Medicare is currently predicted to become insolvent by 2026, according to MedPAC commissioner Warner Thomas. How has this happened?
Medicare is the health insurance for those who are 65-years-old or older, and for some younger people with disabilities. Medicare started in 1966. Currently 60 million Americans have Medicare coverage. For those covered, Medicare covers about half of their health care bills, and the rest the patient has to pay themselves such as for copays.
Medicare enrollment has been rising as the baby-boom generation starts joining the ranks. But at the same time, the number of American workers who fund the program is declining.
The total Medicare spend is about $528 billion a year. However, Medicare pays out about $50 billion in fraudulent payments per year. In addition, health care costs and pharmacy costs have been rising.
What are options for fixing Medicare?
- Medicare needs to control their fraud spend. Other insurers such as United and Aetna have aggressive measures to combat fraud, and Medicare needs to implement those ideas in order to control fraudulent payouts.
- Medicare needs to begin instituting standard guidelines to ensure that medical care and surgeries performed are medically necessary and appropriate.
- Controlling prescription drug prices will be important. Currently 20% of Medicare spend is on medications. Controlling the prices that pharmaceutical companies are charging will be paramount in controlling spending.
- If those steps fail, Medicare beneficiaries may have to have higher co-pay costs, and payroll taxes may have to go up to fund Medicare.