Although I am not quite old enough to qualify for Medicare, I recently received in the mail a 131-page large-size book titled Medicare & You 2024: The Official U.S. Government Medicare Handbook, published by the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services. Turns out that the book was intended for a previous owner of my house who evidently was soon eligible for Medicare.
HHS
The Department of Health and Human Services (HHS) “supports and implements programs that enhance the health, safety, and well-being of the American people.” HHS “strives to provide all Americans with high-quality healthcare and social services.” It also fosters “sound, sustained advances in the sciences underlying medicine, public health, and social services.” HHS has 12 operating divisions that “administer a wide variety of health and human services and conduct life-saving research for the nation, protecting and serving all Americans”:
- Administration for Children and Families (ACF)
- Administration for Community Living (ACL)
- Administration for Strategic Preparedness and Response (ASPR)
- Agency for Healthcare Research and Quality (AHRQ)
- Agency for Toxic Substances and Disease Registry (ATSDR)
- Centers for Disease Control and Prevention (CDC)
- Centers for Medicare & Medicaid Services (CMS)
- Food and Drug Administration (FDA)
- Health Resources and Services Administration (HRSA)
- Indian Health Service (IHS)
- National Institutes of Health (NIH)
- Substance Abuse and Mental Health Services Administration (SAMHSA)
HHS is overseen by a cabinet-level secretary, a deputy secretary, and numerous assistant secretaries and offices. The HHS’s fiscal year 2024 budget is about $1.7 trillion.
The largest and most expensive of the HHS divisions is the Centers for Medicare & Medicaid Services (CMS). It “is the federal agency that provides health coverage to more than 160 million through Medicare, Medicaid, the Children’s Health Insurance Program, and the Health Insurance Marketplace.” CMS “works in partnership with the entire health-care community to improve quality, equity and outcomes in the health care system.” About 50 percent of the HHS budget goes toward Medicare, and about 33 percent goes toward Medicaid.
Medicare
I was unable to find the Medicare & You 2024 book on the CMS website. However, the website does have some general information about Medicare that provides a brief overview of the Medicare program. Medicare is a government health-insurance program for
- People age 65 or older.
- People under age 65 with certain disabilities.
- People of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant).
Surprisingly, it is not mentioned that people with ALS (Lou Gehrig’s disease) are also eligible for Medicare coverage. As of last year, 65.6 million Americans were enrolled in Medicare, or roughly 25 percent of the adult population.
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). Parts A and B together are considered to be Original Medicare. Part A helps cover inpatient care in hospitals and skilled nursing facilities (but not long-term care) and also helps cover hospice care and some home health care. Part B helps cover doctors’ services, outpatient care, physical and occupational therapy, and some home health care. Part D provides subsidized access to prescription drug-insurance coverage by joining a private plan approved by Medicare. Part C is private insurance coverage that combines the benefits of Part A and Part B and usually includes Part D and various additional benefits like dental and vision coverage.
The Medicare & You 2024 book tells the reader when and how to sign up for Medicare, discloses what is new and important for 2024, defines terms, describes what each part of Medicare covers, explains the types of Medicare Advantage plans, compares Original Medicare to Medicare Advantage, explains Medicare rights and protections, and provides details on where to get more information, how to get help paying your health and drug costs, and how to compare health and drug plans in your area. However, there are a number of important things about Medicare that the Medicare & You 2024 book does not say about Medicare.
Medicare & You
Medicare 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. Self-employed individuals pay the full 2.9 percent but receive both a reduction in their net earnings from self-employment and a tax deduction equal to 50 percent of the amount of the Medicare tax they paid. (The original tax rate was 0.7 percent on a taxable wage base of $6,600.) There is also an additional 0.9 percent tax on earnings above a threshold of $200,000 ($250,000 for married couples). 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 (10 years). This should all be common knowledge, but I suspect that many Americans don’t even realize that their employer pays the same amount in Medicare tax on their behalf as they do.
Here are some of the lesser-known things about Medicare, some of them not so good.
One cannot opt out of Medicare and prevent the 2.9 percent tax from being collected. Those who have reached age 65 and decide not to participate in the program are not entitled to get any of their “contributions” back. Likewise, the heirs of those who die before becoming eligible for Medicare don’t get anything back. Eligibility for Medicare is fixed at 65, regardless of one’s income, assets, or health status. Those who work and pay Medicare taxes for 40 years receive the same benefits as those who only work for the 10-year minimum.
Although there is no monthly premium required for Medicare Part A, since it only includes hospital insurance, Medicare recipients are forced to pay a monthly premium for Part B so they can be covered for much more commonly used physician’s services, preventative services, and outpatient care. The premium for 2023 was $164.90 with a $226 deductible. It increased to $174.70 with a $240 deductible for 2024. However, since 2007, this premium has been based on one’s income. Medicare beneficiaries with a modified adjusted gross income above $103,000 ($206,000 for married couples filing jointly) pay an additional income-related monthly adjusted amount (IRMAA) between $69.90 and $419.30 depending on their income.
Failing to sign up for Medicare Part B within eight months of stopping work or losing employer health-insurance coverage will result in a permanent 10 percent increase in one’s monthly premiums. Medicare Part D has an average cost of $34.50 in 2024. And it also has an IRMAA of between $12.90 and $81.00. Once you pass your initial enrollment period and go 63 days in a row without sufficient prescription drug coverage, you may have to pay a permanent late enrollment fee for Medicare Part D that is added to your monthly premium. People with Medicare Part C still have to pay the monthly premium for Part B in addition to any premium for their Medicare Advantage plan. Although Medicare Parts B, C, and D are partially funded by income-based beneficiary premiums, funding by the federal government out of general tax revenues dwarfs the revenue that is received from premiums. This means that Medicare is ultimately an income transfer program just like Temporary Assistance to Needy Families (TANF); Medicaid; Women, Infants, and Children (WIC); food stamps; Supplemental Security Income (SSI); Section 8 housing vouchers; and other welfare programs.
Medicare is also fiscally unstable, uncertain, and unsustainable. According to the “2023 Annual Report of The Boards of Trustees of The Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds”:
Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation.
The Trustees project that expenditures will increase in future years at a faster pace than either aggregate workers’ earnings or the economy overall and that, as a percentage of GDP, spending will increase from 3.7 percent in 2022 to 6.1 percent by 2097 (based on the Trustees’ intermediate set of assumptions). Under the relatively higher price increases for physicians and other health services assumed for the illustrative alternative projection, Medicare spending would represent roughly 8.3 percent of GDP in 2097. Growth under either of these scenarios would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the Federal budget.
Regarding the Medicare Hospital Insurance (HI) trust fund for Medicare Part A, “As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years.” The Trustees “project deficits beginning in 2025 and continuing until the trust fund becomes depleted in 2031.” And regarding the Supplementary Medical Insurance (SMI) trust fund for Parts B and D, although “the SMI trust fund is expected to be adequately financed over the next 10 years and beyond,” this is only because “government contributions, which are transfers from the general fund of the Treasury” are “reset each year to cover expected costs and ensure a reserve for Part B contingencies.” These transfers “finance about three-quarters of SMI costs” and “represent a large and growing requirement for the Federal budget.”
And finally, according to a report by the Paragon Health Institute, improper Medicare payments (ranging from fraud to unintended documentation errors), which in the vast majority of cases result in overpayment by the federal government, were $46.76 billion in 2022 according to the CMS, “although actual improper payments are likely far higher.”
Medicare and the Constitution
Medicare is the largest purchaser of health-care goods and services in the world. It is also second-largest federal domestic program, after Social Security. The two programs are, in fact, intertwined. It was in 1965 that President Lyndon Johnson signed into law the Social Security Amendments of 1965 that added Title XVIII, Medicare, and Title XIX, Medicaid, to the Social Security Act of 1935. They were the nation’s first public health-insurance programs.
During her confirmation hearings for the Supreme Court, Amy Coney Barrett was criticized by the late Senator Dianne Feinstein (D-Calif.) because she would not say whether she agreed with “a right-wing scholar who has argued that Medicare and Social Security are unconstitutional because they exceed the spending powers of Congress.” When pressed further about whether Medicare is unconstitutional, Barrett said she “can’t answer that question in the abstract…. I also don’t know what the arguments would be…. But it’s not a question I’ve ever considered before.” But of course Medicare is unconstitutional. The Constitution nowhere authorizes the federal government to have anything to do with medicine, health insurance, or drugs. The Constitution nowhere authorizes the federal government to have a safety net, a welfare program, or an income-transfer program. The Constitution nowhere authorizes the federal government to subsidize the aged, the poor, or the sick. The Constitution nowhere authorizes the federal government to expand access to health care, make health care more affordable, or ensure that everyone has health insurance. The Constitution nowhere authorizes the federal government to have a HHS, CMS, or Medicare.
Medicare and Republicans
Since Republicans claim in their platform to be the party of the Constitution, it stands to reason that they, of all people, would be opposed to the federal government having a Medicare program and would work to eliminate it when they had control of the government. Such, of course, is not the case. Since Medicare was enacted in 1965, Republicans — regardless of whether they had a majority or minority in the House or Senate or whether they occupied the White House — have done nothing of substance to eliminate the Medicare program, cut Medicare benefits, or reduce the number of people on Medicare. In fact, according to their platform, Republicans want to preserve, save, and modernize it:
More than 100 million Americans depend on Medicare or Medicaid for their healthcare; with our population aging, that number will increase. To preserve Medicare and Medicaid, the financing of these important programs must be brought under control before they consume most of the federal budget, including national defense. We intend to save Medicare by modernizing it, empowering its participants, and putting it on a secure financial footing. We will preserve the promise of Medicaid as well by making that program, designed for 1965 medicine, a vehicle for good health in an entirely new era.
In Donald Trump’s “An America First Healthcare Plan,” he states, “As long as I’m President, no one will lay a hand on your Medicare. Your Medicare is going to be safe and it’s going to be solid.” No Republican running for Congress from any state ever even implies or hints that Medicare is unconstitutional and should be abolished. The second largest welfare program in the federal budget has been accepted as sacrosanct.
And even worse, it was Republicans who instituted the largest expansion of Medicare in history in 2003 when the Republican majority in Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) that created Medicare Part D. It was supported by all of the Republican leaders in both Houses of Congress and passed with overwhelming Republican support before it was signed into law by a Republican president, George W. Bush. This Republican version of health-care reform expanded Medicare beyond the wildest dreams of Lyndon Johnson’s Great Society. But this should have come as no surprise since it was Republicans who created the State Children’s Health Insurance Program (SCHIP, now CHIP) in 1997 to provide federally funded health insurance to children in families with incomes too high to qualify for Medicaid.
Republicans have no philosophical objection to Medicare or any other government health care or health insurance program.
Conclusion
There is no right to health care or health insurance that is the duty of government to provide or enforce. And not only is it unconstitutional, it is an illegitimate purpose of the federal government to pay for, subsidize, or provide health care or health insurance. The fact that someone is elderly, poor, disabled, sick, or in dire need of medical treatment doesn’t make the unconstitutional constitutional or the illegitimate legitimate. Health care and health insurance are services that can and should be provided on the free market just like any other services, from landscaping to car repair to pest control to hair styling.
No one is entitled to receive Medicare because he “paid into the system” his whole working life. There is no connection between the taxes one pays into the Medicare program and the benefits that one receives from the Medicare program. Like it can do with Social Security, Congress can, at will, make substantial changes to the Medicare program. Congress can reduce the amount of benefits, eliminate coverage for certain procedures, increase the payroll tax rate on employers or employees (or both), raise the eligibility age to 67 to match the normal Social Security retirement age that has been gradually increasing, raise Part B and/or Part D premiums, begin charging a premium for Part A, increase deductibles, increase co-payments, institute a means-test or asset test for eligibility, increase the IRMAA, or institute a yearly or lifetime limit on benefits.
Medicare doesn’t need to be protected, saved, revamped, improved, streamlined, reformed, or replaced with some other government medical program. It needs to be eliminated. Medical freedom and a free market in health care and health insurance needs to be restored. No American is entitled to health care or health insurance at the expense of any other American. No American should be forced to pay for the health care or health insurance of any other American. All charity should be private and voluntary — including medical charity.
This article was originally published in the February 2024 issue of Future of Freedom.