By

Dave Kingsley

Definition of Socialism and its Application to Medicare

Socialism is defined simply as “an economic system in which government owns the means of production.” The Medicare system produces no products and provides no services. The system does not manufacture pharmaceuticals or medical devices, it owns no hospitals or long term care facilities. It employees no nurses or physicians or other health care professionals for the purpose of providing services in a medical care facility. It is a program for underwriting health care risks for individuals who pay into it.

There is nothing socialistic about government management of a pool of funds provided by current and future beneficiaries for the purpose of paying for their medical care. In 2019, the program spent nearly $800 billion. In the current political and economic context, approximately 60% of all funds expended by Medicare is derived from the people receiving care. The other 40% is transferred to the program from the U.S. Treasury. This transfer would be unnecessary if a corrupt political process were not allowing excessive charges for services and products.

For instance, the Medicare Modernization Act in 2003 created a prescription drug benefit (Part D) and included a provision that prohibited negotiation of pharmaceutical prices by the Center for Medicare and Medicaid Services. Through enforcement of proper management of costs by providers, and reasonable charges for costs, the 40% transferred by the Treasury could be eliminated, thereby making the program fully funded by the beneficiaries.