In 2028, Medicare Part A Health Insurance Trust Fund is projected to cover about 87% of the costs for hospital care, skilled rehabilitation, home health and hospice care. Without changes to the payroll taxes, it is projected that only 79% of the claims will be paid by 2040.
Medicare Part B (physician and other services) and Part D (prescription drugs) are funded with beneficiaries paying 25% of the costs and general revenues covering the other 75% of costs. By law, these two parts of Medicare will always be able to pay claims.
The Affordable Care Act (ACA) was designed primarily to provide health insurance for adults age 18- 64, rather than to Medicare beneficiaries. But Medicare beneficiaries realized several significant benefits.
The ACA provided funding to cover prescription drug costs in the donut hole. With support from the pharmaceutical industry, by 2020 Medicare beneficiaries will pay 25% of the cost of prescriptions in the donut hole with the balance of costs covered by Medicare and the prescription drug plans.
A second benefit was 100% coverage for most preventive services such as mammography, prostate screenings, and colonoscopies.
If the ACA is repealed, these two benefits would be lost unless Congress makes special provisions to keep them.
Other changes that are being discussed in Congress are to pay a flat fee each year by giving Medicare beneficiaries a voucher. While this would save money for Medicare, the individual who needs more services than are covered by the voucher would most likely have to pay the balance of costs out of pocket.
It is unclear whether Medicare beneficiaries could purchase health insurance to cover these out of pocket costs or how low-income seniors on Medicare and Medicaid who are not able to pay for care would have their benefits covered.
Another proposal is to combine Medicare Part A and Part B into one section primarily changing how Medicare is funded and possibly reducing administrative costs.
Another proposal is to raise the eligibility age from 65 to 67 for future Medicare beneficiaries.
The public debate affecting these changes is important based on the Trump leadership team. Seema Verma, Director of the Centers for Medicare and Medicaid Services, does not have any Medicare experience. Mick Mulvaney, a staunch conservative and leader of the Tea Party and the government shutdown in 2013, is the Budget Director. His goal is to reduce the $20 trillion national debt, likely requiring reductions in Medicare.
Although President Trump says he does not want to make changes to Medicare and Social Security, implementing tax reform may include Medicare reductions. Pressures from the Tea Party (or the Freedom Caucus) to balance the budget in 10 years may require Medicare changes. Speaker Paul Ryan, R-Wisconsin, suggests more than “half of the money that the government borrows is to pay for Medicare.”
Medicare beneficiaries are encouraged to share their thoughts with their Representatives and Senators. Beneficiaries who have questions or want to share their concerns can call 303-333-3482.
~ Eileen Doherty, MS is the Executive Director of the Colorado Gerontological Society since 1982. She can be reached at doherty001@att.net.