in the Americas and around the world --
is universal health coverage. Advancing the
health of our nations is a fundamental commitment
we make to all our people. As President Obama
recently reminded us, access to health care is
“not some earned privilege -- it is a
right.” And that means we must work to ensure
that everyone has access to the services they need.
In her remarks, Sebelius inadvertently
highlighted the two fundamental problems with
Medicare. One, it is run by the government. And two, it is based on compulsion.
First of all, medical insurance or medical care
in the form of Medicare or anything else (SCHIP,
Medicaid, Obamacare), is not the responsibility
of government. These are services that can and
should be provided by the free market, just like
dining, recreation, entertainment, and automobile
repair are services provided by the market. Like
all of the other welfare programs of the federal
government, Medicare is an unconstitutional and
illegitimate function of the federal government.
It is socialistic and collectivist, it fosters
dependency on the government, it shifts
responsibility from the individual and his family
to society and the state, it contributes to class
warfare, and it crowds out real charity. It
doesn’t matter if families and charities don’t
pick up the slack (a very unlikely scenario) in
the absence of government intervention in the
market and someone goes without health insurance
or health care. That doesn’t somehow magically
make it the responsibility of government to
provide someone with medical services. There is
no right to health care that it is the duty of
governments to provide or enforce.
And second, Medicare is an income-transfer
program, a wealth-redistribution plan, and a
social-engineering scheme. A free and peaceful
society is grounded in the nonaggression
principle -- that it is always wrong to threaten
or employ violence against someone except in
defense of one’s person or property. But
libertarians go a step further. They alone
consistently apply this axiom to government as
well. Medicare was established by government
decree and has always been maintained by resource
confiscation. Governments have nothing of their
own to give anyone. The government cannot provide
medical services for one American without first
confiscating the resources of another American.
Although participation in the system might be
voluntary, the paying of taxes to support the
system is mandatory. Refuse to pay and you face
threats, fines, and imprisonment. But no American
should be forced to pay for the health care of
another American -- not in a free society. No
American has a right to the resources of another
American, no matter what his income or need for medical services.
So, because the fundamental problems with
Medicare have nothing to do with the fact that
the program is financially unsound and
unsustainable and is rife with inefficiency,
waste, and fraud, all attempts to reform, save,
or improve the system are illegitimate. Because
Medicare is fundamentally immoral and
illegitimate, the program must simply be ended.
http://fff.org/explore-freedom/article/ending-medicare/
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