Medicare, Its Elements and Payment Policy

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Table of Contents

Medicare parts
Trust funds
Sustainability
References

Medicare parts

The first section of the Medicare scheme referred to as part A, caters to inpatient hospitalization services, admission to specialized nursing homes, home visits by medical practitioners, and patients in hospices. An estimated 32% of spending recorded in 2012 was credited to this section. Benefits in this section are eligible for deductions amounting to $1184 during the year 2013. The second section which is part B insures against medical visits by practitioners, preventive care, residential health visits, and outpatient care. In 2012, part B used 19% of Medicare funding. Benefits in this section are subject to deductions totaling to $147 during 2013 (Kaiser Family Foundation, 2012). However, cost-sharing is commonly applied in part B. The third section is part C. It is an advantage program where individuals can enroll in private insurance schemes such as HMO but have access to all benefits offered by Medicare. Beneficiaries enrolled in this scheme contributed 23% of expenditure in part A and B of the coverage. It is estimated that 23 million individuals were registered for part C during 2012. The last and final section of Medicare schemes is part D. This section mostly caters for outpatient prescribed medication. However, it has additional benefits for individuals with low incomes (Kaiser Family Foundation, 2012).

Trust funds

All financial transactions of Medicare are inclusive of payments of medical care services, administrative costs, taxes, and other revenues. These transactions are conducted through hospital insurance trust. However, part B and D transactions are conducted from the SMI fund. The MBTC report directs its attention to the financial position of Medicare trust. This relates to whether the fund has enough revenues and assets to sustain the payment of claims and administrative costs promptly. The sources of finance for the Medicare trust are prescribed by law. They are comprised of direct and indirect transfers. They include budget receipts and inter-governmental transfers. Part A of the Medicare trust is financed from the taxes obtained from employers’ and employees’ contributions. Part B gets its funds from social security checks. However, part D requires that members should pay for their own premiums, which are subsidized, based on their drug prescriptions (Kaiser Family Foundation, 2010).

Sustainability

The financial status of Medicare is a simple issue and easy to evaluate. This is achieved through the comparison of the projected income and assets in relation to the expected expenses in parts A, B, and D of the health care plan. It is possible to ascertain whether the benefits of the respective parts can be settled comprehensively. The assessment of the financial status of Medicare is a complex and involving issue. Assessing the effects of medical health insurance on the national budget is also straight-forward.

In contrast, the evaluation of the sustainability of the Medicare program is complex. This is a broad issue that includes societal norms. There is no yardstick that has been agreed upon through which the sustainability of Medicare can be assessed. Consequently, there is a misconception of the differences which exist among other features such as the effect on the budget, financial position, and sustainability. The concept of sustainability is not similar to financing. A medical scheme may be adequately funded, but still, prove to be unsustainable. For instance, part B of the Medicare scheme is anticipated to be financially stable due to the estimation of the funds required to operate the program. However, various individuals would argue that it cannot be sustained due to the projection that expenditure would increase. For instance, the development of the MA has an impact on the sustainability of the Medicare program. This suggests that the HI trust fund will be depleted 18 months before the projected budget (Zarabozo & Harrison, 2009).

On the other hand, some medical schemes are sustainable but are found to be inadequate in the short-run. In the event that a program is insufficiently funded for a long period, it also loses its viability. However, the financial status of federal unemployment health services varies with the economy. These schemes are regarded as sustainable. When the effects of the recession subsided in 1982, most of the states in the US had found themselves with negative figures in their trust funds catering for the unemployed. This situation forced the state administration to seek financing from the federal government. Regardless of the imbalance in their books, the unemployed health care plan is running satisfactorily. However, various questions have been asked in relation to their capacity to sustain their operations in the long-term (Zarabozo & Harrison, 2009).

The sustainability of Medicare is a decision whether the health care plan in its current structure can be able to cater to the needs of the parties involved now and in the future. The assessment of the viability of the program should take a multi-dimensional approach. For instance, even though the anticipated future costs of the health care scheme attracts most of the attention from scholars, it is also significant to consider if the plan’s structure will be able to sustain the needs of the community in the future. The two basic approaches in the evaluation of the sustainability of Medicare are cost and design considerations (Medicare Payment Advisory Commission, 2010).

References

Kaiser Family Foundation. (2010). Medicare: A Primer. Web.

Kaiser Family Foundation. (2012). Medicare at a Glance. Web.

Medicare Payment Advisory Commission. (2010). The context for Medicare Payment Policy. Web.

Zarabozo, C., & Harrison, S. (2009). Payment Policy And The Growth Of Medicare Advantage. Health Affairs, 28(1), w55-w67. Web.

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Medicare, Its Elements and Payment Policy

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