Wednesday, July 24

Better Medicare for The Same Money? YES, With These 5 Tips!

When it comes to Medicare, there’s nothing else that gets higher marks from seniors. However, we couldn’t emphasize enough just how much healthcare has evolved since Medicare was first signed into law back in 1965, and so have the needs of seniors in America.

Nowadays, seniors need better protection from all those sharply escalating, expensive costs. And while we’re here, we also think that critical coverage gaps need to be addressed, and this includes dental, hearing, and vision care.

The increasing privatization of Medicare should be immediately counterbalanced with a competitive field, and assistance for low-income seniors should be expanded too.

But first, let’s discuss something that has been bothering all of us for a while now: the looming insolvency of Medicare Part A. Here are five ways in which Medicare could be improved:

medicare
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Control Drug Costs

The disputed Alzheimer’s drug approval from the U.S. Food and Drug Administration placed the whole issue of drug costs in Medicare under the spotlight, AGAIN.

You probably didn’t know this, but Aduhelm is administered by healthcare providers, so it’s already covered under Part B, and that was a huge factor in the eye-popping increase in the Part B premium.

However, Biogen, or BIIB, which is the company that makes the drug, announced the latest decision: to cut the drug’s price in half, which could prompt an unusual downward revision in all the premiums this year.

However, all these drug issues extend to the Part D program as well. It seems that Part D premiums have managed to remain steady in the last couple of years. However, deductibles and all the other out-of-pocket expenses have been constantly increasing due to inflation.

The deductibles vary depending on the plan, and this year, they won’t exceed $480. Also, Part D plans are known to have many tiers of coverage that enrollees could choose from if their drug spending increases.

Well, the initial deductible seems to apply throughout the “initial benefit period”, which is up to $4,430 in mixed spending between you and your insurer. This amount could cover your routine prescription drug costs.

But what about those people who need expensive drugs so they can treat their conditions, like cancer, diabetes, and even rheumatoid arthritis?

Well, it seems that they could also move into the program’s coverage gap, where you pay 25% for all the needed branded and generic drugs until you reach the catastrophic amount of $10,690.

Fix Medicare Part A

Medicare has an immediate solvency problem that could negatively impact one part of the program, and that is Part A, which is basically the part that takes care of your hospital bills.

Unlike any other Medicare, Part A is primarily funded through the Medicare payroll tax, while Parts B and D are financed by general government revenue and premiums paid by the same people that are enrolled in the program.

Some might say that the Part A trust fund, which was formally known as the Hospital Insurance Trust Fund, will soon become insolvent in 2026. The main problem is rising healthcare costs, because the payroll tax rate that is behind Part A hasn’t changed one bit since 1987, but per capita spending has actually doubled.

The easiest way to understand this is by seeing the trust fund as a checking account balance that gets Medicare’s payroll tax payments and then uses the payments to cover all the bills.

If it is the case for insolvency, the fund would be enough to pay 91% of projected benefits. Well, there are a few choices to fix the problem: we could either add new tax revenue and charge seniors more, cut the benefits, or even cut payments to existing healthcare providers. Or, a little bit of all of these.

Medicare
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Cover Dental, Hearing, and Vision Care

Medicare never covered dental, hearing, or vision care, but there are a couple of exceptions to that. Those gaping holes aren’t good for the well-being of seniors, and they might lead to other health problems that could boost the entire program’s costs.

Studies also linked poor oral health with increasing rates of diabetes, cardiovascular disease, and pulmonary infections. Vision and hearing loss are oftentimes associated with a higher risk of falls, depressive symptoms, and cognitive impairment, but also hearing loss is associated with higher chances of hospitalization.

Some of the earliest versions of Build Back Better suggest expanding Medicare to cover all three of the main care needs. One of the most recent versions considered covering hearing, but it might not last.

Level the Playing Field

Medicare has been increasingly privatized on a larger scale over the past two decades, mostly through Part D and Medicare Advantage. Advantage is bound to cover half of all enrollees by 2030, with a very public discussion of all the implications for government spending but also the well-being of participants.

Medicare Advantage has become very popular among seniors. However, in a certain way, its own growth stems from unfair competitive advantages compared with the old-school fee-for-service program.

The thing is, the current traditional Medicare system also comes with absolutely no built-in out-of-pocket cap. While some enrollees might solve this by simply purchasing a commercial Medigap plan, others get their coverage through Medicaid or any other retiree health benefit.

In the meantime, Medicare Advantage has a built-in cap, as the average ceiling two years ago was $5,091 for all in-network services. As Medigap policies aren’t available for those retirees who have Advantage, you could be exposed to your plan’s ceiling in time, especially during the years when your healthcare use might increase.

The main idea is that Advantage enrollees spend a lot less when it comes to upfront premiums.

Medicare
Photo by fizkes from Shutterstock

Improve Protections for All Seniors in the Low-Income Bracket

Well-informed seniors are ready to cope with the rising costs of Medicare. Higher premiums but also out-of-pocket costs could be a bit painful, but well-off seniors don’t have to contemplate skipping any of their medications or choosing between groceries, rent, and their healthcare bills.

However, half of Medicare beneficiaries noted a per capita income below $29,650 in 2019, and even worse, 25% of them lived with less than $17,000. For those seniors, the caps won’t be too helpful.

That’s exactly why we have to improve Medicare’s two programs that were made to assist low-income seniors, and those are the Medicare savings program and the low-income subsidy.

The Medicare Savings Program was meant to help cover premiums, but also cost-sharing requirements for Part A and Part B, while the low-income subsidy was made to help beneficiaries with their Part D premiums and deductibles, but with cost-sharing.

The federal government decides on the income but also provides all the needed requirements for these programs. The pandemic forced policymakers to expand eligibility for assistance, and it actually makes all the sense in the world, as the current income tests are way more strict than those that were used for any other health insurance assistance program.

By expanding income and asset criteria, we could discuss broader access. Obviously, Medicare is one of the most relevant public policy achievements in the history of the United States, but it’s time to make it even better.

If you’re interested in finding out more about how to budget your own spending, here’s what we recommend you read: 70% of Americans Saved Hundreds With THESE 11 Household Hacks

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