Saturday, October 23, 2010

Discovering the Facts about Medicare. What a Revelation! No Wonder Its Going Broke!

Sometimes I wonder how much people really know about the Medicare program. I used to think Medicare was a free health policy for old people. I thought it was a government program administered by the government. Now, however, I realize how wrong I was.

Medicare was originally passed in 1965 under the Social Security Act of 1965. Since the beginning of the Medicare program, the Center for Medicare/Medicaid Services (CMS) has contracted with private companies to operate as intermediaries between the government and medical providers. These contractors are commonly already in the insurance or health care industry (Healthcare Providers). Contracted processes include claims and payment processing, call center services, clinician enrollment, and fraud investigation.

There are two parts to the original Medicare program and they continue today: Part A and Part B. Part A covers Hospital stays with a large deductible. (2010 deductibles = $1068 for days 1 – 60; more for additional days). Part B: covers Doctors Visits and Medical Care. (copays = 20% of Doctor/Medical Care visits/usage).

There were gaps in Medicare Part A + B. Some healthcare providers offered Supplement insurance to cover some of those gaps (termed MediGAP policies). In 1992, CMS standardized these MediGAP policies.

In 1997, with the passage of the Balanced Budget Act of 1997, “Medicare Advantage (MA)” plans were created to allow Medicare participants to purchase their A+B benefits from a private Healthcare Provider. Some people call this “Part C.” But there was still a gap. No coverage for Prescription Drugs.

In 2003, with the passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, these Medicare Advantage (MA) plans expanded to include Prescription Drugs.

Then in 2006, Medicare Part D went into effect. Anyone with part A +/or B became eligible to purchase a Prescription Drug Plan (PDP), again through private insurance companies. However, there still is a huge coverage gap (Donut Hole) in Prescription Drug coverage. (more on that later)

When I found out about all the involvement by the private Healthcare industry in Medicare, I was amazed, especially when I found out that in 2010, Medicare provided coverage to 46M people. 83% are people ages 65 and older and 17% are people with permanent disabilities (under 65). Enrollment is expected to reach a peak of 78M by 2030 when the majority of Baby Boomers are fully enrolled. With all of this private Healthcare Industry involvement and with the large rate of Boomers ready to enter the program, no wonder it is scheduled to go broke soon.

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