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Originally Posted by Clip-Clop
Why does Medicare lose money? Why even though millions pay into something they will never use they still manage to not have enough to cover those using it?
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Note the date, but still applicable. Yes, the programs need some fixing. They always do. Expecting a medical insurance program set up decades ago to be applicable to todays health insurance industry, especially the most expensive in the world, twice as expensive as other countries, is silly. These programs are outstandingly successful, having saved millions of lives over the years by enabling seniors to get health care. No, the programs do not need to be completely thrown out. That would be absurd. The ACA removes millions (that means millions in savings) in Medicare duplication over the next 10 years. That's an excellent start.
It also provides health care to seniors at half the cost of private health insurance, thus saving us all money. We have the most expensive healthcare system in the world - it's a disaster. We are the only country in the world whose health care system is owned by private insurance companies. Medicare for all would fix that.
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Medicare's Financial Problems
Medicare’s financial affairs are handled through two trust funds, the Hospital Insurance (HI, or Medicare Part A) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund.
According to current projections, the Hospital Insurance Trust Fund will receive income of $221 billion in 2008 and pay out $230 billion in benefits and administrative expenses, leaving a deficit of $8 billion for the year. At the end of the year, the trust fund will hold $318 billion in assets. Current income and trust fund reserves will be sufficient to pay hospital insurance benefits through 2019, when the reserves are projected to be depleted. At that point, if no changes are made, scheduled HI income will cover 78 percent of estimated expenditures.
The Supplementary Medical Insurance Trust fund is always adequately financed because beneficiary premiums and general revenue contribution are set annually to cover the expected costs of Parts B and D of Medicare for the coming year. However, the rapid rate of growth in program costs will place increasing demands on both beneficiaries (to pay the premiums) and taxpayers (to provide the general revenues).
Medicare’s spending is growing rapidly for the same reasons that private health spending is growing rapidly—increases in the cost and use of medical services. Much of these increases stem from advances in medical practice and technology that have enabled people to live longer and healthier lives. These technological advances have generally raised costs. The aging of the population makes only a small contribution to the growth in Medicare’s costs.
For more information, see:
Medicare Finances: Findings of the 2008 Trustees Report, Medicare Brief No. 18
Financing Medicare's Future, Final Report of the Study Panel on Medicare's Long-Term Financing
The Financing Needs of a Restructured Medicare Program, Medicare Brief No. 5
Matching Problems with Solutions: Improving Medicare's Governance and Management, Final Report of the Study Panel on Medicare's Governance and Management
Should Higher Income Medicare Beneficiaries Pay More for Medicare? Medicare Brief No. 2
The official Medicare website is www.medicare.gov.
http://www.nasi.org/learn/medicare/financial-problems
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