- Before Medicare, the federal government was not involved in healthcare financing
- Medicare is now the second largest program in the federal budget
- Financed through two trust funds - Hospital Insurance (HI) and Supplementary Medical Insurance (SMI)
- Hospital Insurance is primarily funded by payroll taxes
- Supplementary relies heavily on general fund contributions
- Labor Unions supported government funded healthcare, while organization like the AMA (American Medical Association) and AHA (American Hospital Association) opposed it due to being a "socialization of medicine"
- Health costs increase in old age while income usually declines
- heavy reliance on general fund support raises concerns about long-term sustainability
- Hope to shift over time towards decreased reliance on payroll taxes and increased dependence on general fund contributions
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