Medicare Funding Crisis Essay

As the newly appointed chief of staff I have been tasked with responding to a proposal for reducing Medicare expenditures by enrolling participants in HMO. I understand that we have some key questions must be addressed and that we must justify our position on either economic efficiency or equity grounds. Outlined below are some of the questions that must be answered in order address this issue properly. Is Medicare in a state of crisis? Are you aware of the various policies that are being enacted from each state to state regarding the qualification of Medicare? Medicare is funded by the federal government and each state is responsible for operating the Medicare program as well as the local Medicaid programs. However, premiums have increased for Medicare and also, the coverage has changed in the past few years requiring people to purchase additional supplemental Medicare policies – this is difficult for elderly that have fixed incomes. If the elderly are unable to purchase Medicare, they will go uninsured. The Medicare system is double-funded. It is funded by the taxpayer (federal dollar) as well as the premiums being collected. But, in being double-funded, the coverage is still not as high as most private insurance companies making them appear with less quality. Are radical measures necessary to preserve the program? This is a very interesting question and you will have to take a more subjective approach to answering it. I don’t believe there are radical measures that must be taken to preserve the program because it is funded through two divisions – the federal government (taxpayer) and the premiums being collected. However, the cost of providing the medical services is much higher than the cost being collected. Perhaps a more responsible approach would be to evaluate the cost of the medical services being provided and standardize a cost table among all insurance companies including Medicare. For example, a client may be seen by a physician for a regular check-up and that provider is only allowed to charge Medicare $65. If a client came to that same physician with a private insurance policy, that physician is allowed to charge the private insurance $120. What happens then is that the service under the Medicare payment is not provided in the most quality manner (although, physicians will argue this) because they are getting paid much less by Medicare rates. The physician may spend more time, energy, and commitment to a private paying client because they are getting almost twice the amount of money from the private insurance. It is a matter of motivational service-delivery. The radical measures that need to take place are increasing Medicare rates of reimbursement or mandating lower rates of private insurance to neutralize the risk of receiving poor quality services. How is Medicare funded now? The Centers for Medicare & Medicaid Services (CMS), a branch of the Department of Health and Human Services (HHS), is the federal agency that runs the Medicare Program and monitors Medicaid programs offered by each state. (In 2011, Medicare covered 48.7 million people. Total expenditures in 2011 were $549.1 billion. This money comes from the Medicare Trust Funds. (Medicare.Gov (2010). About OTPN. Retrieved from http://www.medicare.gov/about-us/how-medicare-is-funded/medicare-funding.html) Medicare is funded by the federal government (the taxpayer’s federal taxes out of their paychecks). People may believe that social security pays for Medicare, but it doesn’t. If less people are working, less money is going into the federal â€Å"pool† of money to distribute to Medicare. The nation is at an all-time high for reported unemployment – that means that there is millions of dollars not going into the fund account for Medicare. However, just as many people are seeking medical coverage from Medicare – an imbalance occurs. Why do the elderly feel that Medicare is an insurance program, not a welfare program? Is this perception accurate? Some elderly, in my opinion, believe that Medicare is an insurance program that they are entitled to. During the Great Society movement in the 40’s-60’s, various governmental programs were designed to provide citizens entitlements to human services and welfare needs. The Medicare and Medicaid coverage was designed to provide those that do not have any means to pay for health care a way in which they could maintain their health needs – a right that the government and society has deemed every person should be entitled to; their health. So, depending on the culture, upbringing, and personal philosophy.