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Happy Birthday Medicare and Medicaid?

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On July 30, 1965 — fifty years ago —Lyndon Johnson signed into law the Social Security Amendments of 1965 that created two new government programs. Added to the Social Security Act of 1935 was Title XVIII, Medicare, and Title XIX, Medicaid. They were the nation’s first public health-insurance programs.

Medicare is government-funded health care for Americans 65 years old and older and for those who are permanently disabled, have end-stage renal disease, or ALS (Lou Gehrig’s disease). It is the second-largest federal domestic program, after Social Security. 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) on every dollar of an employee’s income. There is also an additional 0.9 percent tax on 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. Enrollment in Medicare is open to all U.S. citizens or those who have been permanent legal residents for five continuous years and who have paid Medicare taxes for a minimum of 40 quarters (ten years). Most people become eligible for Medicare when they reach age 65, regardless of income or health status. According to the Kaiser Family Foundation, Medicare covers more than 55 million people (46.3 million people 65 years old and older and 9 million people with permanent disabilities under age 65). Spending on Medicare accounts for about 14 percent of the federal budget, just over one-fifth of total personal health expenditures, and 20 percent of total national health spending.

Medicaid is government-funded health care for poor Americans of any age and people with certain disabilities. It is the third-largest federal domestic program, after Social Security and Medicare. Medicaid is the primary source of health-insurance coverage for low-income populations and nursing-home long-term care. Medicare is a means-tested welfare program jointly financed by the federal government and the states, but designed and administered by the states within federal guidelines. Although states are not required to participate in the program, all of them do. Recipients must be U.S. citizens or legal permanent residents. According to the Kaiser Family Foundation, Medicaid covers about 70 million Americans, Medicaid finances about 16 percent of total personal health spending in the United States, almost two-thirds of all Medicaid spending for services is attributable to the elderly and the disabled even though they make up just one-quarter of all Medicaid enrollees, and the 5 percent of Medicaid beneficiaries with the highest costs drive more than half of all Medicaid spending, which is now about $450 billion a year. The Patient Protection and Affordable Care Act (Obamacare) expanded both Medicaid eligibility and federal funding.

There is another reason that Medicare and Medicaid are in the news this year, and one that threatens to spoil their birthday party.

According to the Government Accountability Office (GAO), “Medicare and Medicaid made a combined $77.4 billion in improper payments in fiscal 2014, a 20.4 percent increase from fiscal 2013.” These improper payments accounted for about 62 percent of the $124.7 billion in total improper payments for the year reported by the GAO. An improper payment is “any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements.” Overpayments far exceeded underpayments. In a list of the twelve government programs that made the largest amount in improper payments in FY2014, three of the top four were Medicare or Medicaid programs:

  1. Medicare Fee-for-Service, $45.754 billion
  2. Earned Income Tax Credit, $17.7 billion
  3. Medicaid, $17.492 billion
  4. Medicare Advantage (Part C), $12.229 billion

Ranked ninth was the Medicare Prescription Drug program (Part D), at $1.931 billion.

The problem with Medicare and Medicaid is not the billions of dollars in fraudulent payments that the programs make every year. The real problem is the very existence of the programs in the first place.

The fact that Medicare and Medicaid are now fifty years old doesn’t justify their existence.

The fact that the American Medical Association no longer opposes Medicare and Medicaid doesn’t justify their existence.

The fact that the vast majority of Americans support the Medicare and Medicaid programs doesn’t justify their existence.

The fact that Medicare and Medicaid help millions of Americans obtain health care doesn’t justify their existence.

The fact that Medicare and Medicaid have improved the quality of life of the poor and elderly doesn’t justify their existence.

The fact that Medicare and Medicaid are so ingrained in the nation’s health-care system doesn’t justify their existence.

The fact that Medicare and Medicaid have given millions of children access to health care that they may not otherwise have received doesn’t justify their existence.

The fact that millions of Americans want Medicare and Medicaid to be around in the future for their children doesn’t justify their existence.

The fact that Medicare and Medicaid have unanimous bipartisan support in Congress doesn’t justify their existence.

The fact that millions of Americans are dependent upon Medicare and Medicaid doesn’t justify their existence.

Medicare and Medicaid both suffer from the same underlying flaws.

First of all, it is not the proper role of government to provide a safety net, subsidize those with low incomes, prevent poverty in retirement, protect society’s most vulnerable, or ensure that anyone has access to affordable services.

Second, nowhere does the Constitution authorize the federal government to subsidize any American’s health insurance or health care, pay for anyone’s prescription drugs, have health-care programs, or have anything whatsoever to do with health insurance, health care, or medicine.

Third, no one has a right or an earned entitlement to health care that is provided at the expense of another. No American should be forced to pay for the health care of other Americans — regardless of how poor, disabled, sick, or needy the other Americans are.

Medicare and Medicaid don’t need to be reformed, saved, revamped, improved, streamlined, or replaced. They need to be abolished. Medical freedom and a free market in health care and health insurance — as used to exist in this country — is all that is needed.

This means the complete deregulation of the health-insurance industry, a free market in ambulance services, a free market in medical devices, a free market in organs for transplants, and a free market in health care. It means no federal vaccination programs; no medical-licensing laws; no federal grants for medical research; no federal funding of clinical trials; no federal HIV/AIDS-prevention initiatives; no medical-records mandates; no federal laboratories; no federal medical-licensing laws; no federal regulation of medical schools; no federal student loans for students to attend medical school; no federal nutrition guidelines; no federal mandates on hospitals, physicians, nurses, pharmacists, or insurance companies; no Department of Health and Human Services; and no Medicare or Medicaid.

Happy birthday Medicare and Medicaid? Not in a free society.

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