Medicare is an American social insurance program administered by the United States government that begun in 1965. It is a policy that guarantees health insurance cover for the senior citizen and also young or old citizen who have disabilities. The program also extends its special services to other patients who have end stage renal diseases. Medicare program spreads the financial risk associated with sickness across the society to protect everyone. Therefore, it has a different role from other profit oriented insurers who manage their risk portfolio by adjusting their prices to balance with the perceived risks.
Medicare offers a defined benefit to all those who are enrolled with it. Hospital care is covered under the first part (Part A) while the outpatient medical services are covered under Part B. To cover Part A and B benefits Medicare provides some choices between an open network traditional Medicare (single payer health care) and a network plan( Medicare advantage) where the federal meets the costs for private health coverage. In the US, 76% of those enrolled have traditional Medicare while the rest survive on Medicare advantage plans (Rogne, 2009).
Medicare serves a large percentage of the sick, old and low income earners. On average, it covers a half of all healthcare costs for enrollees while the patient covers for the rest of the cost. However, these out of pocket costs may differ depending on the amount of healthcare an enrollee requires. The uncovered services might include such as hearing, vision care, and dental which are covered by supplementary insurance.
Administration of Medicare Services
The Center for Medicare and Medicaid services (CMS) is responsible for the administration of Medicare services. Along with the treasury and the department of labor, CMS implements the required insurance reforms. However, for Medicare eligibility, the social security administration is responsible to determine and process the premium payments for any Medicare program. From the beginning of the Medicare program, CMS contracts with private insurance companies who operate as intermediaries between the medical service providers and the federal government. These contractors are common in the healthcare or insurance sector. Contracted processes comprise of issues such as claims and processing of payments, clinician enrolment, fraud investigation and call center services (Kronenfeld, 2011).
This service has several sources of financing2.95 of payroll tax which is mainly levied on employers and workers usually finance Part A as established by the Federal Insurance Contribution (FICA). Any self-employed person pays entire amount (2.9% tax) on his self-employed net earnings since they are both the employer and the employee. But a person can deduct half of that tax from his income in calculating net income. In the year 2011, Medicare expenditure accounted for 15% of the total budget of the federal government and the share was projected to increase to 18% by the year 2020.
Even though the Patient Protection and Affordable Care Act (ACA) passed by the Congress in 2010 improved significantly the Medicare finances, there is a projected increase in enrolment by twice the number which may significantly affect the healthcare costs. This challenge is expected to affect the program significantly if better measures are not adopted. In response to this issue, policy makers have offered a number of proposals that compete to reduce the Medicare coverage costs.
Effect of Reduction of Medicare Cost by 15% to Medicare Clinics
Due to the reduction of administration of Medicare finances, the Medicare clinics are bound to be affected significantly. As a result, the clinics offering such services are prone to running into a big problem of indebtedness or delivery of poor services if proper measures aren't taken in the beginning. The cost of treating a patient, the number of patient are not expected to change, so the cost per unit of treatment is bound to rise.
After a deeper analysis of the situation, the managers are bound to come up with solutions to those problems. Some of the solutions involve reduction of some services while others may include increasing the cost of treatment which the patient should meet as an out of pocket cost.
Medicare special needs plan is a type of medical advantage plan that limit membership to people with specific illnesses termed as special. This program tailor the benefit of their clients, provide choices and drug formularies to meet these special needs in a better way. However, due to the reduction in funding of these programs, some of these services may be hard to get because of the additional costs involved. Therefore, the patient/client is left with the option of meeting the extra cost involved or the Medicare policy developers scrap off the service (Buto & National Academy of Social Insurance 2004).
Medicare approved drug discount is another form of Medicare benefit. This is where a patient uses her Medicare card to seek treatment in public hospitals or pharmaceutical benefit schemes. The Medicare card is used in one of the following services:
- Visiting a doctor
- Making Medicare claims for either paid or unpaid doctors accounts
- Getting treatment in a public hospital
To avoid some of these costs, the clinic management has to lias with the Medicare service provider for allocation of specialized treatment. This enables a clinic to offer only one of these products and not all. Avoiding such costs is a benefit to both the federal government and the Medicare clinic. This cost may be met by a different insurance policy or the patient may fund it to the remaining amount.
Medicare patients should also be encouraged to take other health coverage programs in order to increase their health insurance plans which are obliged to provide pay for their services. In such cases, the other plans pay the primary benefit of the secondary Medicare payable. Medicare is also considered secondary to the extent of liability insurer who pays for the service.