Will ‘Medicare As We Know It’ Continue Or Will It Change?
There is little doubt that Medicare in its current form has to change. Everyone knows it, but no one seems to be able to agree on how. To understand the dynamics of the situation, and why it is so complex, let’s walk through how Medicare developed into its current form.
The dialogue going on in Washington requires an understanding of Medicare, how it works, where the money comes from, how it is spent and why there is such concern for its future costs.
In 1965 Medicare was introduced as a government funded program to pay for large and unexpected medical expenses, that the average senior could not afford. It served as a major medical insurance for long hospital stays, usually requiring surgery. Over the past fifty years, Medicare has grown into a “complete care” system, now including preventive care, screening, annual exams and most routine care. As a result of the additional coverage, and huge patient populations from baby boomers, along with the seemingly unstoppable rise of healthcare costs, the government’s Medicare expenditures continue to balloon.
photo Dr. Michael Rauzzino,. Screenshot/video NBC
Today, about seventy five percent of services and about half of the total costs of health care for older Americans, is paid for by Medicare. The remaining twenty five percent is paid for either via a private Medigap policy, by a retiree’s pension plan and/or, out of pocket by the patient.
With so many services, so many people and the aforementioned continual rise in health care costs, Medicare has become the primary component to all health care services in the US. Because of this, it set the norms for levels of payment for medical care, and it never pays full price for the care it covers.
These two factors mean that every non-Medicare patient’s medical insurance premiums and medical costs increase because care providers shift their loses from Medicare to other patients who have private insurance. Medicare charges each working person 2.9% of their income as the Medicare Fund Tax. Higher premiums and medical bills are in addition to this tax.
Independent experts estimate Medicare will increase its expenditures over the coming decade at about 4% per year, and Medicare which now accounts for about 15% of the federal budget, will rise from almost $600 billion per year now, to about $1 trillion per year by 2028. At that time, in its current form, Medicare is simply not sustainable.
Experts like Delos Yancey point to the boom of Supplemental Medicare Insurance as a possible life raft to keep the system solvent. This type of insurance fills in gaps in Medicare coverage and is supplied by private companies who are much more efficient at providing medical coverage than the government. Any plan going forward will certainly have an expansion of this industry at its center.
Author: Anwar Hossain
