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What is Medicare?

Doctors looking at tablet

What is Medicare?

 

As the economic and social atmospheres in this country evolve with ever-increasing speed, the health care field is no exception. Another election will take place this year and could cause any number of shifts in how our government spends money and exerts jurisdiction. However, one colossal government initiative has remained a distinct part of America’s structure since 1965. Though it has experienced changes, it has been recognized as vital to our nation’s success since its enactment. Medicare allows us to care for those most susceptible to health needs — those over the age of 65 and those under that age that suffer from certain health conditions. This important program has made healthcare possible for our senior population for 50 years and counting and its importance should be recognized.

History of Medicare

Medicare was first brought into existence in 1965 by the Johnson administration. Since its inception, Medicare has undergone a number of evolutions. From adding coverage for people under the age of 65 who suffer from certain conditions to bolstering the coverage to include accepted private insurance providers, Medicare has received numerous face-lifts over the years and its latest update in the form of the Affordable Care Act signed into law in 2010 expanded its areas of coverage and applicability even further.

Medicare in a Nutshell

Medicare is a federal health insurance program created primarily to cover Americans over the age of 65.

To avoid misconception, being enrolled will not guarantee that all your medical bills and services will be covered. “If you choose to have original Medicare coverage, you may buy a Medicare supplement policy (called Medigap) from a private insurance company to cover some of the costs that Medicare does not” (“Medicare”, Social Security Administration, page 4). However, Medicare was created to make basic health care accessible to anyone over the age of 65. It is funded in most part by the SSA withdrawals from our workforce’s paychecks. “A portion of the payroll taxes paid by workers and their employers cover most Medicare expenses. Monthly premiums, usually deducted from [seniors'] Social Security checks also cover a portion of the costs” (SSA).

Distinction Between Parts

Medicare is divided into four distinct facets that each represent different types of coverage. Parts A and B compose the core offerings of the Medicare program and are sometimes referred to as “traditional” Medicare. Parts C and D provide auxiliary support for Medicare enrollees whose needs surpass the standard offerings Medicare can provide.

Part A
Medicare’s Part A is referred to as Hospital insurance. This branch of the program covers inpatient care and will also pay for certain home health or hospice services.

Part B
This branch of Medicare is entitled Medical insurance. “Part B helps pay for doctor visits and other medical services, including screenings for heart disease, diabetes and some types of cancer” (“Medicare And You: Getting Started”, AARP). It also helps pay for durable medical equipment, and some preventive services.

Part C
Medicare’s Part C comprises a number of privatized insurance plans that have been approved by the Medicare program. These plans, known as Medicare Advantage Plans, provide alternatives to being enrolled in Medicare or can be used to augment Medicare’s base coverage.

Part D
Enacted in 2003 through the Medicare Modernization Act, Part D offers assistance in fulfilling drug prescriptions.

These four arms constitute the current structure of Medicare as it operates today.

Future of Medicare

While Medicare provides (in many cases) life-saving medical coverage for a vast number of individuals in the United States every year, Medicare is fast approaching an unsustainable state. It was projected that in 2013, “average per capita Medicare spending… [will] exceed $12,000′ (Boards of Trustees, 2012)” (“Medicare: Past, Present, and Future”, PBS). And that number has only continued to inflate as the rate of people becoming eligible for Medicare benefits continues to increase and the cost of healthcare services continue to rise. “Under current policies, the Congressional Budget Office (CBO) projects that federal spending on Medicare and Medicaid will rise from about 4 percent of gross domestic product (GDP) in 2009 to nearly 6 percent in 2019, reaching 12 percent by 2050″ (“Rising Costs for Healthcare”, page 5).

Many reform strategies have been suggested over the past decade. These include proposed changes to the age of Medicare eligibility, restructuring the cost sharing model currently employed by the program by shifting it to various other stakeholders, increasing premiums to help compensate for the program’s bloated costs, reducing the scope of services the program covers, and more. However, the last large-scale adjustment was made in 2010 when Obama signed the Affordable Care Act (ACA) into law.

 

Though Medicare has been overshadowed thus far during the current 2016 presidential run by other hot-button policy topics including immigration reform and national security, this upcoming election could ultimately prove to have a huge impact on the future of Medicare. Its bloated spending and increasingly unsustainable cost to the country will necessitate change and, perhaps, a dramatic restructuring of a program that affects millions of American lives.

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Sources:

“50 Years of Medicare: How Did We Get Here?” Commonwealth Fund. <http://www.commonwealthfund.org/medicare-timeline/>

“Medicare.” Social Security Administration (SSA). October 2015. Publication No. 05-10043. <https://www.ssa.gov/pubs/EN-05-10043.pdf>

“Medicare And You: Getting Started.” American Association of Retired Persons (AARP). January 1st, 2011. <http://www.aarp.org/health/medicare-insurance/info-01-2011/understanding_medicare_a_boomers_guide.html>

“Medicare: Past, Present, and Future.” Public Broadcasting System (PBS). February 8th, 2013. <http://www.pbs.org/wnet/need-to-know/health/medicare-past-present-and-future/16235/>

“Rising Costs for Healthcare: Implications for Public Policy.” Louis Rossiter. Schroeder Center for Healthcare Policy. February 2009. <http://www.wm.edu/as/publicpolicy/documents/nfibrisinghealth.pdf>