The Medicare trust fund is an insurance policy that facilitates the financing of health services for all Medicare beneficiaries. It is a government program that covers the elderly, disabled, and other people mandated by the Congress. The financing of the program comes from a wide array of sources including the general tax revenue, payroll taxes, and premiums settled by the enrollees. The Medicare plans come in different plans with choices varying depending on the services provided by the administrators. Eligible members broadly have two options that include the Original Medicare Plan and the Medicare Advantage Plan (Schwartz et al. 2013). The federal government manages the Original Medicare Plan. One of its major characteristics is the fact that it is a fee-for-service plan with two different combinations classified as Part A and Part B. On the other hand, the Medicare Advantage Plan is an example of a Health Maintenance Organization (HMO) that provides a variety of coverage including Part A, B, and D (Schwartz et al. 2013).
The Medicare Part A guarantees coverage to all inpatient health care. It is primarily offered to individuals who pay the Medicare taxes while still employed. Most people who have enrolled for this type pay monthly premiums to earn the coverage. However, it is also open to those who have not paid their Medicare taxes. Some of the services covered in Part A include home health services, hospital stays, hospice care, and skilled nursing facility care amongst others. Part B is largely optional, and beneficiaries must pay monthly premiums. Part B takes care of all the other services not provided in Part A including outpatient services and doctor's care amongst others. On a broader perspective, it mainly covers medically necessary services amongst other preventive health care procedures. Part C is offered by the private companies and provides similar coverage as both A and B. Part D primarily deals with prescription drug coverage with a monthly premium applicable (Schwartz et al. 2013).
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Current State of the Fund
First, it is important to acknowledge the sources of funds for this program. Part A draws its funds from the Hospital Insurance Trust Fund while Parts B and D have the Supplementary Medical Insurance Trust fund as their source. The two sources are mandated by the Department of Treasury and managed by the Medicare Board of Trustees which reports to the Congress regarding matters concerning the financial situation of the fund. In 2017 alone, Medicare benefitted a whopping 58.4 million people. Out of this number, 49.5 million were 65 years and above with another 8.9 disabled people of below the age of 65 (Davis, 2018). The estimated cost used for the coverage was at $710 billion. However, in the wake of its stellar performance in the previous years, there is a prospect that the Medicare Trust Fund will die soon. In 2017, the financial outlook of the Trust Fund markedly deteriorated with the Social Security continuing to face long-term financial implications (Davis, 2018)
President Donald Trump signed tax cuts amounting to over 1.5 trillion thus bringing the future of the insurance policy into widespread uncertainty. Trump administration does not show any signs that a significant improvement in the economy would bolster the finances directed to the nation’s largest insurance program. According to the current administration, the Medicare Trust Fund will come to an end in 2026 (Marmor, 2017). However, research has shown that Medicare is not nearing bankruptcy in any form. Although it experiences financial challenges, the program is not on the verge of ceasing to operate. According to the 2018 trustee report, the Medicare Hospital Insurance trust fund will maintain its solvency, meaning that it will cater for 100% of the costs incurred in hospital coverage until 2026. It is also important to appreciate the projected 2026 will not apply to coverage pitting outpatient, physician, or drug prescription. The three parts will not be affected by the shortage of funds or face insolvency.
Future Challenges
It remains crucial to note that millions of Americans rely on the Medicare Trust Fund and many will continue to depend on it as they move into their retirement days. However, the only problem that implicates the future of the program includes the increased expenditure that comes as a result of the ever-rising health care costs and the aging population. Other than the rising costs, the benefits package that comes with the program has failed to meet the needs of people with serious health concerns and those with low incomes. Another major challenge has been identified in the fragmentation of the coverage into a plethora of plans such as a physician, drug benefits and hospitals. As a result, this has yielded immense confusion thus inhibiting the coordination of patient care. With Medicare only focusing on a portion of medical expenses, beneficiaries are forced to look for supplementary policies leading to administrative and other complex costs.
The Trump administration has played a significant role in preventing a better future for the program. The tax cuts implemented by the Trump administration will eventually affect the sustainability of the program. With the number of beneficiaries has spontaneously increased hence making the expenditure to grow than the economy in its entirety substantially. Some of the biggest challenges facing Medicare Trust Fund can be resolved. Issues of management such as gaps in coverage, slow bureaucracy, ineffective pricing methods, and restrictions amongst others stem from poor leadership. While the increase in life expectancy is a positive thing, it has also led to problems to do with spending compared to when it started back in the mid-20 th century.
References
Davis P.A, (2018) “Medicare Financial Status: In Brief. Congressional Research Service. Retrieved from : https://fas.org/sgp/crs/misc/R43122.pdf
Marmor, T. R. (2017). The politics of Medicare . Routledge.
Schwartz, R. L., Furrow, B. R., Greaney, T. L., Johnson, S. H., & Stoltzfus Jost, T. (2013). Health law: cases, materials, and problems . West Academic Publishing.
