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Medicare and its Mission Research Paper

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Updated: Dec 15th, 2019

The history of Medicare

Since 1965, the United States’ government has been controlling Medicare (a social health insurance program). Medicare was established to ensure that older people are entitled to viable health insurance provisions. Additionally, people with renal diseases and acute disabilities also benefit from the program.

Before the invention of Medicare, aged individuals and other vulnerable groups hardly accessed viable health insurance covers. Additionally, they could barely afford it (Aaron, Lambrew & Healy, 2008). Through Medicare, many Americans have been insured health wisely. Basically, Medicare differs considerably from other private insurers who run their organizations profitably.

Medicare is structured in four parts; part A, B, C, and D. Part A is strategized to cover the health of those who stay in the hospitals and part B is for the outpatients’ medical cover. In part C (Medicare advantage), it is the responsibility of the United States federal government to compensate those who are under private health cover.

However, many people (nearly 70 percent) who have enrolled for the Medical insurance cover are under the traditional Medicare. The remaining thirty percent are enrolled in the ‘Medicare advantage’. Conversely, the prescription of drugs to those patients who do not reside in the hospitals is covered in part D and is majorly carried out through private provisions and Medicare advantage plans (Aaron, Lambrew & Healy, 2008).

Besides, this health insurance cover is beneficial to many old people and the sick. Additionally, poor people who cannot afford healthcare are now able to receive treatment freely or at a cheaper cost. Those who have registered for the Medicare pay half of the healthcare costs while the remaining half is taken care of by the insurance cover.

Financially, Medicare is funded through revenue tax imposed on workers as well as employers. This revenue tax collection majorly funds part A of the Medicare (Aaron, Lambrew & Healy, 2008). Premiums obtained from those who have registered for the Medicare and income from general funds are used in part B and part D of the Medicare.

Medicare spending has significantly increased over the years and is still projected to rise. Conversely, the increase in healthcare costs has led to a financial constrains. This has triggered the policy makers to come up with suggestions on how to cut down the Medicare costs. It is important to understand the provisions of Medicare for it effective utilization.

Legislative attempts to control Medicare costs

The federal government of the United States has established several legislative reforms in an attempt to control the Medicare costs. In this context, legislators have suggested a premium support scheme. This system will reduce the cost (Medicare cost) by regulating the value of the receipts and connecting its increase to the inflation.

Conversely, people expect the value of the receipts to be low compared to other associated health costs. The other premium support proposed would alternatively retain traditional Medicare and would not be pegged on inflation (Andersen, Rice & Kominski, 2007). Conversely, numerous strategies to increase the age of those who are entitled to Medicare have been established.

As people grow old, the proportion of workers and those who have retired will definitely increase and thus there is need to trim down the programs for the old. Increasing the age at which an individual is entitled to Medicare would save a lot of money, which in turn would be helpful in obtaining the insurance cover to vulnerable groups.

Consequently, through the coverage policy, the manufacturers distributing medicines to hospitals have to present a 20% refund on their average prices. According to Blumenthal (2003), poor people and the old will be entitled to free Medicare coverage. Additionally, the government will procure drugs for them.

Through this, the government would be able to collect and reuse a lot of money on the health of American citizens. Private insurance schemes are expected to reduce as they render patients to unnecessary and costly treatments. Unnecessary charges are the major roots of rising medical costs.

Legislators have come up with a proposal to limit the insurance coverage to 50 percent of the overall cost (United States Government, 1993). Additionally, healthcare is expensive due to high administrative costs. Some policies have been set govern the amount of money spent on administration and healthcare services. Such policies have also ensured that individuals spend considerably on health services (85 cents per premium dollar) on healthcare.

Laws governing Medicare fraud and abuse

Medicare fraud is a nationwide problem in the U.S. Although the majority Medicare beneficiaries are sincere, some individuals constantly abuse various provisions of the program. Consequently, this costs tax payers a lot of money and puts the welfare at risk. Individuals found abusing Medicare programs are punishable by the law.

The punishments may include huge fines and imprisonment. Conversely, Healthcare organizations found abusing the service are at risk of losing their licenses (Keagy & Thomas 2004). Additionally, organizations found guilty may be stopped from participating in Medicare for a given period of time. This is a vital provision when considered critically.


Aaron, H., Lambrew, J. & Healy, K. (2008): Reforming Medicare: Options, tradeoffs, and opportunities. Washington, DC: Brookings Institution Press.

Andersen, R., Rice, H. & Kominski, F. (2007). Changing the U.S. healthcare system: Key issues in health services policy and management. San Francisco, CA: Jossey-Bass.

Blumenthal, D. (2003). Long-term care and medicare policy: Can we improve the continuity of care?. Washington, DC: Brookings Institution Press.

Keagy, B. & Thomas, M. (2004). Essentials of physician practice management. San Francisco, CA: Jossey-Bass.187.

United States Government. (1993). Social security programs in the United States. Darby, PA: Diane Pub.

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