Medicare plays an important role in the United States system of health care by providing more than 45 million American citizens with insurance cover. Medicare is a program established to provide health insurance to individuals regardless of the status of health and income level. Although it is mainly established to cater for health needs of the elderly (65 years and above), the program caters for the needs of about 7 million permanently disabled adults.
Registered members contribute a certain amount of money throughout their working life so that together with their spouses, their health needs are catered for after they have retired. In order to meet the financial obligations faced by the Medicare system, funds have to be sourced from beneficiaries, revenues from the federal government and tax. At present, nearly all people aged 65 and above are insured by Medicare. Although it is a popular program, Medicare is currently faced with many challenges and issues.
Issues Facing Medicare
The greatest challenge facing Medicare is lack of sufficient funds to cater for health needs of the future generation. This is because of the high cost of health care and the increased number of baby boomers in the United States. Annual increase in the cost of health care has in turn increased expenditure. Studies conducted in 2010 show that the number of Medicare beneficiaries is likely to rise from 47 to 78 million by 2030.
For instance, the estimated population of Baby Boomers expected to join Medicare in 2011 (individuals born between 1946 and 1964) was 77 million. To handle this number, Medicare needs some improvements. According to the Medicare Board of Trustees, if changes on the Medicare program are no put in place, the likelihood of the program being insolvent/bankrupt by 2024 is high.
The following measures have been suggested if the Medicare Trust Fund is to be financially stable beyond 2024. The salaries of physicians should be reduced by 40% and payments made to other companies providing services to the programs will also be deducted.
According to government experts, available funds in Medicare Part A Trust Fund will not be enough to cater for full benefits of the large population. The experts also argue that the program requires additional revenue if it is to maintain the current benefits. This implies that beneficiaries will be forced to bear the burden of increased premiums.
Today, 30% of the cost of healthcare comes from the pockets of the beneficiaries. These costs increased annually. Like health care expenditure, increased spending in Medicare is caused by the high cost of services offered in health systems, new technologies, and increased utilization of services.
The increased amount of funds utilized in the Medicare program influence smooth running of other programs. For instance, annual expenditure is expected to increase to about $3 trillion in 2030. The federal government will be forced to adjust the budget to accommodate the requirement of the program.
This will affect funding of other important sectors like education and defense. Because of the increased number of retirees, Medicare will lack funding because the workers will be few. This is because Baby Boomers include the largest percentage of employees in the United States. The economy of United States is largely determined by Baby Boomers because they are innovative. In addition to lack of funds, the program will need to hire more professionals to cater for the large number of retirees.