Wednesday, August 24, 2011

Medicare Report - Part III - Nonprofit FICA Compared to Private Insurance

By: Dan Reed, American Citizen

The Nonprofit FICA Medicare System

The nonprofit, low overhead, payroll tax financed FICA system has efficiently administered Medicare since 1965! The FICA is a federal organization with a 46-year history of collecting Medicare payroll taxes, and depositing them into the nonprofit Medicare trust fund. The Medicare trust fund is used to pay: hospitals, doctors, medical equipment companies, and drug companies, when Medicare patients use their Medicare medical benefits. 

Because the nonprofit FICA administers both Social Security and Medicare, FICA administrative costs are about 30% less than those of private for-profit health insurance companies. In fact, the FICA Medicare system actually saves money – a lot of money – when compared with private for-profit health insurance premiums!
It’s true that Medicare spending has risen dramatically over time! However, it’s also true that private insurance premiums and profits have risen much more dramatically over the same period of time!

Private For-Profit Health Insurance in the U.S.A

As nonprofit, community based organizations; private health insurers were once a benefit to millions of workers and thousands of businesses! However, over many decades, these nonprofit, communities based health insurers evolved into private for-profit health insurance corporations.

The private health insurance industry in the United States “Is Not A Free Market!” In fact, since the nineteen fifties, private health insurance corporations have been exempted from U.S. anti-trust laws, which allowed them to operate as “Monopolies”: fixing prices, dividing markets, buying competitors, and price rationing health care availability too millions of uninsured Americans!

Private health insurance premiums are designed to increase insurance company profits! For decades, these private health insurance monopolies have operated a business modal based on: rationing health care coverage to the uninsured, and denying health care claims to the insured!

Full Story:
Now, Republicans want to privatize Medicare by phasing out the nonprofit FICA Medicare system, and phasing in "direct federal premium support payments” to private for-profit health insurance monopolies! These Private Health Insurance bureaucracies add zero value to healthcare, and only "duplicate existing FICA Medicare services". So, why are Democrats and the media not asking?

1. Where’s the gain from forcing seniors out of an admittedly expensive Medicare system, into a significantly more expensive private health insurance system? 

2. Why would Republicans want to provide “Direct Federal Premium Support Payments” to private health insurance monopolies?

3. Why would Republicans trust senior’s health care to an industry monopoly that has a well-documented history of increasing corporate profits by cheating its customers?

Sunday, August 21, 2011

Medicare Report - Part II - The Republican Medicare Reform Plan

By: Dan Reed, American Citizen

It’s important to note that conservative Republicans have opposed Social Security, Medicare, and Medicaid since each program was established! Part two of this three part Medicare report reviews the major components of the Republican Medicare Reform Plan, provides analysis of the premium support proposal by the CBO and the Kaiser Family Health Foundation, and presents the Democrats argument.
The Republican plan to would make three fundamental Reforms to Medicare:

1. The Republicans plan would cap Medicare payments at a rate slightly above inflation, which is far less than the rate health care costs are rising – meaning seniors would be forced to pay rising medical costs out of their social security and retirement savings!

2. The Republicans plan would phase out the nonprofit FICA system, which directly reimburses doctors, hospitals, drug Corps, and medical equipment suppliers.

3. The Republicans plan would phase in direct federal payments to Private for-profit Insurance corporations, which seniors would be forced to choose from.

Republicans claim their “Medicare Reform Plan” would lower costs by making health care consumers more judicious about their health care consumption! However, most experts agree that health care is not a marketable product that people can bargain for when needed! Instead, they explain that health care is a necessity that people urgently need when they get sick! And, the most expensive care is generally not optional, predictable, or negotiable when demanded!

Here’s an example of judicious health care consumption: a person having a heart attack would judiciously interview a few doctors and hospitals to get the lowest cost before receiving treatment! If said person dies while being judicious about their health care consumption, said person successfully lowers their hospital costs and doctor fees! The moral: “DON’T GET SICK, AND IF YOU DO, BE JUDICIOUS AND DIE QUICKLY”! Economists call this market-based solutionDemand Shedding”.

Analysis by the CBO

Analysis by the Congressional Budget Office (CBO), which does budgetary analysis for both parties in Congress, concluded that Medicare beneficiaries coming into the Republicans Health Premium Support System after 2022 would spend significantly more for heath care under the Republicans private insurance plan:
  • Traditional nonprofit FICA Medicare costs much less than private health insurance premiums because private insurance companies have significantly higher administrative costs, pay higher hospital and doctor’s fees than Medicare, and need to make a profit. 
  • The Republicans proposed direct federal health premium support payments to private insurance corporations, would increase much more slowly than private insurance premium increases, leaving more for Medicare beneficiaries to pay out of their social security and pension savings.

The CBO estimates that net federal premium support payments for a typical 65-year old would be $8,000, or 39%. This means the total cost of providing health care benefits to a typical 65-year old in the Republican Medicare Reform Plan would be about $20,500 in 2022, which the Medicare beneficiary would pay $12,500 in out of pocket costs! THIS IS IMPORTANT, because most Medicare recipients live on a combined social security and pension of about $22,000 per year!

Analysis by Kaiser Family Health Foundation 

Using CBO projections, the Kaiser Family Health Foundation did the math and determined that if a person who turned 65 in 2022 were to remain in the traditional Medicare system, their out of pocket costs would be just $5,630 – a full $6,870 less than it would be under the Republican reform proposal. Kaiser explains it would cost more money to provide benefits under the Republican proposal because private health insurance plans traditionally pay higher fees to health care providers: hospitals and doctors, than FICA Medicare does”, and private health insurance plans have significantly higher administrative costs and profit requirements. 

Full Story:
 Democrats Argument 

Democrats argue that Republicans proposed “Health Insurance Premium Support” would not keep pace with rising health care costs because their health insurance support premiums would be linked to the consumer price index, which hasn’t grown nearly as fast as health care costs! Furthermore, Democrats argue the Republicans plan, which would make direct federal payments to private insurance corporations, amounts to a massive subsidy to private health insurance corporate profits!

The Republican Medicare Reform proposal would surely reduce federal spending for Medicare! However, the Republican plan leaves Medicare beneficiaries on the hook for significantly greater out-of-pocket insurance premiums and rising medical costs than they would pay under the existing FICA Medicare system. Furthermore, the Republican plan does absolutely nothing to solve the core problem: the enormously high cost of health care in the United States! 

Friday, August 19, 2011

1945 Victory in Japan Parade In Honolulu

Here’s a great video of a Spontaneous Victory in Japan Parade in Honolulu, on VJ Day August 14,1945. Take a look at this video – it’s absolutely fabulous!  Notice the cars, jeeps, and youth. How young they all were to do what they did.  This guy really captured a moment in history! (You can listen to Jimmy Durante singing, "I'll be Seeing You" in the background)  This is a super video of a time we need to remember and be THANKFUL. Check out the color fidelity. It's not bad for 1945.  Nothing will ever compare with Kodachrome film.

Here is the generation of are our parents and grandparents. THEIR BRAVE GENERATION SAVED AMERICA! Most of the 1945-generation have passed on. Over a million of them died fighting in: France, Germany, Italy, Africa, Guadalcanal, Iwo Jima, New Britain, Okinawa, the great Sea and Air battles, etc. Those who survived, returned, and built the greatest economy in the world! I GET TEARS IN MY EYES WHEN I THINK ABOUT WHAT OUR PARENTS AND GRANDPARENTS DID FOR US and AMERICA! The few remaining are now in their late eighties and nineties, and their numbers are rapidly dwindling. 

The following video Thanks to WWII Vets is an excellent trailer for an upcoming documentary in November 2011, which I feel presents an excellent follow-up to the VJ Day video above:
I often wonder what these great Americans are thinking today, as they watch our generation, their children, battle over what’s left of their huge sacrifice and hard work? I continue to ask myself, What Have We Done?

Thank you for watching, 

Dan Reed - American Citizen

Thursday, August 18, 2011

Medicare Report - Part I - The Existing Medicare Program

By: Dan Reed, American Citizen

Conservative politicians constantly complain about Medicare and campaign on why Medicare needs significant reforms. These same politicians falsely say that Medicare spending is draining the U.S. Treasury. Based on these claims, I decided to investigate.

The following three-part report reviews the existing Medicare Program, outlines the Republican Medicare Reform proposals, and compares the costs of the FICA Medicare system with the costs of Private Health Insurance.  

Medicare: Program, Financing, and FICA Trust Fund
For three decades politicians, business interests, and media people have presented a drumbeat of negative misinformation about Medicare, which has caused some people to believe that Medicare is welfare for seniors, and generational thief! So I begin this three part series with an accurate overview of: why Medicare was established, what makes up Medicare parts A, B, C, and D, how Medicare is really financed, and how the Medicare FICA trust fund operates

Medicare Program

President Lyndon B. Johnson signed Medicare into law on July 30, 1965. Medicare is a social insurance program administered by the Federal Insurance Contributions Act (FICA), which was established in 1935 as part of legislation that created Social Security. Medicare was established to solve a problem between the high costs of private medical care, combined with old peoples generally low retirement incomes!

Medicare provides health insurance coverage to people over the age of 65, people under 65 who are permanently disabled, and people who meet other special criteria. The Medicare program also funds residency-training programs for the vast majority of physicians in the United States. Medicare benefits are grouped into four coverage categories: Part-A, Part-B, Part-C, and Part-D, with each being funded in a different manner.

Medicare Financing

Medicare covers 80% of Medicare-approved medical cost, with the remaining 20% being paid by either the Medicare recipient, or a “supplemental insurance plan” purchased from a private Health Insurance Company.

Financing Medicare - Medicare is partially financed by payroll taxes collected by the Federal Insurance Contributions Act (FICA), and the Self-Employment Contributions Act of 1954. The Medicare payroll tax rate is 2.9% of the gross wages, salaries and other employment compensation, which is split between the employee and employer. Self-employed individuals must pay the entire 2.9% tax on net earnings, but may deduct half of the tax from income when calculating their income tax. High-income Social Security beneficiaries also pay income tax on their Social Security income, some of which goes toward Medicare. Beginning in 2013, the 2.9% hospital insurance tax will apply to the first $200,000 of income for individuals or $250,000 for couples filing jointly, and will rise to 3.8% on incomes in excess of those amounts.

Medicare Part A – Covers hospital benefits, and is financed from FICA payroll taxes collected from employers (1.45%) and employees (1.45%). About 99% of Medicare beneficiaries do not pay a Medicare Part-A premium because they have earned least 40 quarters of Medicare covered employment. Those individuals with 30 to 39 quarters can buy into Medicare Part A at a monthly rate of $248 to $450.

Medicare Part B – Covers doctors, treatment, and medical equipment costs, and is partially financed with $110 monthly fees withheld from each retirees monthly Social Security check, and co-pays. These fees cover approximately 25% of Part-B Medicare benefits. General revenues of the Federal Government subsidize the balance of Medicare Part B benefits.

Medicare Part C – With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). These programs were known as “Medicare + Choice” or “Part-C” plans. Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, “Part-C” plans were made more attractive to Medicare recipients by the addition of prescription drug coverage and became known as “Medicare Advantage Plans”. Medicare Advantage plans are required to offer coverage that meets or exceeds the standards set by the original Medicare program. Medicare Part-C is partially financed by insurance premiums withheld from each participating retirees monthly social security check. General revenues of the Federal Government directly subsidize each private health insurance company that provides Medicare Part C benefits.

Medicare Part D – Insurance premiums are directly paid to private insurance companies by Medicare recipients, for either a stand alone prescription drug plan, or as a portion of the premium for their Medicare Advantage plan. General revenues of the Federal Government partially subsidize Drug companies that provide Medicare Part-D benefits. 

The FICA Trust Fund 

The FICA is a solid non-profit organization, with a 76-year history of efficiently administering both the Social Security and Medicare Trust Funds! All FICA Medicare collections go into a trust fund, which is used to pay doctors, hospitals and private insurance companies when Medicare patients use their Medicare medical benefits. The FICA administers both Social Security and Medicare. Because of this “dual role”, FICA administrative costs are about 30% less than those of private health insurance companies. 

Full Story: of reven
Republicans and the media continue to “Label Medicare an Entitlement”, like government provided welfare. This is hogwash! The truth is Medicare Parts A, B, C and D, which provides health care for more than 45 million American seniors are partially paid by lifetime payroll tax deductions, partially paid by retirees monthly Social Security withholdings, and partially subsidized by federal tax revenues! 

Republicans falsely claim that Medicare already consumes about (12.5%) of federal spending, and “costs” are set to explode as the baby boomers begin retiring in 2011! Again, this is hogwash! Republicans only mention the spending side! They conveniently omit monthly payroll tax collections and existing Medicare FICA trust fund surpluses. The Medicare FICA trust fund has taken in more than it paid out for years, and currently has a “surplus” that will last until 2024!

Does anyone ever question why progressive politician’s claim Medicare is solvent through 2024, while conservative politician’s claim Medicare is almost broke? The American people need an accurate AUDIT before any Medicare Reform is undertaken! 
  • How much has been collected by FICA Medicare payroll taxes since 1965?
  • How much has been collected from retirees Social Security checks since 1965?
  • How much will be collected from the FICA Medicare payroll taxes in the future?
  • How much will be collected from future retirees Social Security checks?
  • How much has been paid out of the FICA trust fund?
  • How much additional revenue is needed to balance Medicare spending, Medicare trust fund surpluses, future FICA payroll tax revenues, and retirees withholdings?

Without this “AUDIT”, Republican hype about Medicare spending is just pure crap!