Solving Medicare Crisis Case Study

Published: 2021-06-22 00:34:58
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Solving Medicare crisis
Medicare a communal insurance program offers health insurance coverage to people aged 65 years and above, people who meet a special criterion, permanently disabled people and individuals who have a congenital physical disability. The United States government administers the Medicare program. Medicare covers over to 40 million elderly and disabled people. Over the past few decades the program has helped, the program has helped countless retirees and disabled people stay health thus saving countless lives. This paper provides an in-depth discussion about the crisis facing the Medicare health insurance program.
“Is Medicare in a state of crisis?”
Over the last few decades, the Medicare health insurance program has been facing a major funding crisis. The problem is largely attributable to poor administration coupled with waste and inefficiency. The program has adopted a pay as go method of financing which causes unnecessary financial burdens on young generation. In addition, the program discriminates against minority groups; and has been failing in providing health insurance to the elderly.
Over the last one decade, the government has been facing a major challenge trying to resolve the Medicare financial crisis as it threatens to send the country into an astronomically high deficit spending (Cohen, 2004). The Medicare looming crisis is largely because the fund is being depleted faster than it can be replenished. Additionally, it is expected that a numerous number of the United States population, which is middle aged will move into retirement qualifying for Medicare and social security programs in the near future increasing financial need to cater for their medical needs.
“Are radical measures necessary to preserve the program?”
The government needs to take radical measures to resolve the Medicare financial crisis because the fund is absorbing close to half of the total government revenue from taxes and is still not adequate to cover all qualified individuals adequately. Not unless the government takes, measures to modernize the insurance program with expediency it may force the government to increase taxes on workers to cover the program. In the next one year or two the elderly and disabled will not be able to access medical care. With the rising cost of health, care doctors and health practitioners will only provide medical services to individuals with private insurance because the government is unable to reimburse fully the medical cost for individuals with the Medicare health insurance. Currently the reimbursement to health acre providers for health acre services for patients funded by government is not commensurate to the actual cost of the medical services, which will force health care providers to either close down or stop administering health care to government-funded patients (Cohen, 2004). The current government requires that doctors fill out a lot of paper for any health acre services which is another factor which is discouraging health care providers from taking on many patients with Medicare health insurance. It also puts constraints on the number of patients a doctor can attend to and still fill out all the paper work.
“How is Medicare funded now?”
Medicare is primarily funded through payroll taxes. The FICA (Federal Insurance Contribution Act) imposes the payroll taxes for employed persons and the Self Employment Contribution Act for self-employed individuals. In the case of employed persons, both the worker and the employer contribute to the fund. Both the employer and employee make an equal contribution to the fund, which is a percentage of the employer’s basic salary plus other employment benefits. In the case of self-employed persons, they have to contribute a percentage of their net earning to the fund. The fund only qualifies for individuals earning more than $ 200,000 annually or couples earning $250,000 annually (Cohen, 2004).
“Why do elderly people feel that Medicare is an insurance program and not a welfare program? Is this perception accurate?”
The elderly in most instances regard Medicare as a health insurance rather than a social welfare program. According to Senese (2003) social welfare programs are designed to reduce poverty for already poor segments of a countries population. The social welfare programs prevent working individuals from becoming poor. On the other workers contribution to the federal government is governed by federal insurance contribution Act (FICA), to provide social security in old age. The elderly perception is correct because they contributed to the federal government so that they may get health insurance in old age thus regard it as health insurance rather than a social welfare program.
“Should there be a Medicare program at all?”
Medicare is program designed to promote health care among elderly disabled and persons below the age of sixty-five who meet the required qualification. Before the inception of the program by President Lyndon B. Johnson in the year 1965, only fifty percent of persons over the age of sixty-five years had access to health. The program now serves over forty million persons most of whom will not afford health care was it for the program. The program also provides finances for residency training in order there are adequate trained personnel for provision of health acre in the United States. The Medicare program is necessary exceptionally with the rising cost of health because it makes health acre accessible to vulnerable groups in the population.
“Why should the government be involved in providing insurance to elderly people?”
Most people in old age suffer from illnesses, which if not attended to and managed through health care could result to premature death. Most elderly people above sixty-five years are unable to continue working and if they did not have saving for old age or family members to take of them, most of the time they are left destitute. With proper medical care, elderly people can live a long and fruitful life. The government is socially obliged to take care of the elderly in the society to avert fatalities due to lack of finances to cover their medical expenses.
“Does Medicare have detrimental effects on the market for healthcare or on the market for health insurance?”
Federal tax laws fully exempt employer sponsored health insurance and any health contribution to government programs from taxation. The laws discriminate against individuals who purchase private health insurance because unlike employer-sponsored health insurance it is not exempted from insurance. Most employees prefer employer sponsored health insurance because it tax exempted which in turn reduces demand for private health insurance. After retirement, the employee qualifies for Medicare, which then further reduces demand for private insurance thus affecting the health insurance market negatively. Due to access to Medicare, the health care market has been thriving.
Through Medicare, most people who could not otherwise afford medical care are able to get basic health services. A demand for health care by many people is contributing to astounding high cost of health care in the United States of America. The high cost of health care in turn call for the government to increase takes in order to meet the cost of health care provided through Medicare. The taxes will in turn reduce the net income of workers and their purchasing power thus making them reliant on the government for Medicaid.
“Are these economic effects, offset by the positive effects of the Medicare program for the elderly?”
Largely the society is responsible for providing Medicare for the elderly. However, the negative effects on health insurance and health market trickle down to the society. The society through high taxes will have to absorb the negative effect of Medicare to the elderly in the society. The society is socially obliged to take care of the elderly and with the rising cost of health acre, which cannot be fully absorbed by the government it will be a small price to pay to keep the elderly healthy. Children who provide finances to cover medical bills for their elderly parents benefit considerably from Medicare because with the rising cost of medical care it would put financial strain on them.
“What about the positive for society effects of caring for the elderly?”
The family structure has changed considerably over the years. We are now a more mobile society with more emphasis on the nuclear family. After children are grown, they tend to leave their parents in search of their own families. The elderly parents tend to be left alone and after retirement in most instances, they do not have adequate fiancés for medical care. Through Medicare, the society is able to contribute to the elderly Medicare care indiscriminately.
Through medicare, which also contributes to advancement in technology in medical field the life expeactancy for Americans, has been increased significantly. The old in the society play a fundamental role of giving guidance and shaping the morals of the young generation. The young generation benefit from the wisdom of the old in the society.
“Are there any externalities here?”
Medicare has both positive and negative externalities. The rising cost of health acre in the United States is attributable to Medicare. Citizens have through high taxes cushion the high cost of health care. This is a spillover cost which workers have to bear for Medicare and social security programs to continue running effectively. On the other, hand the poor in the society benefit through access to medical care through Medicare programs. Only persons with an income of two hundred thousand dollars qualify to contribute to Medicare funds. Most low-income earners enjoy benefits from Medicare during old age yet they did not contribute to the fund.
“Justify your position on either economic efficiency or equity grounds (or both)”
It is the role of the government to ensure equitable distribution of wealth in the community. The distributive justice theory advocates for social justice through equitable distribution of resources. Through Medicare the government takes is able to take resources from the rich in the community and redistribute the resources to the less noble in the society through social security programs and Medicare during old age (Senese, 2003). The noble in the society can be able to afford private medical care while the poor in the society cannot. Through Medicare, the government ensures equitable distribution of resources to the society. Medicare is a positive externality, which ensures equitable distribution of health care to all who qualify in the society.
Over the last five decades, Medicare has been playing the fundamental role of providing health care insurance for the elderly and disabled in the society. Although the Medicare health fund insurance may be facing a looming financial crisis in the near future with better administration the fund can continue helping the needy in the society significantly.
Cohen, E. (2004). The politics and realities of Medicare. Public Interest, (156), 37-37-50. Retrieved from
Senese, D. J. (2003). Policy challenges for senior citizens: Reforms in social security, Medicare, and taxes are essential to help seniors and keep our economy strong. Vital Speeches of the Day, 69(15), 468-468-472. Retrieved from

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