Tag: health insurance

Medicare

What is Medicare?

Medicare is a national social insurance program, (like Social Security) administered by the U.S. federal government since 1965, that guarantees access to health insurance for Americans ages 65 and older and younger people with disabilities as well as people with end stage renal disease. As a social insurance program, Medicare spreads the financial risk associated with illness across society to protect everyone, and thus has a somewhat different social role from private insurers, which must manage their risk portfolio to guarantee their own profit – if not solvency.

A brief history.

In 1965, Congress created Medicare under Title XVIII of the Social Security Act to provide health insurance to people age 65 and older, regardless of income or medical history. Before Medicare’s creation, only half of older adults had health insurance, with coverage often unavailable or unaffordable to the other half. Older adults had half as much income as younger people and paid nearly three times as much for health insurance. (Medicare also spurred the integration of thousands of waiting rooms, hospital floors, and physician practices by making payments to health care providers conditional on desegregation.)

Success

While the USA does not have good results (compared to other industrialized nations) in measures such as average life expectancy and infant mortality, we rank well in the measure of those who reach 65 living until 85.

Medicare administrative overhead costs (2%) are well below the overhead of large companies that are self-insured (5-10%), health insurers offering coverage to small employers (25-27%), and individual insurance (40%). Insurers offering coverage in “Medicare Advantage” plans spend up to 16.7% on profit and overhead.

Who is eligible?

As above, Americans ages 65 and older (who have been legal residents of the United States for at least 5 years ) and younger people with disabilities as well as people with end stage renal disease.

What is covered?

There are four parts to Medicare: types A, B, C, and D.

Part A (hospital insurance) covers inpatient hospital stays (at least overnight), including semiprivate room, food, and tests, and brief stays for convalescence in a skilled nursing facility if certain criteria are met.

Part B (medical insurance) helps pay for some services and products not covered by Part A, generally on an outpatient basis, e.g. doctor visits.

Part C With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). As Part C cost the government about 14% more than traditional Medicare, it is being phased out, as per the ACA.

Part D (prescription drug plans)went into effect on January 1, 2006. Anyone with Part A or B is eligible for Part D. Part D is not ‘human friendly’ because it covers prescriptions up to a cost point, then no long covers them until another cost point is reached (the coverage gap or ‘donut hole’). Part D did not allow for negotiation of prescription prices, but this and the coverage gap are addressed in the ACA.

Who benefits from Medicare?

Those eligible above, and their children and/or other family members, as the latter do not have to bear the cost for the care!

How is it funded?

Medicare has several sources of financing. Part A largely is funded by revenue from a 2.9 percent [payroll tax] levied on employers and workers (each pay 1.45 percent). Until December 31, 1993, the law provided a maximum amount of compensation on which the Medicare tax could be imposed each year. Beginning January 1, 1994, the compensation limit was removed. Part B is funded in part by premiums paid by the recipient (about $100/month).

Changes under the ACA.

The Patient Protection and Affordable Care Act (“ACA”) of 2010 made a number of changes to the Medicare program. Several provisions of the law were designed to reduce the cost of Medicare. Congress reduced payments to privately managed Medicare Advantage plans to align more closely with rates paid for comparable care under traditional Medicare. Congress also slightly reduced annual increases in payments to physicians and to hospitals that serve a disproportionate share of low-income patients. Along with other minor adjustments, these changes reduced Medicare’s projected cost over the next decade by $455 billion.

Due to the passage of the ACA Medicare’s unfunded obligation over the next 75 years declined from $13.4 trillion to $3 trillion.

The ACA also made some changes to Medicare enrollee’s’ benefits. By 2020, it will close the so-called “donut hole” between Part D plans’ coverage limits and the catastrophic cap on out-of-pocket spending, reducing a Part D enrollee’s’ exposure to the cost of prescription drugs by an average of $2,000 a year.  Limits were also placed on out-of-pocket costs for in-network care for Medicare Advantage enrollees.  Meanwhile, Medicare Part B and D premiums were restructured in ways that reduced costs for most people while raising contributions from the wealthiest people with Medicare. The law also expanded coverage of preventive services.

What does Medicare Cost us as a nation?

As a share of GDP, Medicare cost is expected to increase from 3.6 percent in 2010 to 5.6 percent in 2035 and to 6.2 percent by 2080. That is, a mere 4% – 6 % to provide health care for our old and disabled citizens.

Why is Medicare Under attack?

This is not an easy point to address from a non-partisian standpoint! If one has as a dogma that no government program can be successful, then counter examples of very successful programs such as Medicare and Social Security are a threat. If one believes that Medicare is a major drain on our finances (it isn’t), then one might view it as an opportunity to cut spending. It revisits the failed privatize Social Security efforts of the last decade. The major causes of our current debut are the reduced tax rates on high incomes, and two wars.

From Politifact:

“Barack Obama has slashed Medicare by $500 billion. Mitt Romney and House Republicans want to end Medicare. And a new board is going to ration care so Washington can waste more money. 

Believe any of that? You shouldn’t.” (Politifact)

Information from many sources, including:http://en.wikipedia.org/wiki/Medicare_(United_States)