Medicare is experiencing higher than projected spending and earlier than projected depletion of the hospital trust fund. Many options are being considered to fix the problem. Hillary’s latest “Buy In” option is most alarming. Essentially, the “Buy In” option would extend Medicare int0 the 55+ age group which would result in higher Medicare premiums to the 65+ to cover the cost of the extended program. The analogy is ” If we are losing money on an average Medicare patient now, let’s add more patients”. The “Buy In” option would result in a massive adverse selection effect bringing more sick patients between the ages of 55 and 65 into the program, effectively accelerating the earlier depletion of the hospital trust fund.
The “Single Payer Option” refers to a proposed health care program supported by President Obama and the presumptive Democratic Presidential Candidate, Hillary Clinton. Under this Program the Government of the United States would pay for all medical care, ending the need for private health insurance and premiums. The private health insurance companies would most likely provide only supplemental coverage for health care not covered by the Government Program. This could also be referred to as “Socialized Medicine” where all medical and hospital cost is paid for at a nominal cost through Government Regulation with subsidies derived from Taxation. Medicare for people over 65 is a version of this with Part A (Hospital) being free for qualified participants and Part B (Medical Services) being paid for with a nominal monthly amount, however, only covering 80% of the costs. Private insurers typically would cover the additional cost through a Supplemental Policy paid for by the client.
The Obama Administration has released its latest financial review of the “Medicare Trust Fund” and it is not good news for seniors. Under existing law, the trustees announced that the fund would be depleted in 2028, two years earlier than projected in last years report. The trustees reported that the Fund outlook had deteriorated because of changes to their assumptions and expectations. Medicare actuaries now expect higher inpatient hospital usage, as well as lower payroll tax revenue resulting from slower growth in wages. It is now anticipated that “Automatic Medicare Cuts” required by law could take place for the first time in 2019. Donald Trump, the presumptive Republican presidential candidate has said he will not cut Medicare benefits to seniors. Hillary Clinton, the presumptive Democratic presidential candidate she would reduce health care costs and ask the wealthy to contribute more.