How Is Medicare Funded?

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   Pete Wittman

   President, The Wittman Group, Tennessee

   Medicare has several parts.  Medicare Part A covers Hospital Benefits; Part B covers physician & outpatient services; Part D covers prescription drugs.  Also, a Medicare Supplement can be purchased to cover gaps in Part A & B.  All of that to say that Medicare claims  are funding from a combination of resources.  The primary source of funding comes from taxes typically withheld from your paycheck (1.45%).  Part A is covered 100% by the government; Parts B & D are subsidized by the government, paying a portion, while premiums collected are supposed to pick up the remaining.  Major reductions in claim payments from the Medicare side are currently being implemented in order to help fund the Affordable Care Act (aka Obama Care).  Reductions in reimbursements to doctors & hospitals have already begun.  Also, the implementation of Accountable Care Organizations (designed to determine what procedures are necessary... surgery or a pill) will also dramatically reduce costs.  All this to save the government money on Medicare funding.

   Answered on April 1, 2014

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