MEDICARE
Medicare is a state health insurance program in the United States formulated under the Social Security Administration (SSA). However, it is currently run by the Centers for Medicare and Medicaid Services (CMS) and its main mandate is to provide health insurance for Americans aged 65 years and above. It also includes a small section of young people with disabilities and other stipulated diseases by the commission, such as individuals suffering from end-stage renal disease.
There are different sections or parts of Medicare that facilitate the successful accomplishment of their tasks. They include; hospital insurance which covers inpatient hospital stays, care in a skilled nursing facility, some home health care and hospice care; medical insurance that covers certain services of doctors, outpatient care, preventive services and medical supplies; prescription drug coverage which helps cover the cost of prescription drugs.
Original Medicare, currently referred to as the Program of All-inclusive Care for the Elderly (PACE) and Medicare advantage, are the main two ways that one needs to decide in order to access his or her Medicare coverage. The difference between the two is that, with original Medicare, you can go to any doctor or facility that accepts Medicare .At the same time,Medicare advantage plans have fixed networks of doctors and hospitals.
The Medicare program is moreover, the second largest insurance program in the United States with about 61.2 million beneficiaries and total expenditures of $ 796 billion in 2019.it has two separate trust funds, the Hospital Insurance Trust Fund (HI) and the supplementary medical insurance trust fund (SMI).The Social Security Act established the Medicare Board of Trustees to oversee the financial operations of the SMI and HI trust funds.
The board is run by six members, four of which serve by virtue of their positions in the federal government and the other two are public representatives appointed by the president and approved by the senate. The secretary of the board is the administrator of the Centers for Medicare and Medicaid services (CMS).The board is mandated with the duty of reporting to the congress on the financial and actuarial status of the SMI and HI trust funds each year by the Social Security Act.
The most current report is the 55th report done by the board and presented to the Congress this year. The report highlights the following; Medicare solvency remains greatly improved since the enactment of the Affordable Care Act(ACA),with the Hospital Insurance trust fund paying full benefits until 2026;provision of incentives to reduce the rate of hospital readmissions and a reduction in the rate of increase in payments to hospitals and private Medicare plans are improving financing of Medicare; implementation of payment and delivery system reforms that emphasize coordinated care especially for people with multiple chronic conditions, millions of Medicare beneficiaries are receiving preventive screenings and wellness visits without copayments and additional help with their prescription drug costs; solvency has improved by 9years from the date that was projected before enactment of the Affordable Care Act .this has been made possible through the phasing out of overpayments to Medicare Advantage plans and increasing Medicare payroll taxes for high income earners as well as couples; costs of Medicare are projected to grow more sluggishly reaching 6.5% of GDP in 2094.
Moreover, the costs of SMI trust fund are growing due to the aging population and rising health care costs. The standard monthly premium is projected to be $153.30 in 2021 which will be an increase of 8 dollars from the 2020 amount of $144.60.the annual deductible is also projected to increase from $198 to $212 for all beneficiaries in 2021.the premiums and cost sharing amounts are expected to consume 37% of the average Social Security check compared to 24% in 2020. However, it was noted that Medicare faces a long-term financial challenge due to the large number of beneficiaries, hiked drug prices and overall health care inflation that is on the rise at high rate. This challenge will require reforms that are aimed at containing costs and promoting access to quality health care. These reforms include; reducing hospital readmissions and hospital-acquired infections, supporting coordinated care through Accountable care organizations, medical homes, bundled payments and efforts to reduce spending due to waste, abuse and fraud,
These reforms and the ones presented by the law, characterized by slowing the rate of increase in provider payments and reducing overpayments to Medicare advantage plans are crucial in preventing Medicare costs from becoming unsustainable for both the federal government as well as the beneficiaries. With the help of the National committee, the financing of Medicare is strengthened without shifting costs to beneficiaries through the following ways; ending pay-for delays deals as well as other tactics by manufacturers to limit access to generics and drive up the costs of drugs, asking pharmaceutical manufactures to negotiate the cost of prescription drugs with manufacturers and putting inflation controls on drugs used under Medicare part B.
The report highlights that healthcare technology is significantly on the rise.it further states that there is great medical achievements and advancements that have resulted to new methods of disease treatment. With these developments, the costs are on the hike but the board believes that future advancements might lead to decrease in costs in relation to increase in efficiency.
However, the GDP is estimated to grow by 4.3%over the next five years which implies the healthcare costs will definitely be rising faster than the economy. Furthermore, the HI trust fund is seemingly running at a deficit in its operations which the board argues it can be resolved in two ways namely; immediate reduction of expenses by 16 % and the immediate increase of payroll tax from 2.9% to 3.66%.
The current report does not however show the potential effects o associated with coronavirus outbreak on the Medicare programs as well as on the social security. The board argues that with the uncertainty projected with these impacts, it is impossible to adjust their estimates accurately at the moment.
The changes realized in the 2020 report from the one of the previous year are; lower projected spending due to a methodological change in the projection of health care expenses that considers time until death, a higher projected spending outside the prospective payment system for acute care hospitals and higher projected enrollment and spending per beneficiary in Medicare advantage.
Additionally, the report states outlines that medical advantage plans are still paid on average 102-3% of what traditional Medicare would spend on a given individual due to alterations in risk scores. The Medicare expenses are further attributed to be higher than estimated before because of the huge spending of Medicare advantage linked to the high possibility of more Medicare advantage enrollees as well as higher payment rates.
It is significantly important to note that the assets and the income of a Medicare beneficiary are not a consideration in determining eligibility or benefit payment .Medicare is a national program and its procedures should not vary significantly from state to state. The Medicare coverage does not differ from that of private insurance companies in that it pays a portion of the total cost of medical care required of the beneficiary. The Medicare managed care plan provides health care treatment by use of a physician, usually regarded as the `gatekeeper’. However, a beneficiary can shift from managed care plan and return to `original Medicare’ upon his or her wish.
Individuals not eligible for Medicare but are above 65 years can as well purchase the insurance by paying a monthly premium, only available on the first day of the first month in which the individual attains 65 years of age. Additionally, individuals receiving social security or railroad retirement disability benefits become entitled to Medicare coverage in the 25th month of receiving those benefits while individuals who have end stage renal disease become eligible on the first day of the third month of a course of renal dialysis treatment.
However, enrollment during the required month for eligibility will result in coverage from the first day of the second month in relation to the month which the individual enrolls while enrollment in one of the final two months of initial enrollment period will result in coverage starting on the first day f the third month depending on the month in which the individual enrolls. There is however a general enrollment period which happens in the first three months of every year.
The `donut hole’ refers to the gap in Medicare part D drug plans and varies in size depending on the plan but the high out-of pocket costs negatively affect the enrollees that joined it. The 2020 report by the board explains that those individuals joining the Medicare on or after January 1, 2020 will not be allowed to pick up Medicare supplement plans that cover the Medicare part B deductible which covers outpatient services in an effort to reduce costs to Medicare. A Medicare supplement plan is an insurance policy that is sold by a private company. It is also referred to as Medigap plan and it plays a key role in ensuring it protects an individual from being responsible for the remaining portion after the bigger portion coverage of Medicare.
Medigap policies are guaranteed renewable in spite of the health situation as long as you pay your premium. The premium further varies depending on age, where an individual lives, type of plan and company you select. Medicare supplement plans are grouped by letter and range in coverage where every individual plan will offer varying amounts of protection for costs, deductibles, copays as well as emergency foreign travel.
In conclusion, enrollment in Medicare Advantage has doubled over the past decade with more than one-third which is 36% of all medical beneficiaries enrolling in 2020.for instance, the total enrollment to Medicare Advantage grew by about 2.1 million beneficiaries which was 9% increase from 2019 and is estimated that the numbers will rise to about 51% by 2030.in response to the coronavirus pandemic outbreak, the coronavirus aid, relief, and economic security(CARES) Act includes $100 billion in new funds for hospitals and other health centers. Moreover, majority of Medicare advantage insurers announced they are voluntarily waiving cost-sharing requirements for COVID-19 treatment. However, beneficiaries in traditional Medicare without supplemental coverage will be responsible for any out-of-pocket costs relating to covid-19 treatment if they get admitted to the hospital. The Medicare part D plans as well as public health emergency, are expected to provide upto a 90-day supply of covered part D drugs to enrollees ,limiting movements to a pharmacy as a coronavirus counter measure.
References
Cicchiello,A.,&Jacobson.(2020).What Does a post-pandemic presidency mean for Medicare?.Public Policy & Aging Report,30(4),169-172.
Kranz,A.M.,Mulcahy,A.,Ruder,T.,Lovejoy,S.,&Mehrotra,A.(2020).Patterns of postoperative visits among Medicare fee-for-service beneficiaries. Annals of surgery, 271(6), 1056-1064.
Medicare Payment Advisory Commission (US). (2003).Report to the Congress ,Medicare Payment Policy.Medicare Payment Advisory Commission.