Medicare costs are a significant issue in the presidential debate this election. How much does Medicare cost America and seniors?
Medicare is the Government sponsored healthcare insurance plan that covers all social security recipients. The several different parts of Medicare receive their funding from different sources. Understanding from where the funding arises will help to understand the issue.
Medicare Part A is free to most Americans who have had the Medicare payroll tax deducted from their income for at least ten years. Medicare Part A covers hospital costs, hospice care, home health care and skilled nursing facility stays. The tax rate for Medicare’s Hospital Insurance (HI) is currently 1.45% for both employer and employee. The US government spent $486 billion on Medicare costs in 2011.
Medicare Part B covers most doctor’s visits and outpatient services. As of 2011, most Americans will pay a premium of $99.90 per month for Medicare Part B. Those with higher incomes will pay more, up to a maximum of $319.70. Federal tax dollars subsidize the costs of Medicare Part B.
Medicare Part D covers drug costs. There is a sliding scale for premiums, based on your income tax returns. Persons with an income of $85,000 or less for individuals, and couples filing a joint return with incomes below $170,000 will pay the lowest premiums. Medicare costs are less than they would be in the private section because of tax dollar subsidies.
Medicare expenses consumed 13% of the Federal budget in 2011. As a percent of total tax revenue, Medicare expenses represented 21% in the same year. Some experts are predicting that the cost of Medicare will increase to 80% of the GDP in 2075. This compares to 3% in 2011.