TCS Daily


Health Care Reform or Welfare Program: Who Pays the Bill?

By Steven Selengut - August 19, 2009 12:00 AM

The White House has released another of its health care reform clarification emails--- there will be more. It seems strange to me that the focus is on insurance coverage rather than on the spiraling costs of health care itself.

Frankly, the drafters of the insurance reforms have little, if any, understanding of insurance, risk assessment, or underwriting--- and nary a clue about running a business. But why should they care? This is Robin Hood politics, not business. Why do we continue to re-elect them is a far better question.

Incidentally, I am not a health insurance salesman or healthcare professional--- just a payer of far too much in small-group insurance premiums in spite of a crazy-high deductible!

Insurance is neither a cost of obtaining healthcare services nor an expense associated with those services. Insurance is an agreement in which a private company agrees to pay part of someone else's medical expenses in exchange for premiums it collects in advance from all of its insureds.

If President Obama owned the New World Order Health Insurance Company, he would not be willing to insure an applicant with brain cancer nor would he be willing to pay an unlimited lifetime benefit to all insureds--- not without a premium that reflects the risks to his personal bank account.

Theoretically, insurance companies collect enough in premiums to operate profitably while paying all the claims they have agreed to pay under contracts with the individuals and groups that they insure. If we add more risk, the insurance company has no choice but to increase premiums.

The persons who own the insurance companies (you and me, pal) expect them to operate profitably. The companies employ thousands of actuaries, healthcare industry expense analysts, claims adjusters, fraud inspectors, service personnel, underwriters, risk assessors, etc. to assure that this happens.

Insurance companies protect us by standing ready to pay "covered" expenses over and above whatever deductions, exclusions, and limitations are agreed upon in advance. There is a viable legal contract between the parties--- financial disasters are avoided if we get really sick.

Within the terms of their agreements, insurance companies determine who is insurable, and at what premium. Their job is to pay covered medical expenses--- and they have a vested interest in keeping medical expenses as low as possible. But do they really?

Just as the financial crisis was partially caused by business conflicts of interest so too are there conflicting interests in the insurance-healthcare-drug-medical supply industries. These conflicts reduce the natural desire to control the costs of all healthcare services.

We can control the industry to eliminate the conflicts of interest. We can (and should) police the boardrooms of insurance companies to eliminate "abuse of shareholders" through excessive salary packages.

Perhaps we should require health care insurers to be "mutual" companies, or maybe "network" doctors should not be allowed to bill patients for amounts above what the insurance actually pays. Maybe the annual deductible could be dealt with differently without increasing premiums.

We can tax for-profit hospitals higher to encourage more non-profit care facilities; we can keep doctors, insurance and drug companies from owning hospitals; we can cap jury awards for medical malpractice or error, and we can give tax relief to medical practitioners who provide free health services to the indigent and uninsurable.

But the government's efforts to redefine insurance are counter-productive. As cold as it may sound, if we make insurance companies cover pre-existing brain tumors, the expense is coming out of your pocket in the form of higher insurance premiums or higher taxes--- and it's likely that the healthiest among us will be the ones paying the increased taxes.

The White House list of reforms, every one of them, would increase insurance company costs and our premiums while doing nothing to reduce the price of the medical services we receive. They only sound good to those who do not understand insurance.

Insurance is designed to pay the bills--- reforms need to make the bills smaller for everyone. Does this plan cut any costs, or just increase insurance premiums for those who will still be able to pay them?

Group health (and even dental) insurance is a benefit used by many employers to attract and retain employees. I've heard rumors that the reform plan will tax employers who don't provide insurance and tax those employees who receive the benefits. True or not, neither approach helps the economy or reduces health care expenses--- both raise taxes for everyone.

Insurance can only be made more affordable by reducing the costs of the healthcare that is provided. Let's focus on streamlined record keeping, controlling ambulance chasers, jury awards, drug company advertising, an army of lobbyists, and industry conflicts of interest.

We should also make all government employees, from the top down, dance to the same tune as the rest of us--- that'll do away with the tax on benefits. Then, next chance you get, do away with an incumbent.


Steve Selengut is the President of Sanco Services and the author of The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read and A Millionaire's Secret Investment Strategy.
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192 Comments

Free market => cost control
Instead of a few dozen insurance companies paying the bill, if there were 200,000,000 people paying a bill, costs would fall IFF (if and only if) government regulations that limit such competition were relaxed.
Expanding the capability of nurses, PAs and medics to provide services, letting WalMart, Walgreens and CVS open in store clinics, is just a start to lower costs AND improve service, as LASIK as demonstrated.

You can not lower cost of Breast Cancer
or Leukemia. If you make 10 bucks an hour you will never be able to afford the 500,000 or 1,000,000 cost for treatment?

Even if you make health cost 50% less? Could this person pay 250,000? or even 100,000 if it is 5 time more efficient?

You still have to have some kind of "net" for the poor.

Is that not a catatrophic event?
Even now one can purchase 'cancer insurance' right?

Also, from what I have seen from telethons and such, hospitals like St. Jude treat children at no cost to them.

The 'net' used to be charity, which the government has wanted to usurp.

A more equitable proposal
The author comments "It seems strange to me that the focus is on insurance coverage rather than on the spiraling costs of health care itself." But it seems to me that the questions of who pays, what they get charged and for that matter what they get for their money, are all inextricably linked.

The question of health care reform can be reduced to whether we have a choice of subscribing to a variety of for-profit plans, none of which we can readily afford, or whether we are to also have a nonprofit option.

The author goes on to say that "Insurance is neither a cost of obtaining healthcare services nor an expense associated with those services." But when the providers of that insurance are for-profit companies, their product certainly entails an associated expense. In fact, a large one.

In such an environment, I would vote for greater freedom of choice. Those among us who preferred to subscribe to companies that pay their bills PLUS a generous profit to their shareholders and senior executives should certainly be encouraged to remain enrolled in such plans. And those of us who just want the bills paid and nothing else should, by the same token, have that option.

Who should pay? Those who receive the benefit. A more equitable approach would be to fund the program from the payroll tax.. the tax on ordinary mortals.

Taxes on the super-rich, and on those who derive their income from investment sources like dividends and capital gains, should be used to fund those areas of government that benefit those people. That is, on every government program that confers no social benefit.

I would have no problem with a two-tiered tax system, as I would no longer have to pay to support our military-corporate national security state. The only programs I'd be tasked with supporting would be those that benefit actual people. Things like public education, Social Security, Medicare-Medicaid, unemployment benefits and a national universal health plan. You know-- things you can't use yourself, so don't want to pay for.

If payment for these government functions were limited to those who planned to use and support them, and non-vested individuals were restricted from being able to them, our political life would be a lot simpler.

Of course you have no problem with a two tier tax system when you are in the lower tier.
It still does nothing to reduce the cost of services.

One significant cost reducing feature for DoD has been the computer and gaming industry. More customers and fewer middlemen lower costs.

feel free to contribute as much of your money as you want.
oh, you wanted to force other people to contribute.

It lowers prices for roy, by forcing someone else to pay
that's the only kind of charity roy is interested in.

profit for insurance companies average about 3%
And there are not-for-profit insurance companies already.

Why am I not surprised to find out that roy's final solution is to tax the "super rich" and give the money to him?

Lower tier?
As a matter of fact, the group comprising those who pay payroll taxes consists of those whose earnings come from wages, salaries or business profits. Are these to be considered "lower tier" people?

Also the tax is regressive, in that only incomes below $100K or so are subject to the tax. Warren Buffet pays the same as anyone making $100K.

And revenues are significant. Payroll tax revenues in 2008 were 35.7% of total federal revenues. Income taxes (which include not only wage, salary and self employment income but also income deriving from investments, only amounted to 45.4% of the total. So when you put together wage earners and the self employed, they end up paying both sides of this subtotal.

Corporations, in contrast, only contributed 12.1% of federal revenues for that year.

taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=204%20

Also, of course, note that recipients of investment income get taxed typically at half the rate paid by those who actually earn their income through labor.

Under my suggestion, those earning "earned" income would pay into a separate account, to be dedicated toward social services. Those earning "unearned" income, in IRS terminology (that is, those who don't work for their money but whose money makes money for them), would support all those services government provides to corporations and investors. This would only seem fair to all.

Tax rates for either side would be determined by budgeted expenses. That is, their budgets should be balanced so that disbursements and revenues are equal.

"It still does nothing to reduce the cost of services."

The comment has nothing to do with reducing the cost of services. It addresses the justice of making those who enjoy the benefits pay the costs. Which is, I believe, a position you advocate.

Workers should be required to fund only those programs that benefit them. Investors should be able to do likewise. The bookkeeping would be simplicity itself.

Actually, no
Healthcare provisioners, on average, make a profit of 5.5% on their revenues. The subset of HMO providers is lower-- 3.8% profit on average. That's a lot of money out of our HC dollars. But you may submit your evidence to the effect that it's only 3%.

Also, the current maze of private policies requires that 31% gets taken from our HC dollar just to pay for processing paperwork. That's the main saving that could be accomplished by having a single payer plan. This expense could be reduced below two percent if the program were run like Social Security.

So let's subtract the 5.5% plus the 31%, and compare that savings to a new cost of 2%. Looks to me like we've reduced expenses in the sum of about 34.5%. Not bad.

Also, you should read more carefully. You say that "roy's final solution is to tax the "super rich" and give the money to him". Au contraire. My suggestion is that the people who enjoy the service should be the ones to pay for it. That would leave everyone happy.

Go back and read me again.

Not-for-profit insurance companies
Your comment seems disingenuous. Certainly you know that "nonprofits" like BCBS still make handsome profits. Only they call them "cash reserves".. so they don't have to pay taxes on them.

They are still expenses borne by the people who pay the premiums. And they don't go toward actual health care. Instead they pay bloated salaries for the CEOs who set them up that way. Plus other expenses, like the naming rights to sports stadiums.

"Warren Buffet pays the same as anyone making $100K."
Pays the same what?

There is a difference between tax rates and the actual dollar amount of taxes.

It seems our Democrat buddies don't like to pay their 'fair share' either. As you noted, Buffet, an Obama supporter, Geithner, IRS boss cheated on his taxes as did Daschle.

Billionaire Sen. Kerry pays little in taxes as well.

It is the hard working conservatives that get screwed and the limousine libs that cheat.


"would support all those services government provides to corporations and investors. This would only seem fair to all."

Why not eliminate such unconstitutional acts?

Why would the government care about spiralling costs?
We notice how they have also been emailing people lately rather than sending the messages by snail mail via the USPS. If even they acknowledge that that email, and even fax before has superceded the post office, by how much has the post office contracted budget wise, employee wise, jeep wise, etc?

Governments don't care about expenses.

You really don't know this?
We were discussing the payroll tax. And there is a limit on personal income subject to that tax. This past tax year that limit was the first $102,000 of income, which gets taxed at a rate of 15.3%. Back in 2006 the limit was $94,200. It changes every year.

That means that the person making $102,000 pays about as much under the payroll tax as does the person making $102 million. There are some discrepancies in the limit for the Medicare portion of the payroll tax, but that's more or less the way it works.

Also, a majority among us currently pay more in payroll taxes than they do in personal income tax (federal). Two out of three families, in fact, when you include the employer's portion. This is something you should know.

http://www.urban.org/publications/1001065.html

As for our eliminating "unconstitutional acts" that benefit the moneyed classes.. lots of luck on THAT one. The people who own and direct our federal government would never stand for any infringement of their use of it for personal gain. Subsidies and rules favoring their continuing enjoyment of advantage on the financial playing fields are perks they will never voluntarily hand over to the crowd. They run the country, always have, and are not about to change their ways.

I know. I have NEVER NOT paid the full social security taxes
Except when I was overseas.

When did you reach your SS tax limit?

And we have been through this before. I have and will pay more to SS than you have ever paid. I am not eligible to retire until age 67. When did start sucking on my SS?

Buffet pays more, if he pays. He pays the full amount as an employer and employee. He also pays half his employees share so Buffet, like all self employed, with employees, pays MORE SS tax than most.

There is no cap on the Medicare portion of FICA -- except on Planet Roy
Oh, and the reason why the cap on the SS portion exists...is because it makes no sense for someone to pay into an 'insurance program' more than they get out of it.

Especially when it is a LOT more.

In that case, you don't have insurance but flat out Robin Hood welfare economics, just as the author outlined.

Starving the beast
"Philadelphia's court system will face a "virtual shutdown" if the cash-strapped city does not get state approval for a sales tax increase and changes to how it makes its pension payments."
http://cbs3.com/topstories/philadelphia.budget.mayor.2.1135651.html

Isn't east PA the socialist side of PA?

2010 elections around the country will be interesting.

You old folks are going to get real expensive for the government soon.
"The solvency of Social Security, which provides pensions for people older than 65, has not played a major role in the current debate about health care in Congress. Bachus said it will not likely be addressed in any health-care bill the House eventually passes, although if a Social Security bailout is needed, it will invariably have an impact on government health-care programs."

http://www.tuscaloosanews.com/article/20090818/NEWS/908189977/1007?Title=Bachus-discusses-Social-Security-health-care

Check out Logan's Run lately?

This is a 'different ' administration.
" President Barack Obama's push for a national health care overhaul is providing a financial windfall in the election offseason to Democratic consulting firms that are closely connected to the president and two top advisers.

Coalitions of interest groups running at least $24 million in pro-overhaul ads hired GMMB, which worked for Obama's 2008 campaign and whose partners include a top Obama campaign strategist. They also hired AKPD Message and Media, which was founded by David Axelrod, a top adviser to Obama's campaign and now to the White House. AKPD did work for Obama's campaign, and Axelrod's son Michael and Obama's campaign manager David Plouffe work there."

http://news.yahoo.com/s/ap/20090819/ap_on_go_pr_wh/us_health_care_consultants

They don't pay more, but they don't get more either
As usual, all of roy's solutions involve finding someone else to pay for what he wants.

SS will go into deficit within two years.
According to the latest estimates.
It will be bankrupt less than two decades after that. Probably much less.

roy isn't interested in an insurance program
He wants to force someone else to support him.

Must be why Obama is so interested in socialized medicine
So they can get more old people to die.

All the studies show that medicare has higher overhead than any private plan
And that's not including the 30% lost to fraud.

If you honestly think that govt is more efficient than the private industry, then you have been smoking something illegal.

Bob re-invents terms
Cash reserves can only be used for company purposes. That is, they provide the funds to keep the company in business during recessions, or they are used to lower premiums in future years.

Cash reserves are not the equivalent of profit.

The fact that you try to equate the two is typically ignorant and dispicable.

It never has before
If they run short of money, just raise taxes.

One thing govt never considers
cutting costs.

never has before
They can't even just do that either. If you raise taxes too much you get diminishing returns; a dentist say will spend more time trying to evade taxes than he will pulling more teeth; others go offshore, others go underground.

Then the government will try to borrow from overseas as they have been, depending on the Chinese. Now we see they are cutting back on their loans to the US.

The only other alternative to pay for the profligacy of these drunken-sailors is to print money; which they're doing, is spite of Roy's common comment on there being no inflation.

Where will the Canadians go?
"Dany Mercado, a leukemia patient from Kitchener, Ontario, is cancer-free after getting a bone marrow transplant at the Barbara Ann Karmanos Cancer Institute in Detroit.

Told by Canadian doctors in 2007 he couldn't have the procedure there, Mercado's family and doctor appealed to Ontario health officials, who agreed to let him have the transplant in Detroit in January 2008.

The Karmanos Institute is one of several Detroit health facilities that care for Canadians needing services not widely available in Canada.

Canada, for example, has waiting times for bariatric procedures to combat obesity that can stretch to more than five years, according to a June report in the Canadian Journal of Surgery."

http://freep.com/article/20090820/BUSINESS06/908200420/1319/

Invest in medical tourism?

"India and Thailand are clearly the best choices in terms of price, capability and quality, while Central America and Eastern Europe should mostly be considered by those who need minor procedures or don't want a trans-Pacific flight and are generally willing to pay more for the convenience.'

http://www.discovermedicaltourism.com/international-medical-travel/


Why socialism must always lead to tyranny.
When citizens can vote with their feet and leave a high tax state, revenues drop for such state unless the state can use force to keep their victims from moving.

I explained as much
You're trying very hard to catch me out on something. You should instead be trying to make some point.

The income cap is in fact on the SS portion of FICA, while the M-M portion is calculated under a different formula. You'd have found this information in my reference, had you looked.

And if this income cap was in fact put into place for reasons of fairness, as you say-- that is, to correlate a cap on contributions with the cap on benefits-- then in fact it is by any definition a fair one. Not "Robin Hood economics".

I have voiced the opinion here, back in 2005 or so, that any plan to increase the contributions of the rich should be balanced by a concomitant increase in their benefits.. on the grounds of basic fairness. And I still believe that.

My plan presented here-- which you have not commented on-- is raised in that same spirit of basic fairness, that one should only have to pay for services one subscribes to and endorses. RSVP.. if you can bring yourself to address the suggestion.

never has before
As for govt spending...as in hard drug usage... First the high.. then come the lows.

Why socialism must always lead to tyranny
Government restrictions of buying private health care across state lines creates cartels such as FDR loved and created which styme market choice and drive costs up while driving political powers toward their would be nirvana.

The pig in the python
Apparently you don't have a good grasp of the dynamics of Social Security's cash flow. My generation will be very well funded until we kick the bucket-- with no adjustments to the system.

The problem comes later. Around 2018 the system begins drawing on reserves, rather than paying benefits from a portion of its income stream and investing the rest in Treasury notes. The consequence is only that over the next few years, Congress will be relying less and less on dwindling SS investments for its operating income, until it reaches the zero point (2017 or 18), where no cash flows one way or the other.

After that, the SSA begins withdrawing funds from its Treasury account to pay benefits. And here the system, as currently configured, is solvent until 2046. That is, when that account has finally been emptied.

I would point out here that no other area of government can boast of solvency for anything like that long. Our national security apparatus, for instance, has never been solvent (that is, self-sustaining without a continual increase in the national debt) in our history. So SS is actually comparatively very soundly funded, relative to the rest of government.

But still, not good enough. It has been calculated that an increase in FICA in the sum of 1.75 cents on the dollar would allow the fund to be solvent over the coming 75 years-- that is, in perpetuity.

There is also the obvious fact: when a retirement fund such as this is maintained by current employment contributions, there has to be a favorable ratio of employed members to retired members-- a problem Chile found out to its chagrin. And most published projections of this ratio for the US are not reassuring.

All such guess-timates fail to take into account the American pattern of a constant labor influx from abroad. That is, throughout our history, Americans have retired and been replaced, not just by their own children, but by plentiful immigrants. So any demographic analysis should be premised on there being a constant influx of fresh, eager labor from abroad-- to do the work of building our strong economy.

I have no reason to worry that my own checks will ever fail to come, as stated above. And you shouldn't be either. It's your generation that's the pig in the python, the bulge that allegedly breaks the bank. And only incremental fixes in the system will give you the same assurances I have about the fund's solvency into the next century.

Providing we don't run out of gas.

SS is a Madoff scheme. It is funded with current receipts.
There is no money in the 'trust' fund.

Cooking raw numbers
I should probably not even bother to respond. Your unsourced (naturally) numbers have no earthly counterpart.

First, the contention that 30% of Medicare revenues are lost through fraud. Anyone would have to agree that fraud losses are sky high, and any sane approach to fixing the plan would include provisions for effective enforcement. But your figure has been picked from the sky, without even an attempt at attribution.

Medicare-Medicaid losses have been estimated at $60 billion per year.. an immense and intolerable number. I get the figure from Republican John Cornyn of Texas.. a source you should find to be acceptable.

Revenues into the program stand at $439.5 billion per year (FY 2006).

http://www.kff.org/medicare/upload/Medicare-Chart-Book-3rd-Edition-Summer-2005-Section-7.pdf

That would give us fraud losses in the 13-14 percent range. Right? My calculator batteries seem fully charged to you?

It's a figure that could be improved upon considerably. Plus, the prescription benefit foisted upon us by an administration who calculated it would bring the system down, must be entirely revamped. Those are the two great problems with Medicare as currently construed.

Now let's address the idea that "All the studies show that medicare has higher overhead than any private plan". These numbers-- put about by outfits like Heritage.org-- have, politely put, been skunked.

Let's look at a reasonable exposition of this POV, the one put forth by the Council for Affordable Health Insurance:

http://www.pnhp.org/news/2006/january/cahis_claim_of_medi.php

They give the administrative overhead for Medicare as being 5.2%, including what they term "hidden costs". And they give the average costs of private plans as being "about 8.9 percent - and 16.7 percent when commission, premium tax, and profit are included".

So then, 5.2%, as opposed to 16.7 percent. They attempt to paper over this disparity by saying we should actually be comparing cost PER CONTRIBUTOR rather than cost per premium dollar. But that's only stupid. It's a transparent attempt to find some parameter that will give the desired result.

So where is that 31 percent I seem so intent on propounding? THAT expense is represented in the pay of those hordes of billing clerks carried on the payrolls, not only of the private plans themselves, but in every medical practise, clinic and hospital in the nation. They are all required to be there just to process the plethora of paper.

Under a decently constructed single payer plan, there would just be one plan, therefore one set of paper. The health care customer could be left out of the loop. THAT is the aspect of the transition that could be reduced from 31% to one or two percent.

Medicare only pays for a small part of it's own overhead
The rest is picked up by other govt agencies.

The projections he's using didn't take into account the Obama recession/depression
but then, aligning himself with reality has never been one of roy's strengths.

roy uses the most optimistic of fairy tale projections
In reality, SS will start bleeding money before 2011 is out. It will be bankrupt by 2025, if not earlier.

The longer and deeper this recession gets, the sooner both those numbers gets.

Additionally, if ObamaCare does pass, the suppression of wages that it will cause will wack many more years of off SS's solvency.

Misuses of reserves
Excuse you, that's roy.. not Bob.

Every company needs to carry cash reserves, for operating purposes. In fact more companies should have been doing that last year, when the credit window slammed shut on their fingers. But with the nonprofits, that ledger entry has been much abused. In fact, with the help of commonly accepted accounting practises, the entire camel has crept into the tent.

When a company evades taxation but perpetually continues to add-- oh, let's call it surplus funds-- into the account, and over a period of years is always adding more money into the account, it tends to find creative areas in which that money can be spent.

As a nonprofit it has no shareholders. But still, outfits like BCBSNC find areas in which handsome sums can be spent, on things well outside their core mission, which is to provide ONLY direct healthcare benefits and administrative costs, salaries, etc.

As in most things, the principle faults proceed from the Board's choice of a CEO. The result is precisely akin to what happens to the nation when a bad president comes to office.

So? The federal government is funded with IOUs
Yours was a particularly brainless comment. Any enterprise funded with cash receipts is inherently more stable than one funded by borrowing. How stable must SS's funding be before it passes your litmus test?

All insurance companies fund their payouts through income from premiums. Are they then inherently unstable? Of course not.

And as you very well know, what is in the Trust Fund is US Treasury bonds-- promises to pay. And throughout the history of the republic, the government has never welshed on a promise to pay.

Of course you will respond that these bonds are not transferable, etc. Which makes, as you should know, absolutely no difference. They are recognized by the government as legal obligations to pay.

So please explain how one should fund ANY enterprise, without recourse either to borrowing (an inherently unstable approach) or through contributions.. that is, through cash income.

Explain and illustrate
Don't be so damned lazy. Do some work.

Source?
..

So when inflation hits 15% again.....
to attract lenders or when they print money, you won't mind the loss of purchasing power.

Canadians crossing over to the US
It regularly happens, especially in border towns like the ones in Windsor going over to Detroit. There was a scandal about that a few years ago when an ambulance was stopped coming into detroit and the patient was delayed. It came out that such crossing were very frequent.

They also say that any Canadian who can afford it will go down to the Mayo Clinic and all those places, because they don't even exist in Canada.

Canadian politicians used to have their own secret private medical service, till whistleblowers let out the secret. Now they openly use it claiming they deserve better than normal people a la Louis XVI; I hope they get the same in the end too.

"Saving Our Future Requires Tough Choices Today: "
"Year: 1966;
Defense: 43%;
Social Security: 15%;
Medicare and Medicaid: 1%;
Net Interest: 7%;
All Other: 34%.

Year: 1986;
Defense: 28%;
Social Security: 20%;
Medicare and Medicaid: 10%;
Net Interest: 14%;
All Other: 29%.

Year: 2006;
Defense: 20%;
Social Security: 21%;
Medicare and Medicaid: 19%;
Net Interest: 9%;
All Other: 32%.
"

"Growth in Spending for Social Security, Medicare, and Medicaid Expected
to Outpace Economic Growth:
"

http://www.gao.gov/htext/d08501cg.html

there is NO income cap for medicare FICA portion, period
None. Zip. Nada.

So, there is likewise NO formula to apply. It is what we engineers call 'a divide by zero' problem.

Even Wikipedia backs Zyndryl up
CAPITALIZED content is my way of providing emphasis to the relevant portion. Sorry to shatter your make-believe world, Roy.

=======================================================================

"Regular" employees (most wage-earners)

For 2008, the employee's share of the Social Security portion of the tax is 6.2% of gross compensation up to a limit of $102,000 of compensation (resulting in a maximum of $6,324.00 in tax). For 2009, the employee's share is 6.2% of gross compensation up to a limit of $106,800 of compensation (resulting in a maximum tax of $6,621.60).[6] This limit, known as the Social Security Wage Base, goes up each year based on average national wages and, in general, at a faster rate than the Consumer Price Index (CPI-U). THE EMPLOYEE'S SHARE OF THE MEDICARE PORTION IS 1.45% OF WAGES WITH NO LIMIT.

Source: http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax#.22Regular.22_employees_.28most_wage-earners.29

As does roy, actually, in his comments above
Far from shattering my world, all you've done is to clarify my comment. You could have gotten your information much more readily just by reading my citation.. which informs us that "..most Americans actually pay more payroll taxes than federal income taxes. In 2006 workers and employers each paid 6.2 percent Social Security tax on the first $94,200 of earnings and 1.45 percent Medicare tax on all wages. While the statutory obligation to pay payroll taxes is split evenly between workers and employers, most economists believe that the employer tax usually translates into lower wages, so workers bear the full burden of the tax. Thus, the total payroll tax rate equals 15.3 percent of earnings for most workers."

So then.. we agree on the above facts.

These discussions would be much more productive if you didn't devote all your time and energy to trying to prove me wrong in some minor detail. Instead, why don't you respond to my assertion? That in fact workers making modest incomes do in fact pay a huge proportion of total federal taxes-- and a majority of those taxes that support SS and Medicare. And that it's highly misleading when pundits restrict their analysis to the income tax alone, considering that this tax doesn't pay for our principle entitlement programs, the ones you folks love so to complain about.

My point, to hammer it home yet further, is that American workers now pay the majority of the assessments supporting social programs that benefit them directly. And that basic fairness would dictate that anyone NOT wanting to be a part of that social safety net should be able to opt out. He or she could simply pay the federal INCOME tax, not be subject to FICA, and not be a party to either Social Security or to Medicare-Medicaid.

This, to me, sounded like a fine idea. If you differ, I'd like your opinion. But don't just be disagreeable.

That old bugabear inflation!
Does it make no difference to you that what we're experiencing now is actually an episode of price DE-flation?

Any idea that we're due for a serious round of inflation is highly conjectural. The world is not the same place it was back in 1975. Interest rates should remain low well into the future, as everyone seems to prefer them low. And the entire trading world likes a dollar that holds its value.. as most of everyone's net worth is denominated in those selfsame dollars.

It's a group effort. Every financial player on earth has a vested interest in a strong dollar. With no one at all on any opposing team, I think they will prevail.

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