Observations on life

Myths about Medicare 😩

The following is from the Motley Fool. Read it and draw your own conclusion. Is this what you call a mixed message? 

So, Medicare Part A is not broke, but it will run a surplus only until 2020 and the Part A trust will run out of money in 2028. 

That’s good news?  In fact, there is no good news. And besides the obvious fiscal issues, there is no good news because Congress is ignoring the problem, the left and right have totally different views of what a problem is and Americans choose to bury their heads in misinformation. 😑 

Only hospital insurance (Part A) is funded. Part B of Medicare has no trust fund, it’s spending is unlimited and that too is a problem. Part B pays its bills using general revenue, premiums beneficiaries pay and the income taxes paid on Social Security benefits by those who have 85% of their SS benefit taxable. In essence some seniors are paying three times for their Medicare. 😎

Medicare is broke?

Despite what you may have heard, Medicare is not broke, bankrupt, or whatever other word you want to use. Medicare hospital insurance had nearly $200 billion in reserves at the end of 2015, the most recent year for which finalized data is available. And, substantially all of the program’s costs were covered by the payroll taxes collected from American workers. What’s more, Medicare is expected to run a surplus every year through 2020.

But that’s where the good news ends. After 2020, Medicare is expected to swing to an annual deficit, which will continue for the foreseeable future. Here’s a thoroughgoing discussion of the problem, but in a nutshell, with the retirement of the massive baby boomer generation, there simply won’t be enough taxpayers contributing to the program to take care of all of the beneficiaries. The trust fund’s reserves are expected to be completely depleted in 2028, after which point the incoming payroll taxes will only be enough to cover about 87% of the program’s costs. There are ways this could be fixed, such as by raising Medicare taxes, but for now, that’s where the financial state of Medicare’s hospital insurance program stands.

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Categories: Observations on life

3 replies »

  1. Congress could make one big fix to both social security and medicare, but I doubt they will. They will likely make small fixes to each separately sufficient to allow each to limp along for ten or fifteen years. Likely limp alongs: tax social security benefits fully, not 85%, increase payroll tax one percent (incrementally over five years so taxpayers won’t notice as much), double medicare premiums on top 20% of retirees, etc.

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  2. That being the case, Medicare is not out of money, then why do they continue to raise our premium and take away from our Social Security benefit. As stated in an earlier comment, the little raise I got last year in SS went directly into the Medicare premium that was raised which gave me a less SS benefit than the year before. With costs going up in daily living expenses, it leaves me short in my budget for other expenses. Will that ever stop? It seems though the government keeps getting more of our SS check to fund Medicare yet you say they aren’t broke then why? We need our little increase every year just to keep up with rising costs .

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  3. Isn’t the only reason it is running a surplus is because of taxes added in health reform and various cost shifting?

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