Financial Facts about Medicare
There are many rumors circulating about what is going to happen to Medicare in the years to come, such as that the program is running out of money or that it might not be around for much longer – at least not in the same version, it is today. It is easy to get caught up in what is being reported on the news, and sometimes it is hard to find the facts about Medicare. If you are over 65 years old, chances are you rely heavily on Medicare, so naturally, you are concerned about what is going to change. It is important to keep in mind that most of the information out there about what could happen to Medicare is based on speculation and predictions from experts. So, their guess is probably better than mine or yours, but that doesn’t mean it’s a sure thing. The bad news, according to many experts, is that the rumors that are going around about financial challenges with Medicare and changes to come are likely true. The good news is that the more facts about Medicare that you know, the better you will be in deciding who and what to believe.
Financial Facts about Medicare
So, let’s take a look at the numbers. Here are some hard, financial facts about Medicare.
Medicare still has money.
Basically, Medicare as a whole is fine for right now, but there are certain parts of it that are facing financial challenges. For example, Medicare is struggling to pay your hospital bills. This means that for Medicare Part A, the amount Medicare is spending on hospital benefits exceeds the revenue coming into the program. This is due to an aging population. Between 2010 and 2050, the population ages 65 and older will double, meaning that a number of people using Medicare is also increasing and will continue to go up. There are currently 56 million Americans covered by Medicare, either because they are over the age of 65-plus or they are a younger people with certain disabilities. With the number of Medicare beneficiaries increasing, financial experts predict that there will be enough money in the pool to pay for hospital insurance benefits in full until 2028. After that, Medicare will only be able to cover about 87 percent to be sustainable. This means that hospitals will be given less money, which could hurt them, or some other change will have to occur to fix the financial shortage.
But you might pay more.
Medicare Part A is just one piece of the pie when it comes to the government-run program. Part A is funded primarily by payroll taxes, or in other words, all that money that’s been taken out of your paycheck over the years. Part B and Part D are paid for through a combination of general revenues and beneficiary premiums. So basically, the government is paying part of it and you are paying the other half. Over time, if the government’s budget doesn’t allow them to continue paying as much, your premiums may go up.
The Affordable Care Act might be helping.
It seems like the Affordable Care Act is helping to reduce the amount of Medicare spending. For example, studies show that repealing the healthcare law in its entirety could add $802 billion to Medicare spending over 10 years. This means that there will likely be higher premiums, deductibles, and cost-sharing for people on Medicare.
Healthcare reform and Medicare
There have been many different ideas proposed for reforming Medicare, such as privatizing it so that it is no longer a government-funded program. People could still get help from the government to pay their monthly premiums, in the form of a subsidy, but they would essentially be insured by private insurance. This is very similar to how Medicare Advantage works right now. The concern is that with a fixed monthly payment coming from the government, there’s no guarantee on how much of your expenses it will cover.