By Carolyn Spence Cagle PhD, RNC-E
We’ve heard that by 2028 the Medicare Part A Trust Fund will be depleted and unable to cover all beneficiary expenditures. Fewer workers paying into the Trust Fund, more “baby boomers” accessing Medicare services, and escalating health care costs have contributed to that depletion. Fewer retirees choose Traditional Medicare plans compared to Medicare Advantage plans but by 2030 half of retirees will choose a Medicare Advantage plan. This concern has led the government to consider options to fund Traditional Medicare and respond to the large growth in Medicare Advantage recipients. What options may be on the horizon for Medicare change grounded in facts about Medicare now?
- Medicare is the largest purchaser of U.S. health care and covers an estimated 62 mostly retiree beneficiaries. Thirty-eight percent of retirees currently choose a Traditional Medicare (80/20 plan), along with a Medigap and Medicare D policy, to cover health care costs.
- Others (24M) currently choose a Medicare Advantage plan to cover the same Traditional option benefits plus others (vision, dental, and hearing.) They often pay no or low monthly premiums. Offered by private insurance companies (UnitedhealthCare; Humana, etc.), these plans receive federal subsidies to cover Medicare recipients and cost more than Traditional Medicare. Some authorities argue for closer monitoring of these plans that inflate beneficiary risk ratings to increase governmental cost. These persons note that private companies “pocket” many profits by limiting beneficiary coverage through provider network restrictions and drug formularies.
- More underserved Medicare beneficiaries enroll in Medicare Advantage plans These often focus on preventative health care that improves some quality care outcomes at a lower cost than Traditional Medicare; Advantage plans may better address sociocultural factors related to some higher disease rates among those communities as compared to Traditional Medicare.
- A pilot program called REACH (“Realizing Equity, Access, and Community Health”), a new provider network and team-based model of health care delivery and payment, will be tested in 2023 with Traditional Medicare recipients to compete with current Medicare Advantage plans. This model will involve networks of providers who will earn incentives to meet beneficiary quality indicators and earn profits for saving health care dollars each year. This concerns many who believe this will privatize Traditional Medicare and compromise beneficiary access and quality of health care.
- Experts agree that the federal government needs to quickly address ways to address the Trust depletion. These might include increasing payroll taxes (particularly among richer Americans) to fund the Trust Fund, decreasing payment to Medicare providers, decreasing low-value and costly Medicare benefits, increasing beneficiary insurance premiums, allowing Medicare to negotiate drug prices, and restructuring Traditional Medicare for more efficiency (less of a problem for Medicare Advantage).
Challenges lie ahead for maintenance of the current Medicare program. It is time for a bipartisan federal Congress to propose creative and feasible plans to address current program deficits to ensure continued health care to deserving older Americans.
References Cited:
Bipartisan Policy Center. (2022, June 7, 2022). Medicare’s fiscal challenges: A look at the 2022 Trustees Report). Retrieved from https://www.youtube.com/watch?y=hcmL6XolHjs.
Eisenberg, R. (2022, June 1). Why value-based health care can be costly for people in Medicare. https://www.nextavenue.org/value-based-care-costly-for-medicare.
McWilliams, J. Michael (2022, March 24). Don’t look up? Medicare Advantage’s trajectory and the future of Medicare. Health Affairs Forefront. Retrieved from https://www.healthaffairs.org/do/doi10.1377/forefront.20220323.773602.
Miller, M. (2022, February 28). The end of traditional Medicare as know it? Retirement Revisited. Retrieved from https://retirementrevised.subslack.com.