General revenue finances an increasing share of Medicare.
April 01, 2012
SOURCE: Historical data and projections from 2012 Medicare Trustees' Report. Compiled by PGPF.NOTE: "Other" includes proceeds from the taxation of Social Security benefit, which help to finance Medicare Hospital Insurance costs, as well as drug fees and state transfers. General revenues are resources that come from the General Fund of the Treasury.
Medicare has three major sources of funding: payroll taxes paid by workers, premiums paid by beneficiaries, and subsidies from general revenue. One of the biggest misconceptions about Medicare is that it is self-financed through payroll taxes and beneficiary premiums alone. In truth, the program is heavily subsidized with general revenues, which accounted for nearly 45 percent of program financing in 2011. The composition of program financing has changed significantly over the past 40 years. In 1970, general revenues funded only 25 percent of the program.
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