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Medicare Costs Rising
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Who Is Going To Pay?
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Join the Discussion
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"My mother lives in a small community in northern Calif. and is limited to the providers the doctors will accept. She recently switched to HealthNet, to find out after 01/01/01 they will no longer provide her with the prescription coverage. Any idea why and how these companies are able to get away with this?
Any help would be greatly appreciated. She lives on a fixed income of about $1,000.00 per month and certainly can not afford this.
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GAYLA140
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A report released January 2nd from the Urban Institute, lends more credence to the predictions that Medicare is in trouble and requires some major fixes. This study also predicts that the impact will be felt most severely by those who can least afford it, the elderly poor.
Challenges Facing the Future of Medicare
- Medicare's growth in spending is outpacing its growth in revenue. Most of the revenue in Medicare is derived from payroll taxes that have not increased from their present rate of 2.9% since 1986. There is no plan to increase the Medicare payroll tax rate in the near future.
- With an aging baby-boom generation joining the Medicare roles, the number of beneficiaries will grow by 77% over the next 25 years, from the present 40 million to an estimated 70 million. As soon as 2010 the number of new Medicare beneficiaries will grow faster than the number of new workers contributing to the program.
- Medicare spending is expected to double in the next 25 years. The Medicare Trust Fund will run out of money at that rate by the year 2025.
Increasing Burden on Beneficiaries
- Out of pocket costs to Medicare beneficiaries are predicted to rise 80% in the next 25 years.
- Low income elderly will see the amount of income spent on health related expenses grow from a present 51% to an estimated 71% by 2025.
- Low income, elderly women with chronic health problems will bear the greatest burden of health related increase in expenses.
Impact On America's Future
- Medicare has been a highly successful health program for the elderly and disabled. Despite rising costs and the fact that Medicare beneficiaries are older and generally sicker the growth in Medicare's per capita expenditure over the past 30 years has been less than that of private sector health care. Medicare remains a valuable benefit to all Americans, a benefit that needs to be protected.
- Without long term planning and overhaul of the Medicare Trust Fund, one of 2 scenarios is expected. Either the Trust Fund will become insolvent, or there will be serious impact on the health and welfare of the nations most vulnerable population.
What Does This Mean To Me
As we prepare to see a new President inaugurated in a few days, we all have to realize that this is a very serious situation that needs a long term solution, not just a quick fix. The Balanced Budget Act of 1997 and increased oversight to reduce the amount of fraud and abuse of the Medicare system have help curtail some of the cost increases. But the Balanced Budget Act is self limited, and it is yet to be seen if there will be the same commitment to preventing fraud in upcoming administrations. With a new President promising massive tax cuts, an increase to the revenue flow into Medicare is not promising. Resistance to adding a Prescription drug benefit to Medicare and instead relying on the private sector indicates a further reluctance to improving the health care status of seniors. Without a concerted effort to improve the system, Medicare will either be gone, or out of pocket costs will be so high that seniors will ration their healthcare dollars in an effort to reduce costs.
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