Personal Finance

Barry Margolin · Guest

"Tony" <tonkoj@gmail.com> wrote:

John D. Goulden · Guest

Medicare (and Social Security, for that matter) are taxes,
not insurance policies or retirement portfolios. What I paid
in Medicare and Social Security last month is in my parent's
mailbox this month. Twenty years from now when I am
hopefully still around and drawing Medicare and Social
Security, it'll be my kids and grandkids footing the bill.

<soapbox on>
At this time, the income from Social Security taxes exceeds
the benefits paid. Congress immediately "borrows" the
surplus and spends it on damn knows what, thus running up
the national debt and endangering my retirement. One reason
that I support President Bush's proposal for individual
retirement accounts that are partially funded by Social
Security taxes is that it will be more difficult for
Congress to get their grubby little paws on that money.
<soapbox off - sorry, moderator, couldn't resist>

--
John Goulden
(not a cpa or lawyer, just a long-time lurker and occasional poster)

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Tony · Guest

Rich Carreiro wrote:

Tony · Guest

A.G. Kalman wrote:

Tony · Guest

Barry Margolin wrote:

Hank Murphy · Guest

"Tony" <tonkoj@gmail.com> wrote:

<snip>

Bob Sandler · Guest

Gil Faver · Guest

"Tony" <tonkoj@gmail.com> wrote:

L K Williams · Guest

Tony" <tonkoj@gmail.com> wrote:

Bob Sandler · Guest

Barry Margolin · Guest

"Tony" <tonkoj@gmail.com> wrote:

Tony · Guest

Gil Faver wrote:

Tony · Guest

Bob Sandler wrote:

Shyster1040 · Guest

As I understand it, your basic question is not, why do you
have to pay the taxes, but rather, given that you've paid
the taxes, why is the availability of benefits limited to
(otherwise eligible) persons physically present in the U.S.,
correct?

First, this probably isn't the right forum to ask that
question - the main focus here is on the liability for the
taxes, generally irrespective of the use the revenue is
ultimately put to; the "tax" answer, as you've seen, is
that, since the taxes are validly levied, you've gotta pay
them, and the fact that in your case you believe you
ultimately won't receive the benefits for which those taxes
are levied is largely irrelevant - the benefits derived by
the expenditure of tax revenue do not (need not, and in some
cases either cannot or should not) go dollar-for-dollar to
those individuals who paid the taxes.

For example, part of the general tax revenue goes to pay for
FDA regulation of so-called "orphan drugs" - drugs used to
treat rare diseases such as Wilson's Disease (a rare
autossomal recessive inherited disease primarly caused by an
acumulation of copper in tissues all over the body, mainly
in the liver, brain, kidneys and cornea). Unless you suffer
from Wilson's Disease, you obtain no benefit from that part
of your taxes that go to pay for the FDA's regulation of
drugs for that disease.

Nonetheless, the "tax" question was not your primary
question, but rather the broader one of why, unlike social
security, your benefits do not travel with you.

The short answer is, in 1965, when Congress enacted
Medicare, it excluded coverage for services provided
overseas (with limited exceptions), see 42 USC sec.
1395y(a)(4), and did so with little or no explanation;
neither the committee reports during consideration nor the
final reports on passage do more than restate the exclusion.

At least one commentator has suggested that Congress was
concerned with the following policy issues: (1) difficulty
in administering and monitoring such services, (2) inability
to control fraudulent claims by foreign providers or
beneficiaries receiving such services, (3) limitation of the
economic benefits of the subsidization of medical care to
those providers who would contribute back to the U.S.
economy, and (4) the sheer expense of providing world-wide
coverage. Of these, the last is arguably the most
significant - while we "pay" for Medicare through the
associated taxes, the benefit provided is not linked to
amounts contributed, and may vastly exceed the total amount
of taxes paid by a particular recipient. This is in contrast
to social security, under which the ultimate benefit
received bears a very determinate relationship to amount of
taxes paid, a relationship that effectively caps the "cost"
of the program with respect to each and every beneficiary.

My source for this is the following article: James R.
Whitman, "Venturing Beyond the Great Wall of Medicare: A
Proposal to Provide Medicare Coverage Outside the United
States," 8 Elder Law Journal 181 (1993)[available from the
Journal's website and also
at:http://home.law.uiuc.edu/elderlaw/issues/vol_8/num_1/pdf/williams.pdf].

As Whitman discusses, an even better analogy than social
security is the program called TRICARE, which is the
military analog to Medicare. TRICARE, which is funded out of
general revenues rather than a specific tax, also provides
coverage to retired military personnel and their
spouses/dependents, including those who choose to
permanently retire overseas.

Whitman discusses the fact that most (if not all) of the
policy concerns that, as he speculates, may have motivated
Congress to restrict Medicare benefits in 1965, except the
additional cost, have been successfully addressed by the
TRICARE program. In particular, as Whitman describes it,
the TRICARE program has developed a fairly large network of
providers and claims administrators that operates largely
within the dictates of the requirements of Medicare, and
that at this late date there is no justifiable reason for
not permitting Medicare recipients to take advantage of this
network (at least in certain circumstances - Whitman limits
his proposals to vacationing Medicare beneficiaries) by
extending Medicare coverage to services provided within the
existing TRICARE network.

Whitman's article is an interesting (and relatively short)
read. If you really want to pursue the question, I would
suggest starting there.

Thus, it would appear that the "non-tax" answer to your
question is, no-one's really sure, but there are various
concerns that might have motivated Congress in 1965,
including concerns over administration, monitoring, fraud,
and last (but certainly not least) cost. However, most of
those putative concerns have been successfully addressed by
the military via its TRICARE program and, other than the
additional cost (get ready for more Medicare taxes), there
are few if any remaining concerns that justify the
continuing exclusion of medical services provided overseas.

Does that help at all?

<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >>

Tony · Guest

Barry Margolin wrote:

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