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What's the reality on the Medicare Trust Fund?

Since Obama and the rest of Versailles seem to be gearing up for gutting Social Security by cutting the weaker trust fund out of the pack.

Anybody got reliable, that is, not FKDP, access blog, or Republican, information on this?

And now, RL calls. Really! Enjoy the day...

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Submitted by hipparchia on

for medicare's birthday.

i ran across a couple of sites this past week or so that had some better graphs and tables [i was cribbing from the aei for my post] and explanations than mine. i was just speed-surfing the web so didn't bookmark any of them, but if i remember where i found them, i'll link back to them.

meanwhile, short[ish] answer:

the HI [medicare part a] trust fund [which is the one that everybody yells about] is in the best shape it's ever been in its entire history [actually it was a smidgen better a couple of years ago, but only by a few percent].

longer answer:

no it's not in nearly as good shape as the social security trust fund, but 6.2% of your salary/wages goes to social security and only 1.45% goes to medicare. your employer matches those two percentages btw, so a total of 12.4% of the nation's payroll goes to social security and 2.9% goes to the medicare part a trust fund. in 2008 social security [oasi + di in the first table] paid out $625.2 billion and medicare part a [hi] paid out $235.6 billion. this means medicare part a paid out about 1/3 the amount that social security paid out, but it's only collecting about 1/4 the taxes that social security gets.

solution: raise medicare taxes, and while you're at it, put everybody into medicare starting NOW so that people will be getting something for their money NOW. weiner's proposed tax rates look more realistic [lesser price controls on providers, politically weasable!] to me than do conyers', but with really strong price controls on health care providers we could do well under conyers' proposed rates too.

Submitted by hipparchia on

the harvard professor quoted in the article, is a total fanboy of the dartmouth atlas.

i don't know anything about dr jeffrey flier or rober bixby or the concord group, and i've only recently started reading robert greenstein and poking into the cbpp's policy prescriptions, so i can't say anything intelligent about any of them yet.

Submitted by lambert on

I could sense the big weinie coming a mile off on that story. Thank God for McClatchy.

This, of course, is the current objective of what "health insurance reform" has morphed into. Now that single payer is headed off -- thanks, "progressives"! -- and the insurance companies have their bailouts -- thanks, Democrats! -- the next step is to start looting the weakest of the trust funds under the heading of "entitlement reform."

What we need to do is start re-framing "cost control" as "denial of treatment." Which is what it will turn out to be, since Big Health won't give up their profits, the money has to come from somewhere, and all the cost saving measures on the table are, as the article points out, bogus. "When you have eliminated the impossible..."

And now, I must must must get back to RL.

Submitted by lambert on

Ya know, "fiscal scold" is such totally weak ass shit I'm amazed that anybody, especially the access bloggers, is using it. Not. I mean, they're trying to steal my retirement money so I have to eat dog food and die earlier. "Fiscal scold" hardly seems adequate to that, since scolds are, almost by definition, ineffective.

beowulf's picture
Submitted by beowulf on

No not your commentary hipparchia (and thanks for the link) but the report's flat statement that to bring Medicare and Social Security into actuarial balance will require either 1. Increasing the payroll taxes 4 points and 2 points (Medicare Part A and SS, respectively) OR 2. Cutting benefits 53% (Medicare) and 13% (SS).

The report notes that Supplementary Medical Insurance Fund is fine on an indefinite basis, its paid by individual premiums and general revenue. They'd be in better shape if Congress simply let Medicare negotiate drug prices. That would immediately drop the annual outlay of $232 billion by $30 to $50 Billion a year. Heck, just eliminating the Medicare Advantage subsidy would save at least $11 billion a year. What's more, since Medicare already has income-scaled Part B premiums, it could save money with Parts A, B & D going to income-scaled deductibles and copayments. Instead of an annual $135 Part B deductible and Medicare paying 80% after that (with no annual cap, gotta sell those private supplement policies); Medicare could have a deductible of 1% of annual income above the poverty line and pay 80% (or 50%, the percentage won't matter) of the bill the beneficiary's share reaches, say, 5% of annual income, Uncle Sam would cover 100% after that. The provider won't need to know the patient's income, they'd bill Medicare and Uncle Sam would square the bill at tax time (basically this is economist Laurence Seidman's "Healthcard" proposal from the early 90's).

As you know, President Clinton uncapped Medicare taxes. However the 12.4% tax allocated to Social Security stops at $106,000. That explains why (per the report), each point of Medicare tax raises $80 billion and each point of Social Security taxes raises $65 billion. Simply uncapping Social Security raises $185 billion in additional revenue. Hmm, Social Security needs 2 additional (capped) points to remain solvent for 75 years. In fact, we could reduce the now uncapped Social Security taxes and, in turn, increase Medicare rates by the same amount. To fill the remaining Medicare shortfall, I'd look at Citizens for Tax Justice proposal of applying payroll taxes to unearned income, they calculated each point would raise $26 billion (again, uncapped). Nahh, easier to make up the shortfalls by just cutting benefits. Dead people rarely vote and never send campaign contributions.

Submitted by lambert on

(except in Chicago), and the sick, and the dying, are too busy to vote.

Great analysis, beowulf. Thanks.

Submitted by hipparchia on

yes, my analysis was sloppy at best [i'm fast approaching analysis fatigue myself]. thank you for doing a better one.

there are so many things we could be doing that actually work: negotiating not just better drug prices, but lower provider fees; getting rid of medicare advantage [and medicaid managed care too]; removing private insurance from the loop entirely; changing the tax structure; ....

instead we're going to get 'managed competition'.