By Tom Curry National affairs writer
msnbc.com
updated 11/19/2009 10:37:14 AM ET 2009-11-19T15:37:14

Claim: Under the Democrats' bills, funds would be taken from Medicare used to pay for Medicaid.

Medicare pays the medical bills for nearly 40 million Americans age 65 and older and 7.4 million disabled Americans. About 80 percent of Medicare's funding comes from the taxpayers, both from income taxes and from the 2.9 percent Medicare payroll tax. About 12 percent of its funding comes from premiums paid by the people enrolled in the program. In an effort to curb inefficiency and to restrain the growth of Medicare spending, both major Democratic reform bills propose to make cuts in Medicare outlays. A different program, Medicaid, pays for the care of indigent people, mostly women and children, as well as for 6 million elderly and 9.6 million blind or disabled people.

Fact or fiction?
Fiction. Will money raised by the Medicare payroll tax be diverted to Medicaid? No, because there's really not money to be diverted: The revenue from the Medicare tax covers only 40 percent of Medicare's costs, so the program already needs general tax revenue to stay viable. "Almost no one receiving Medicare now or in the near future will have paid for their own benefits through the Medicare tax," said former Treasury Department official Eugene Steuerle. If the House bill became law, Medicare spending would still grow. By 2019, Medicare spending would be more than $900 billion, nearly doubling its outlays from 2010 -- but it would be far less than it would have been if the House bill didn't become law. The bill also would expand Medicaid eligibility and boost Medicaid outlays by $680 billion, more than a doubling from 2010.

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