The Future of Medicare: What America Needs
by Belinda Lao
The complex system of Medicare is currently undergoing a series of re-evaluations in anticipation of our population’s evolving needs. In fact, on November 8, this topic was the subject of Pitt Law School’s symposium, titled “The Future of Medicare.” But before we can join policymakers and citizens in discussion of Medicare’s future, we must first comprehend the current system.
Congress created Medicare in 1965 under the Social Security Act to guarantee government-mediated health insurance for individuals 65 years and older. According to William McKendree, a symposium speaker and University of Pittsburgh professor, medical insurance coverage was poorly represented within this population due to high costs and ineligibility because senior citizens often had pre-existing medical problems. Within five years of implementation, the Medicare program had increased the proportion of seniors with health insurance from less than 50 percent to nearly 97 percent, says McKendree. It was later expanded to cover the disabled and patients with end-stage renal disease, regardless of age. Rather than having to rely on community safety nets – or worse, paying out of pocket – older and sicker citizens now had an option to receive government-mediated health insurance, financed by the current working population.
Today, Medicare has developed into a complex system with an array of coverage components for each individual. Basic Medicare, the traditional option, is composed of Part A and Part B:
Part A covers in-patient hospital care, skilled nursing, hospice and some home health care.
Part B covers doctors’ services and outpatient care, outpatient surgery, lab work, diagnostic tests, therapy and durable medical equipment.
These are fee-for-service programs in which medical facilities that accept Medicare will bill Medicare for a significant portion of an individual’s medical costs. The individual is then expected to cover the remaining cost, either through a supplemental medical insurance program or out-of-pocket. Beneficiaries of Medicare must share some of the coverage cost through additional payments such as premiums (as low as $0 for Part A, depending on how much the individual has paid into the Medicare system throughout their employed years), deductibles (the individual pays a certain amount and Medicare picks up the rest for a certain period of time), and co-pays (the insurance program designates a specific out-of-pocket payment that the beneficiary must pay each time a medical service is used). Since Basic Medicare does not cover certain services, such as dental and eye care, individuals are often motivated to find other sources of medical coverage to supplement their current plan.
Part C, also known as Medicare Advantage Plans, are created and administered by private insurance plans and often offer additional coverage such as dental and vision care. Individuals must be enrolled in Part A and B before enrolling in Part C, which may include prescription drug coverage. These plans are much more variable than Parts A and B.
Part D provides prescription drug coverage and is possibly the most-used type of Medicare coverage.
According to McKendree, one of the largest problems with Medicare today is the cost of prescription medications. Not only is the cost high, but the differing tiers of coverage create a volatile coverage gap for those whose monthly medications cost too much to qualify for partial coverage but not enough to qualify for catastrophic coverage. In an example he presented, an individual is only responsible for paying 25 percent of his drug coverage (the plan pays the rest). This continues until one reaches a month where one exceeds an “initial coverage limit” of $2,930. After that point, one’s plan switches to the coverage gap area, where one must now pay 50 percent of drug coverage. Until that individual pays a cumulative out-of-pocket total that meets the “out of pocket limit” of $4,700, one remains in this gap. If one can reach that limit, one is then eligible to pay only 5 percent of one’s drug cost and Medicare covers the remaining expenses.
Although this cycle is reset at the start of each year, it is the cyclical nature that is problematic. High prescription drug costs lead people into the coverage gap, and the subsequent need to reach the high “out of pocket limit” to climb out of the gap puts a financial strain on many beneficiaries. For those who cannot climb out before the cycle resets, the costly cycle begins anew.
In addition to these inherent structural problems, the landscape of Medicare demographics and changes in health policy are rapid and multifaceted, according to Dr. Edward F. Lawlor, the founding director of the Institute for Public Health at the University of Washington in St. Louis. Professionals who have followed the trends of Medicare have long predicted an explosion in the number of Medicare beneficiaries in the coming years, as American baby boomers reach eligibility criteria. Lawlor suggests that the current estimate of 48 million Medicare users will likely jump to 79 million by 2030, with the enrollment of the baby boomers.
The increasing incidence of diagnosed chronic conditions will also require attention. This is especially apparent with the rising prevalence of diseases such as obesity and diabetes, which have many factors that complicate prevention and treatment. Mental illness, a sector which has previously garnered little attention, has also seen a boost in medical focus and treatment options. As the number of citizens eligible for Medicare and suffering from chronic conditions grows, the focus of our Medicare policy needs to shift to sustain a greater level of coverage. An increased focus on preventative and long-term care is only one factor necessary to keep up with our changing population.
With all the current talk about Medicare and the American health system, it is important for us future healthcare professionals to understand what these programs entail. As we pursue our respective careers, we have the responsibility to educate ourselves. The Medicare system will surely contribute to the financial concerns of our patients and colleagues in the years to come. So what can we do? With the rising focus on preventative factors, our country needs individuals who are passionate and driven to answer the call for primary care. This will hopefully decrease the incidence of the chronic conditions that account for a large portion of Medicare spending. Primary care has often been pushed to the wayside because it offers less attractive lifestyle options and salaries than more specialized fields. Although institutions have yet to offer sufficient incentives for students to enter the primary care field, it remains one of the most short-handed areas of health care, especially in rural populations. Perhaps, this steadily growing need will instill a sense of urgency in policymakers and prompt them to take steps to improve the perceived quality of a career in primary care.