Medicare is a social insurance program that serves more than 44 million of us. The program costs about $432 billion, or 3.2% of GDP, in 2007. Medicaid is a social welfare (or social protection) program that serves about 40 million welfare recipients (as of 2007) and costs about $330 billion, or 2.4% of GDP, in 2007. Together, Medicare and Medicaid represent 21% of the FY 2007 U.S. federal government.
The only reason these two programs are not costing government (us) far more is because their reimbursement rates are unrealistically low. They don't pay their fair share, in fact some estimate that Medicare and Medicaid pay about 40 cents on the dollar for most hospital costs. As a result of this shortfall hospitals routinely overcharge the insurance companies and this is reflected in your premiums. So you are paying one way or another, make no mistake. Sadly, if you are a cash pay patient, your costs may be even higher when you think it should be lower. Less paper work for all concerned right? No, this isn't true because insurance companies often barter for hospital costs and this is something that an individual can't do. The person who pays cash not only pays their actual, but they are subsidizing the balance of unrecoverable costs from everyone else from insurance companies to medicare.
Is this a stupid system or what?
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