Medicare Tax Revenue

Medicare programme refers to a health insurance programme that is meant for the people who are aged 65 years and above, people who have various disabilities and others of all ages who have renal disease that has reached the end-stage. It is a national programme that is usually administered by the federal government since the year 1966 and is usually provided using private insurance companies across the nation. The payment for this programme is done through two accounts of trust funds which are held by the treasury and such funds can only be used for the purpose of Medicare (Bryan and Percy, 2035). The funds for Medicare are obtained from the taxes paid by the employers, most employees and those people who are self- employed. These funds are also obtained from the general revenues like income from taxes which are paid on social security benefits, interest that is gotten from investments of trust monies and premiums for Part A of Medicare from those people who are ineligible for Part A that is premium free. This method assist in payment of visits to the hospital and physician, the prescription drugs and many other services which are either acute or semi-acute (Bryan and Percy, 2054). This programme sets an example of how the federal government should allocate revenue whose amount is substantially huge in terms of collection. In relation to this, the program should be expanded since its benefits are more than the expenses paid through it. The value of this programme will be exploited fully when it is expanded and through this the scope of its benefits will be wider. This will remove the limitation and inflexibility that this programme is experiencing currently.

In each year, Medicare uses billions of dollars from the federal budget that is usually over and above the taxes for Medicare that are usually paid through the employees’ payrolls. The payroll taxes are normally deducted from the pay checks and are paid by the employer on behalf of the employees.  Taxes from the OASDI benefits are paid by some recipients of social security on the benefits they receive from social security since they have other incomes that are more than a certain set threshold. These taxes are considered for purpose of funding Medicare (Bryan and Percy, 2054). Premiums are paid by those people who have subscribed for Medicare Part B that pays for services offered by the physicians or for Part D of Medicare that pays for the drugs prescribed.  Premiums are not contained in the Part A which pays for hospital stays. This is the portion of Medicare whose financing is mostly done through payroll taxes that are paid by employees. The Parts B and D of Medicare are not usually financed by taxes on payroll. Rather, the premiums paid by the people who enrol for this programs are calculated yearly such that they cover around a quarter of all the costs of the program. The remaining three quarters of these costs are paid for by the revenues from the general tax. In future, the transfers of general revenue are expected to be more than payroll taxes. This can be attributed to assumption made by Medicare trustees while they are projecting the future that the laws will not be changed from what they are currently. The current laws specifies what Medicare taxes on payroll should have 1.45 percent payment by the employee and the employer each , including some additional taxes by those people who have income that is above a certain set threshold. However, the law sets no limit on the amount transferred from general revenue for the purpose of funding Parts B and D of Medicare. Currently, the law provides that transfers from general revenue should amount to three quarters of the program’s cost regardless of how high such costs are (Lee and Sabiha, 3).

The issue arising concerning this programme is whether it should be expanded or not a matter that is largely determined by whether it will remain solvent and sustainable. Solvency can be referred to as a measure of determining whether the two funds of Medicare are able to meet the entire cost of benefits that are provided by the law on time. Sustainability can be identified as a concept that can be used to mirror the societal values or political viability of Medicare as it is structured currently. Considering that this programmes aims at benefiting the public, it is essential that sustainability is sort with the assist of the all stakeholders (Lee and Sabiha, 2). The stakeholders include the general public, doctors, other medical staffs and more importantly the politicians who pass laws to put in place such a programme. The stakeholders have had to influence how the funds to finance the program should be collected, how the payments for Medicare cost should be paid and participating in any reforms that are aimed at changing the current law on the program. Groups such as American Medical Association, RUC, and other medical profession groups give their perception regarding the Medicare program to the federal government before major change is made on this program. Beginning in the early 1980s, the stakeholders have been raising many concerns about the viability of this program as a hospital insurance policy, about the protection offered to the beneficiaries and the overall quality of care reimbursement through Medicare (Brown, 3). This has resulted to a lot of changes in system of quality assurance and the structure for reimbursement related to this program. For instance the, the congress as a major stakeholder in this program passed the 1984 act on deficit reduction that  ensured the development and implementation of Medicare payment system, which was designed to curb the spiralling cost of healthcare by having reimbursement made to providers at a fixed rate. This was centred on diagnosis-related groups which reflected the groups and amount of resources normally used for each diagnosis, thus replacing a system of reimbursement that was based on prevailing or reasonable charges (Brown, 5). This is an example of how the stakeholders have influenced any process that is aimed at altering the manner in which the funding of the program and the allocation of this healthcare funds to various costs.  

However, for this program to attain its maximum benefit there is a need to expand it so as it can cover more groups of people. This expansion will ensure that the program covers everyone for all the necessary medical services and this would include the visits to doctors, prevention programs, hospital care, long-term care, and care for reproductive health, vision, dental, mental health, prescription drugs and costs of medical supply. While it may appear like the cost of such expansion can be prohibitive, the savings on administrative costs that would be realised from having an efficient and non-profit program to pay all medical bills would make it possible to eliminate all deductibles and co-pays (Gerald 6). Moreover, the expanded system would allow for reduction and control of medication costs and the cost of any other supplies. This would also make it possible to prevent chronic conditions or provide treatment for such conditions that would require more cost and medical care that is complex if left untreated. This would make it possible for the public to understand and appreciate how the federal government raises its revenue and how such revenues are allocated to the various programs that are aimed at providing public services. This improved system is not to be seen as socialism. Similar to the current situation the government would not have ownership for any clinics or hospitals. Patients would have an opportunity to visit the doctor they prefer and the only change would concern the means of payment. The revenues for this program would be obtained through maintaining the present health care federal revenues and introducing new tax increases that are modest on those people with very high income. The revenues would also be obtained through increasing employee’s payroll taxes, since they would no longer be required to pay health premiums and a small taxation on bond and stock transactions (Gerald, 6).

In conclusion, Medicare is a program that can assist the taxpayers to understand how the federal government spends it revenue and the various means through which such revenues are collected. The policy on Medicare taxes ensures that the program is sustainable and ensure that health care services are accessible to those who are most in need.

 

 

Works cited

Lee Goldberg, Sabiha ZainulbhaIs. Medicare Solvent and Sustainable? The National Academy of Social Insurance. 5.1 (2012). 1-3

Lawrence, Brown. The Politics of Medicare and Health Reform, Then and Now. HEALTH CARE FINANCING REVIEW.Vol.18.2 (1996)1-6. Accessed from: https://www.ssa.gov/history/pdf/PoliticsMedicareReform.pdf

Gerald, Friedman. Funding HR 676:  The Expanded and Improved Medicare for All Act .How we can afford a national single-payer health plan. (2013)1-12. Accessed from: http://www.pnhp.org/sites/default/files/Funding%20HR%20676_Friedman_7.31.13_proofed.pdf

Bryan, Percy W. Medicare and Medicaid Fee-for-Service Payments. New York: Novinka Books, 2004. Print.2035-2057