Medicare Advantage has been facing criticism for its administrative and financial delays, and an increasing number of hospitals are scrapping their contracts with MA altogether. What is Medicare Advantage and how does it relate to Original Medicare?
Throughout the 1950s and 60s, low-income and aging populations began to grow significantly. As a result, President Lyndon B. Johnson signed the Social Security Amendments into law in 1965, establishing safety-net health insurance programs known as Medicare and Medicaid to provide healthcare for these populations. Within the first week of its implementation, one-million people enrolled in Medicare.
The Medicare program has shifted and changed a lot since it began. Originally, Medicare was split into Part A (hospital insurance) and Part B (medical insurance) covering all individuals over 65. Coverage has expanded to adults under 65 who have certain medical conditions, like end-stage renal disease. Medicare is now made up of 4 parts:
Medicare Part A: Medicare beneficiaries who paid toward Medicare taxes for a set period of time are usually eligible to receive Part A (hospital benefits) without paying a monthly premium.
Medicare Part B: Part B premiums are dependent on household income levels and increase for those with higher incomes.
Medicare Part C: Medicare Advantage plans are approved by Medicare and offered by a private insurance company. Premiums, deductibles, and copays vary depending on the plan. Premiums can range anywhere from $18 to $200. These plans provide beneficiaries with max out-of-pocket spending to limit annual costs.
Medicare Part D: Part D premiums are paid in addition to plan premiums and may increase for higher income households.
Medigap is a type of supplemental insurance that can fill in coverage gaps left by Medicare Part A and B. Original Medicare does not have an out-of-pocket max, so Medigap is provides additional protection against potential catastrophic costs. These plans are sold by private insurance companies and must be standardized under federal and state regulations. Like traditional insurance, these plans implement deductibles, coinsurance, and copayments. About 40% of original Medicare beneficiaries supplement their insurance coverage with Medigap.
For most people, Medicare enrollment begins once an individual turns 65 years old. The initial enrollment period begins 3 months prior to one’s 65th birthday and ends 3 months after their 65th birthday month. Signing up for Medicare after the initial enrollment period ends can result in a lifetime penalty added to a monthly premium. Signing up during the general enrollment period, January 1st through March 31st, can also result in a penalty if it takes place after the initial enrollment period. Other special enrollment rules apply and may waive the late penalty. This includes circumstances such as natural disasters, incarceration, losing Medicaid coverage, or having employer-sponsored insurance.
Medicare and other federal programs were amended even further with the passing of the 2010 Patient Protection and Affordable Care Act (ACA). The ACA had both positive and negative implications for Medicare. One improvement is that it addressed the coverage gap, known as the “donut hole,” for Medicare Part D recipients. Prior to the ACA, Part D recipients were required to pay 100% of their prescription drug costs after meeting their coverage limit. Provisions in the ACA reduced out-of-pocket costs for beneficiaries’ prescription drugs. On the other hand, physicians have also spoken out against Medicare’s low payments to providers and CMS funding cuts. Just last month, 120 medical associations sent a joint letter to congress expressing their concerns about the current state of Medicare.
65 million Americans are covered by Medicare, though many Americans still struggle with high deductibles and out-of-pocket spending under the public program. One-fourth of Medicare beneficiaries spend 20% or more of their income on premiums and cost-sharing. Many adults covered by Medicare struggle to afford supplementary coverage and are ineligible for Medicaid, resulting in steep increases in their out-of-pocket expenses. Adults with chronic conditions spend the most on out-of-pocket expenses, especially when original Medicare is their only form of coverage. As the aging population continues to grow, Medicare coverage is vital to the health of Americans. Medicare and other health policy issues will be at the center of 2024’s presidential election and are a top concern for voters over the age of 50.
Medicare stands as a cornerstone in the framework of healthcare accessibility for millions of Americans, providing essential coverage for seniors and individuals with certain disabilities. It is crucial to recognize the significance of Medicare in fostering a healthier and more secure future for the aging population. However, the system is not without its challenges and opportunities for improvement. By continuing to advocate for policy enhancements, embracing technological advancements, and promoting a holistic approach to healthcare, we can ensure that Medicare evolves to meet the changing needs of our society.
For more information about Medicare plans and costs, visit the links below:
Medicare Advantage Coverage Overview
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