Medicare United States Essay Example

Medicare United States Essay Example Medicare United States Paper Medicare United States Paper The government program which provides health insurance coverage to people 65 years and over in the United States is known as Medicare. Medicare is a single player health care system. A single player health care system is a system under which health care providers are only paid from a single fund. This system is considered to be a system of universal health care. It was signed into law on 30th July, 1965 by President Lyndon B. Johnson as a change to the social security legislation. When it was ratified President Johnson presented former President Harry S.  Truman with the first Medicare card making him the first beneficiary of Medicare in the United States (SeniorJournal. com, 2001). The true history of the program however goes back to 1945 when then President Harry S. Truman requested congress to create a national health insurance program. Due to the opposition of the Soviets at the time and rejection of communism, the dangers of socialized medicine were fiercely debated for the next 20 years. By the end of his term Truman backed away from his plan for universal health care. However, his rivals in the social security administration and other sections of government ran with the idea of insuring social security benefactors. When it was signed into law as part of Lyndon Johnson’s great society the Medicare Part B premium was three dollars a month. Part B premium serves the outpatient basis of the medical insurance and is geared towards those individuals who are retired or no longer working. Then in 1972 the program was expanded to include disabled individuals who were under 65 years of age and those with end stage renal disease were also enabled to receive coverage. It also expanded to include chiropractic services and other forms of therapy such as speech and physical therapy. This was also the year that payment to health maintenance organizations began and the supplemental security income for the elderly and disabled poor was established to automatically give these recipients coverage under Medicare. In 1982 the program expanded to include hospice treatments on a temporary basis to assess the financial costs of these institutions. The benefits would not become a permanently ratified until 1986. Then in 1983 they changed their system of payment from one of reasonable cost to a case by case basis based on the diagnosis for in-patients in hospitals. In 1984 the President, federal employees, members of congress and federal judiciary also became covered by Medicare. In 1988 a major overhaul of the Medicare program was made in order to provide benefits for life threatening illnesses and prescription medication, it was cancelled the very next year. This was followed by coverage for routine mammographies in the same year. The next year coverage for pap smears started and physicians were now paid based on their schedules. In 1997 the balanced budget act was passed which enabled various providers from Medicare to have their funding reduced. This was enacted under the Medicare choice program which provided advantages to those individuals who are financially burdened. However, congress soon revisited this act due to pressure in 1999 and passed the Balanced Budget reform act which returns some of the cuts to the providers. These returns were increased by the 2000 Budget improvement and protection act (SeniorJournal. com, 2001). Thus, in 2000 the Medicare Choice final rule took effect. At this time the Medicare Part B premium was at forty five dollars and forty cents a month. Inaugurating it in 2001 and launching it in 2002 Medicare started a new program known as Quality Initiative. This was a new program which encompassed not only quality monitoring by independent surveyors. But also pay for performance plan along with the hospital compare website. They also eventually revealed that they would no longer offer payment for treatment of hospital acquired infections and problematic hospital events. In 2006 they began a prescription drug coverage program. This at a monthly premium puts individuals on a drug plan to cover their drug costs. The current premium for Medicare part B is ninety six dollars and forty cents per month (Centers for Medicare and Medicaid Services, 2005) (Medicare, 2009). A look at the government website for Medicare and the Centers for Medicare and Medicaid do not reveal the mission statement for the organization. What is present however is what the program actually entails in terms of services. As mentioned before Medicare is a health insurance program for people of ages 65 and over who may have certain disabilities and also those of all ages with End Stage Renal Disease. It provides three types of insurance. Part A is hospital insurance which covers the costs of hospital care, hospice care and inpatient care. It may not be required to be paid if the payroll tax of an individual pays for it. Part B medical insurance is the type which covers outpatient care and doctors services. It also covers certain other physical and occupational therapies in health care and is bought with a monthly premium. The third is prescription drug coverage which covers the individual’s drug plan for a monthly premium (Centers for Medicare and Medicaid Services, 2005). In terms of the criminal justice system Medicare does not pay for those individuals who have been sent to prison since they lose their social security on incarceration. However if an individual pays their premiums for Medicare B directly they are still eligible for the program. Otherwise their Medicare benefits will run out in 3 months. They also lose coverage under the drug prescription plan. In the case of individuals who are in psychological institutions for the criminally insane and in nursing homes serving out their sentence are covered under the Medicare part B program (Bazelon Center for Mental Health Law, 2009). If we look at the financial records of Medicare for the past three years, i. e. from 2007 to 2009 we find that Medicare has faced striking loses and financial challenges. According to the April 2007 report the Health Insurance Trust Fund which gives finances to part A of the Medicare plan will no longer be viable after the next 20 years. Meaning it will dry out in 2019. Once it is gone Medicare will turn to payroll taxes to cover the costs of 79% of part A. The 2007 report was also the first one which included the Medicare funding warning. This was due to the fact that this was the second report which stated that the in the next seven years 45% of all funding for Medicare would come from common revenues (Aflcio. org, 2007). The 2008 financial report contained information which stated that the estimated health insurance deficit over the next 75 years was expected to be around thirteen trillion dollars. To eliminate this problem the only foreseen solution was to increase payroll taxes by 122% or to reduce benefits by 51% or some combination of both and that failure to do so would result in even greater increases and reductions. The report also spoke of the problems of the long term sustainability of Medicare with the rising cost of Health Care in the United States. The report also stated that due to these expenses Medicare would continue to be a burden, relying on the country’s GDP to function. They said that Medicare spent 3. 2% of the country’s GDP in 2007 and is estimated to spend 6. 3% in 2030 and 10. 7% in 2080 (American Academy of Actuaries , 2008). In 2009, the report once again showed the financial failings of the Medicare organization. It now reported that the Health Insurance fund would empty out in 2017 two years sooner than predicted in 2008. The report also said that the benefits given out by hospitals this year will outpace the earnings to such an extent that it will result in bankruptcy by 2017. This year they said that the Health Insurance deficit would require an immediate 134% increase in payroll and 53% reduction in benefits or some combination of the two with the total deficit over the next 75 years totaling 14 trillion dollars (American Academy of Actuaries, 2009). A critical analysis of the effectiveness of Medicare finds that Medicare has failed to perform adequately for several years and its performance in the 2009 fiscal year was not satisfactory. Not only have they not taken any steps to curtail the projected deficit. Since 2004 the costs of the Medicare program have exceeded income from payroll tax revenue forcing the program to rely on interest earnings to help pay benefits. Furthermore immediate action needs to be taken to insure that the Health Insurance Trust Fund which is on it way to depletion in 2017 is preserved. As the reliance of Medicare on GDP grows it is predicted that social security costs will grow along with it. This is because after 2010 the number of people receiving benefits through Medicare and social security will sharply increase. It is expected that the part B premiums will increase in the ensuing years as beneficiaries will have to pay more due to ever increasing health costs. However, by law since the Part B premium cannot exceed the cost of living adjustment provided by social security. Thus, nearly 75% of the Medicare beneficiaries will not pay increased premiums placing the financial burdens on the rest of the 25% of the population (American Academy of Actuaries, 2009). It is also expected that since the prescription drug plan is not subjected to any legislation, the prices for its premiums will dramatically increase over the next few years. The current business model employed by Medicare quite frankly is a disaster of epic proportions. With the current recession of the economy in the United States and the ever increasing cost of health care, it is not conceivable for Medicare to maintain any form of profitability or stability long term in this market. Not only that but shareholder and consumer confidence along with an overwhelmingly negative perception of the general public will curtail any efforts by Medicare to rectify its earning procedures for years to come. Thus eventually Medicare will not only become unsustainable for its beneficiaries but also for the federal government. Since the substantial increase in health care cost and increasing complexities of the health care system will be a dominant force in the industry over the next few years. It is essential that Medicare streamline its operation and keep costs down while keeping consumer confidence up. In order to do this they must completely abandon the current Modus operandi they have adopted and turn towards creating a new plan that is customized towards providing a standard form of service rather than awarding cash on a performance basis. Additionally, they must insure that their new programs are not only more streamlined but are also created to insure the best health care possible for their consumers. It is inevitable that the price of the Medicare premiums will increase over the next few years. However, if Medicare changes its modes of operation from stressing quick cures to instead creating an emphasis on primary prevention the long term benefits on the civilian population and the organization will be incalculable. It is through this means that they will create a more standardized approach towards medicine and prevent the occurrence of more life threatening diseases that are considered a financial black hole. Meaning these diseases require years of funding to treat patients with no guarantee of recovery. However, it is much more likely that Medicare wills continues it current mode of operations and will continue to employ the use of the failed Quality Initiative. With increasing Job losses and a recessive economy it is doubtful that the organization will find its way back to profitability and become free of the aid it is receiving from the GDP of the United States and the Health Insurance Fund. Additionally it is conceivable that Medicare will abandon all the programs it consider non essential. Among those will be programs which are geared towards the medical aid of felons or sex offenders. It is possible that the health benefits afforded to senior citizens in nursing homes may be revoked in an effort to increase funding for the organization. It is equally plausible that Medicare will possibly outsource some of its businesses to local prisons such as their help lines and customer relations due to budget concerns and deficits. However, it is inevitable that in the end no amount of funds will help the organization return to a mode of profitability. It has been suggested by the republican body recently that it may be more prudent for congress to scrap the program completely in favor of a more contemporary approach. In my opinion I believe that is a much better option over the wait and see approach the Medicare has obviously adopted over the last few years. It is true that an immediate increase in payroll tax and an immediate reduction in benefits will alleviate the actuarial balance within the next few decades. However, the long term sustainability of such a plan is whimsical at best. Additionally one must consider if the longitivity of this organization is based solely on the success of these factors, then their increase within the next few decades is assured creating a greater burden on the populace. The financial difficulties that face Medicare today are not as simple as they appear. Nonetheless it is apparent that reform of the organization is essential to its long term survival. Its biggest concern is sustenance without sacrificing the quality of care of its individual. However, with ever increasing cost of health in the United States, its possible that might just happen. References Aflcio. org. (2007). Medicares Financial Condition. Retrieved May 30, 2009, from Aflcio. org: aflcio. org/issues/healthcare/financial. cfm American Academy of Actuaries . (2008, March). Medicares Financial Condtion: Beyond Actuarial Balance . Retrieved May 30, 2009, from American Academy of Actuaries : actuary. org/pdf/medicare/trustees_08. pdf American Academy of Actuaries. (2009, May). Medicares Financial Condtion: Beyond Actuarial Balance. Retrieved May 30, 2009, from American Academy of Actuaries: actuary. org/pdf/medicare/trustees_09. pdf Bazelon Center for Mental Health Law. (2009). Bazelon Center Fact Sheet Medicare p. 2. Retrieved May 30, 2009, from Bazelon Center for Mental Health Law: bazelon. org/pdf/Factsheet-Medicare. pdf Centers for Medicare and Medicaid Services. (2005, December 14). Overview. Retrieved May 29, 2009, from Centers for Medicare and Medicaid Services: cms. hhs. gov/MedicareGenInfo/ Medicare. (2009). Medicare premiums and coinsurance rates for 2009. Retrieved May 29, 2009, from Medicare: http://questions. medicare. gov/cgi-bin/medicare. cfg/php/enduser/std_adp. php? p_faqid=2100 SeniorJournal. com. (2001). Brief History of the Medicare Program. Retrieved May 29, 2009, from SeniorJournal. com: http://seniorjournal. com/NEWS/2000%20Files/Aug%2000/FTR-08-04-00MedCarHistry. htm