Medicare is the widely-known social health insurance program that plays a critical role in the healthcare system of the United States. It has continued to cover millions of Americans over the age of 65 and those of any age with permanent disabilities and end-stage renal disease (ESRD) since 1965, without any regard to health status or level of income. Though its coverage is an integral part of the well-being and livelihood of many Americans, harsh financial realities continue to place a burden on and threaten the future of the program.
This article highlights the following topics:
  •     Medicare Plans and Benefits
  •     Medicare Funding
  •     Medicare Fraud
  •     The Future of Medicare

Medicare Plans and Benefits

There are four main parts to Medicare that offer health coverage to those under the Medicare plan.
“Part A” is Hospital Insurance which helps to cover the costs of a hospital stay, like inpatient care in hospitals, skilled nursing facility, hospice, and home healthcare. This plan is typically known as “premium-free” because most people pay into the system throughout their years of work. However, those who have not been contributing to this plan can elect to buy this plan under certain conditions.
“Part B” is Medical Insurance which covers medical services like doctor’s appointments, medical equipment, outpatient services, along with some preventative care.  Unlike Plan A, Plan B requires a premium payment each month, whose amount is usually dependent on the amount of income a person receives.
“Part C” is a Medicare Advantage program that is run by Medicare-approved private insurance companies and operates like a traditional HMO or PPO. Under this program, Medicare covers the costs of Plan A and Plan B, and pays part of the coverage of expenses to the approved private health insurance companies each month. Each private company under the Medicare Advantage program must follow similar rules, but they are allowed to charge different out-of-pocket expenses to their beneficiaries as well as have different rules as far as which group of doctors or specialists can be seen and/or if referrals are required.
“Part D” is Medicare Prescription Drug Coverage that offers beneficiaries coverage for prescriptions drugs under a network of Medicare-approved insurance companies. The monthly premium amount that is deducted from Social Security for coverage under Part D can be different for some, depending on a person’s income level.
Those eligible can choose to go with:
  • The “Original Medicare”, which offers coverage for Part A and B and the option for Plan D, and allows the beneficiaries to choose their healthcare providers
- or -
  • The “Medicare Advantage Plan”, or Plan C, which offers the same benefits as those in the plan above, only these are offered under the coverage of private, Medicare-approved health insurance companies with their own set of approved healthcare providers

Medicare Funding

Americans pay into the Medicare system all throughout their working life so that funds for coverage can be available for individuals and their family members once they become eligible. The main sources for funding come from revenue generated through general and payroll taxes as well as allocation of government funds and premiums paid by beneficiaries.
The funds raised for Medicare through payroll taxes and other income streams are disbursed between two trust fund accounts established and run by the U.S. Treasury. The Treasury is responsible for paying out the funds required for Medicare coverage from these sources.
  • The Hospital Insurance (HI) Trust Fund pays for administration costs to run the Medicare  program as well as the benefits covered in Part A of the plan. The funds in this trust come directly from payroll taxes.
  • The Supplementary Medical Insurance (SMI) Trust Fund pays for the benefits covered in Plan B and Plan D and some administration costs. The funds in this trust come directly from the government as well as premiums paid for by beneficiaries.

Medicare Fraud

Medicare fraud is, unfortunately, a big problem facing the program and continues to rob thousands of Americans of their tax dollars and deplete the amount available through the trust funds each year through false claims. This happens most often when doctors, healthcare providers, or medical suppliers falsely submit a claim to Medicare to increase the amount of reimbursements they can receive.
For medical professionals, committing Medicare fraud can have serious consequences, as it is considered a federal crime, and can cost them their medical license, put them in jail for a minimum of ten years, and impose harsh monetary fines.

The Future of Medicare

With increasing medical costs, an increased life expectancy of those in the United States, and increasingly high levels of national debt, building a sustainable plan for the future of Medicare is a challenge that government officials are fighting hard to overcome. Studies into the sustainability of the program show that in just a few short years, funds for the program – especially for Part A – will run out, making it vital that additional funds and resources come into the program. Medicare already accounts for 14% of the federal budget, and with increasingly high levels of debt, finding the necessary funds to fuel this, and Social Security and other important healthcare programs like Medicaid, is a tough challenge. Although today’s policymakers agree that a resolution to this problem needs to be found quickly, they cannot come to a solid agreement on how to go about it.
While many of today’s beneficiaries fear increasing premium rates and more out-of-pocket expenses for services once covered by Medicare, younger generations that are not yet eligible for coverage fear for their future under the system.