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COMMENTARY: Mr. President, Medicare IS NOT Medicaid !March 30, 2009

Posted Nov 04 2009 10:08pm

This past week has seen a great deal of exposure for President Obama in the media – press conferences, internet “community” meetings as well as numerous newsworthy emanations from the White House and Administration.  This site has become somewhat frustrated in the continued phraseology of the President and others in the Administration and in Washington DC.  This relates to the continued discussion of “entitlements” with respect to health care and the growth of Medicare and Medicaid, as if they were one and the same.

Let us please set the record straight for all to understand.

Medicare DOES NOT EQUAL Medicaid

First some facts about Medicare:

(1) It is an INSURANCE PROGRAM supported by payroll taxes and subscriber premiums.

(2) Workers pay a percentage of income as withholding on their income to the Medicare Fund (it should be sequetered but is in the general fund, more about this later).

(3) Beneficiaries, PAY a monthly premium for medical services, as well as drug benefits.  They also may pay for hospital coverage if they have not worked for at least 40 quarters (10 years) during which they made tax contributions to the fund.

So those who are eligible for and participate in Medicare are NOT receiving an “entitlement” but health insurance.  They have paid Medicare taxes and pay Medicare insurance premiums.  This is not welfare or health care “given” by the largess of the politicos in DC.

Now some facts about Medicaid:

(1) Medicaid is funded by State sources drawn from state budgets via state income taxes, property taxes or other fees.  These funds come usually out of the general fund.

(2) State funds are matched by the Federal government, through CMS, with funds from the federal general fund, which is drawn from federal income taxes primarily.

(3) Those eligible for Medicaid usually meet some combination of lack of income or limited assets.  It is therefore in fact, a form of health care “welfare”.

So, those on Medicaid are mostly those who have not contributed greatly to the system via taxes or who have such limited income or assets as to be without the ability to obtain health insurance in the private market.  Indeed, many Medicare beneficiares suffer the indignity of having to “desitute” themselves in order to get Medicaid nursing home benefits etc. (more on that issue for another time).

There is no shame in being on Medicaid.  But it is NOT the same as being on Medicare.  One is a form of welfare, the other a tax and premium supported insurance.

Indeed, esentailly all Medicare beneficiaries, are in fact contributors to the tax basis which supports Medicaid through both state and federal taxes.

Mr. President, please read this and get these facts straight.  If the Medicare fund has a shortfall, first repay what is owed to it from the siphoning of monies into the general fund, second raise tax rates if needed and thirdly raise premiums.  All of these options are unpopular but real alternatives.  As for Medicaid, you can only raise the income tax rates and states do the same – certainly not popular and there is not enough wealth at the “top” to rake in without tax increases all the way to bottom tier (more on general tax reform and its impact on health care options later).

In the end, MEDICARE IS NOT MEDICAID ! . . . jomaxx and obi jo


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