What is Medicare?
What is Medicare? Medicare is a guaranteed health insurance plan intended for people over the age of 65 in the United States. The program is administered by the Federal Government and funded with taxes.
It was on July 30, 1965, that President Lyndon Baines Johnson signed an amendment to some Social Security legislation that established the Medicare system. Former President Harry S. Truman was the first person enrolled and he was issued the first Medicare identification card. The Medicare concept was designed to be connected with the Social Security program that would insure that elderly Americans would not find themselves destitute or forced to depend on the charity of others. What is Medicare and how is it funded? It is a health insurance for the elderly.
The program was funded by taxation. The tax is part of the FICA tax withheld from the paychecks of all employees. The FICA tax is the Federal Insurance Contributions Act tax and is currently at a rate of 2.9% of the employee’s gross pay. This amount is divided between the employer and employee with each being responsible for 1.45%. The Medicare portion of the FICA tax, unlike Social Security contributions, does not have an income level cutoff.
Persons reaching the age of 65 currently have the option of enrolling in several various Medicare plans. When the program began, it resembled standard insurance program and did not have many variations or options. However, as the Insurance Industry changed and innovative programs were developed to improve health insurance and manage overall health care, the Medicare program responded by offering some optional plans modeled, in part, on the private sector insurance.
There are some who view Medicare as a form of Universal Free Health Care of the type that is practiced in other countries such as Canada. However, there are many differences that combat the negative impact of the quality of health care services in those places. Since the free health care is being provided to only the elderly and the insurance industry remains competitive for everyone else, health care service has not declined as a result of Medicare.
The Medicare program is not free health care in any case. It has been purchased by the contributions of working citizens during their entire working life. It is not a perfect system by any means, and Medicare fraud has been an ongoing problem. As a person nears the age of 65, they must make sure they are aware of the variations, options, are restrictions of Medicare. They have paid for it and it is their right to enjoy the safety net it provides.