Medicare's FutureSubmitted by Fiduciary First Advisors on February 25th, 2020
In early 2018, President Trump signed a budget deal that came with potentially-significant changes to the way Medicare is distributed and administered, such as the elimination of Medicare’s independent payment advisory board whose purpose is to serve as a check on Medicare expenses.
This deal impacted nearly all aspects of Medicare, from prescription drug coverage to long-term outpatient therapy. These efforts were aimed to be more helpful for its users; however, the cost of new benefits still has to be paid. The budget deal called for individuals making $500,000 a year or joint filers earning more than $750,000 to pay a higher percentage than the average enrollee.
Before getting into Medicare of today, let’s first understand a bit more about its beginnings. The idea of a national health insurance fund was the brainchild of Harry Truman. While it took another 20 years for the idea to come to fruition (1966), Harry Truman and his wife, Bess, were the first two Medicare beneficiaries.
Within the next five years, Medicare would have its first significant change: coverage was expanded to cover individuals with long-term disabilities and end-stage renal disease, regardless of age, by President Nixon.
The 1980s brought even more change to benefits: hospice services for the terminally ill were added to the benefits, as well as a limit to out-of-pocket expenses and Medicare supplement insurance, called Medigap. By the ’90s, Congress began looking at eligibility, private market options, and a program to limit annual funding for Qualified Individuals (QI). In the 2000s, Americans diagnosed with ALS became allowed to enroll in Medicare without a waiting period– something enrollees typically wait up to two years to receive; President Bush signed in an optional drug benefit (known as Part D) that allowed further coverage for enrollees. In 2010, President Obama passed the Patient Protection and Affordable Care Act (ACA) intended to contain the costs of Medicare while improving delivery systems and services and increasing revenue.
In 2015, Congress passed the Medicare and CHIP Reauthorization Act (MACRA). This repealed a 1990s method of requiring Congress to review payments under Medicare Part B annually; MACRA later helped push changes for how Medicare pays doctors for care, moving from how many services doctors provided to beneficiaries more to value and quality. Premiums from Part B have recently increased: in its debut, enrollee’s premiums were $3; in the early 2000s, premiums were $50; by 2019, premiums have reached $135/month.
As new benefits, services, and needs arise, how will Congress keep the program sustainable for the long term?