Is Medicare Socialism?

“Socialism” is a term that gets thrown around a lot when discussing economic policy, government assistance programs and especially health care legislation.

Medicare is among the biggest targets of the word, particularly when talking about Medicare For All campaigns that dominate headlines during recent election years.

But is Medicare really a socialist program?

Defining Socialism

“Socialism” is often used loosely, and there are different takes on what exactly constitutes socialism. To determine whether Medicare is socialism, let’s use the meaning of the word as defined by Merriam-Webster:

1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods. 

2a: a system of society or group of living in which there is no private property.

2b: a system or condition of society in which the means of production are owned and controlled by the state.

3: a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done.  

In more general terms, “socialism” refers to a form of economic production in which the means of goods and services are owned and controlled by the government.

Socialism differs from capitalism, which is a system intended to allow private individuals to own all the means of production and enter into private contracts and transactions, independent of the government.

So does that make Medicare socialism?

How Medicare Is Similar to a Socialist Program

The government runs Medicare. It sets the prices for use, requires you to pay taxes to fund the program and tracks your earnings and eligibility accordingly while managing all of the program’s revenue. The government runs the official website for Medicare, approves or denies applications, decides which benefits you will receive and imposes and enforces regulations and restrictions around the program.

That all very much fits the scope of socialism, or at least of a program with inherent functions that one could describe as similar to socialist concepts.

Why Medicare Is Not a Socialist Program

While Medicare shares many features of socialism, there is one key element of Medicare that keeps it from being pure socialism. 

A truly socialist system of government eliminates the concept of private property or resources. Doctors, hospitals and other health care providers who participate in and are reimbursed by Medicare are still privately owned and operated, and they are not required by law to participate in the Medicare program or accept Medicare insurance. Because of that caveat, Medicare cannot be considered pure socialism.

Medicare most closely aligns with the “social democracy” found in countries like Norway and Sweden, where residents are free to own property and goods while also benefiting from social needs services like a public health care system.

These countries are free market capitalist counties that trade openly with the rest of the world, but they have a social welfare state (sometimes called a “social safety net”) that is much broader and more generous than that of America’s federal social welfare programs.

What Are Other Examples of Socialism?

The Veterans Health Administration is a more direct example of socialism or a socialized health care program in America.

The government owns and employs the facilities and health care providers used by the VA system. To use VA insurance, you must visit a VA facility (which is owned and operated by the federal government) and be treated by a VA doctor (who are government employees). You may not use VA insurance with a private health care provider the way you can with Medicare. 

Other programs that are somewhat like socialism in America (in the sense that they are funded and operated by the government instead of private actors) include:

• Public schools – Schools are taxpayer funded and owned by the state government, and teachers are state government employees.
  
  
• Water utilities ­– Though there are some private water companies in the U.S., most are owned and operated by the local government and funded through taxes.
  
  
• The military – Our branches of the military are publicly funded and owned and operated by the government.
  
  
• Police – Police forces are taxpayer funded and are owned and operated by the government.

Medicare can be compared anecdotally to building a road. The government decides a road should be built from Point A to Point B. It contracts with private paving companies to build the road and then uses taxpayer money to pay for it. The road is then used by the public.

In 1965, the government decided a health insurance program should be built for retired workers. It contracted with private companies (hospitals, doctor’s offices and medical equipment suppliers) and used taxpayer money to pay for it. The insurance program is then used by the eligible public.   

Does the U.S. Have a Capitalist Economy?

Capitalism is the driving force behind the U.S. economy. However, just as Medicare is not pure socialism, the U.S. economy does not practice pure capitalism either, otherwise known as “laissez-faire.” This form of capitalism opposes any government intervention in business affairs and is a fundamental of true free-market capitalism.

In the U.S., as with most modern countries, the government still regulates what, how and when private businesses can sell. There are various laws in place concerning monopolies, conflicts of interest, price gouging, consumer protection, worker’s rights and many other economic concerns. A business owner must obtain a business license from the government, pay taxes on their business and adhere to both federal and local laws pertaining to their business practice.

Despite its reputation as the torch bearer for capitalist economies, the United States technically has more of a mixed economy that incorporates features of both capitalism and social safety net programs. Americans enjoy private property and resources as well as economic freedom but, at the same time, are bound by certain government interventions aimed at the public good.

Each year, the Heritage Foundation publishes its Index of Economic Freedom that ranks countries according to their level of economic freedom, or the fundamental right of every human to control his or her own labor and property.

In 2022, 7 countries (Singapore, New Zealand, Luxembourg, Taiwan, Estonia, Switzerland and Ireland) were classified as “free.” The United States ranked 25th overall, with an economic freedom score of 72.1 out of 100, and was classified as “mostly free.”   

At the bottom of the rankings was North Korea, which has an economy classified as “repressed” and an economic freedom score of just 3.0. In North Korea, the government has nearly full control over what goods should be produced, how much should be produced and the price at which they will be offered for sale.

Is Medicare a Social Program?

Social programs are designed to ensure the basic needs of the population. Medicare is a social program in the same fashion as Social Security, Medicaid, unemployment compensation, housing subsidies, food assistance, education subsidies, childcare assistance and various other government assistance programs.

Social Security, Medicare, Medicaid and the other programs listed above are entitlement programs, meaning the beneficiaries of these programs are entitled to the benefits because they are eligible for the program benefits due to health, financial situation, previous payment into the program or other reasons.

What’s unique about Medicare is that while it is a social program, it also includes a private sector. Many Medicare beneficiaries supplement their publicly-funded Medicare with a type of private Medicare coverage, such as a Medicare Supplement (also called Medigap) plan or a Medicare Part D prescription drug plan.

Many Medicare beneficiaries opt instead for an alternative form of Medicare called Medicare Advantage (Medicare Part C), which is sold and operated by private insurance companies. These Medicare health plans replace a beneficiary’s Original Medicare benefits with those offered by their plan insurance carrier.

Is Socialized Health Care Socialism?

Socialized health care or socialized medicine refers to a system in which the government owns and operates the healthcare facilities and employs the healthcare professionals. Socialized health care would commonly be considered socialism. Socialized health care is also referred to as a single-payer system or universal health care.

Medicare is a form of publicly funded health care, which resembles a looser definition of socialized health care or socialism. Medicare is not universal (it is restricted to individuals aged 65 and over and people with qualifying disabilities), is not mandatory, it utilizes private health care professionals who own their own businesses, and the government works with private companies to offer alternative or supplemental insurance plans.

Many developed countries have a partially or fully publicly funded health care system like Medicare in the United States. Countries with more formal socialized health care systems include Austria, Denmark, Czech Republic, Germany, France, Spain, Sweden, Switzerland and the United Kingdom, among others. 

Is Social Security a Socialist Program?

Like Medicare, Social Security is a form of social insurance or social safety net. However, Social Security does not meet the traditional definition of socialism. If it did, the amount of money contributed to and received from the program would be the same for each person. 

Like Medicare, Social Security fits a loose description of socialism and each person's opinion about whether or not it is indeed socialism depends on how narrowly you interpret and apply the definition of the word. 

In Conclusion

It’s reasonable and fair to say that Medicare is a loose form of socialism, but it is more accurately described as a social or entitlement program similar to the types of generous welfare programs of some other countries. It is taxpayer funded, and the government operates both the program’s information website and the program itself. The government determines the benefits available, sets the prices for those services and manages all revenue, applications and regulations. 

However, the health care providers who participate in the Medicare program do so voluntarily and are private entities not owned or operated by the government. Medicare also has a private sector offering supplemental or alternative coverage.

Whether or not you describe Medicare as socialism depends largely on how strict of a definition of the word you apply.