Sunday, September 2, 2012

Learning More About Why Medicare Is Approaching Insolvency

Well, you really do learn something new every day! This is in respect to a letter of mine published several days ago in the local rag, in reply to a nurse ("Wendy Smith") who said she worked on a cancer ward at local hospital and bemoaned the lack of sufficient resources to a visiting official from CMS. (The federal agency that oversees finances for Medicare). According to Ms. Smith the guy told her that never mind, they are effectively "moving deck chairs on the Titanic anyway". Huh!?

Anyway, in her missive Ms. Smith the nurse then jumped out and said THIS is why she is supporting the Paul Ryan plan to "save" Medicare! I then submitted a letter which read as follows:

"As a Medicare recipient who's recently been diagnosed with prostate cancer, I feel Wendy J. Smith's (Aug. 25) anguish at the future prospects for that program. However, Paul Ryan's voucher plan is absolutely not the way to right the Medicare "ship".

To be blunt, if currently (at age 66) I had to go cap in hand with a $10,000-$15,000 Ryan-voucher to try to snag an insurance company to pay for my care, I'd likely be laughed out of their offices! They'd probably think I was some kind of comedian out to try his new shtick. No lie!

A huge assumption with Ryan's plan is that having been handed this voucher, but with no government assurances mandating coverage (as exists now, including with Medicare Advantage), seniors will just be able to pick and choose the insurance company they want. I have news for them: NONE of those companies will be fighting to grab a bunch of oldsters in a high risk health pool! Especially, if you have so much as a pre-cancerous mole!

If insurance companies do sign on and accept already infirm oldsters (like me) it'll likely be with ginormous deductibles attached, say like $10,000 a year. How long will your voucher last then?

The only way to right Medicare is to increase revenues (say by increasing the payroll tax threshold to cover at least $1m of income). Americans must grasp they can't have their piddly (except for the uber-wealthy)tax cuts and future benefits too!"

One local yahoo couldn't even get my name correct on the online (Facebook) forum reply (referring to me as 'John') and asserted I ought to stop peddling Dem propaganda and learn more of Ryan's plan which actually permits people to remain in original Medicare. (Technically, this doofus is wrong, since that 'remain in' proviso was only appended LATER by Oregon Dem Rep Ron Wyden, in order to try to gain the plan more favor. So that was actually part of the Wyden-Ryan plan, not the strict Ryan original plan! )

Anyway, another respondent asserted I was wrong about the payroll tax threshold and in fact, ALL of wages were covered. Double 'Huh?' I'd always assumed that the Medicare payroll taxes withheld were identical to Social Security - or 6.2% per taxpayer- and only covered up to the same defined wage limit (currently $110,000). My mind could not wrap itself around how a program that was becoming more insolvent than Social Security could be funded less. But alas, it's true.

Though Medicare withholding tax does indeed apply to ALL wage scales, it is of a pitiful amount, only 1.45% to be exact! This measly scrimpy rate will only be changed as of next year if Obama's Patient Protection and Affordable Care Act is preserved, in which case - according to an IRS information site:

"For taxable years beginning after Dec. 31, 2012, employers will be required to withhold additional amounts from the wages of high-earning employees. The Medicare tax rate will increase by .9 percent (from 1.45 percent to 2.35 percent) on wages over $200,000 for single filers, wages over $250,000 for joint filers, and wages over $125,000 for persons who are married but filing separately. "

And, in addition:

"Beginning with tax year 2013 , single taxpayers who earn more than $200,000 and married taxpayers with combined income of more than $250,000 will face a new 3.8 percent Medicare tax on their investment gains. The tax will apply to investment income including interest, dividends, capital gains, rents, royalties and the taxable portion of an annuity payout. "

So on researching all this, my immediate and stunned reaction was:


It's totally underfunded! It needs to be funded across ALL wages at 6.2% not 1.45% or even a miserly 2.35%, especially when Medicare Advantage programs are bleeding it dry by their higher costs, to the tune of $12 billion a year!

As I said, you learn something new every day!

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