Introduction
Social Security programs are a set of government programs that are offered to people to meet their needs. They are available to individuals who pay a tax or contribution to the insurance, after which participants receive discounts on services. Medicare is a program that offers health insurance in the U.S. for a specific segment of the population. The program was created to preserve the quality of life of the elderly population and reduce their health care costs. Medicare currently covers more than 50 million people.
Participating in Medicare
In order to participate in Medicare, age and specific disease conditions must be met. Generally, health insurance is available to people aged 65 and older. There is an exception in the form of the younger population with a Social Security Administration (SSA) listed disability (Centers for Medicare and Medicaid Services, 2019a). These include amyotrophic lateral sclerosis and terminal renal failure. Usually, people with this condition need a transplant or expensive treatment with rare drugs.
Medicare Funding
Medicare levied a portion of the payroll tax funds on both employees and employers. It is also partially funded by monthly premiums deducted from Social Security benefits. Medicare funding correlates to Parts A, B, C, and D, the types of services that are covered. Part A refers to services in a hospital, so payroll taxes fund it (Madden et al., 2021). It is levied on workers and employers at the cost of 2.9%, and for high-income individuals, the tax percentage is close to 4%. Parts B and D relate to extra health care and extended care, including durable medical equipment (DME) and prescription drugs (Centers for Medicare and Medicaid Services, 2019b). They are funded by Medicare premiums and the state budget, to which members of various insurance programs contribute income. All of the parts listed are also funded through trust funds. Part C is funded through trust funds and administrative contractors. It means that for Part C services (Medicare Extended Service Plans), the funding is not created for the service but a set rate and additional interest charges.
Rules for Getting Reimbursement
Medicare has four program categories: A, B, C, and D, each of which is regulated in a certain way. Part A is needed to cover hospital services performed as an inpatient. It helps pay for services for hospitalized patients in the clinic or after discharge in nursing facilities (Kaiser Family Foundation, 2019). To qualify for reimbursement and free use of Part A when one reaches age 65, one must be eligible for Social Security benefits, have a long history of public service, or be related to railroad work (Cubanski & Boccuti, 2015). For younger age, unrestricted use is available with two years of Social Security, a disability pension (amyotrophic sclerosis, terminal renal failure, former railroad workers), and a government job with Medicare tax withholding.
Part B is optional, so payment is required for those who qualify for free Part A services. If unable to qualify, Part B is paid each month if there is either U.S. citizenship or at least five years of lawful residence in the United States (Madden et al., 2021). It is needed to remember that the application period is limited, so registration must be done on time. Thus, Parts A and B are funded through the federal government, so much coverage is Original Medicare.
Part C is private coverage and is called Medicare Advantage. The extra cost is covered when one participates in Parts A and B. It also requires additional monthly payments for services like dental appointments or medical checkups (Cubanski & Boccuti, 2015). The rules are generally the same as for Parts A and B, but the fee will be significantly higher. As with Part B, one must go to the enrollment window and belong to the coverage area offered by the county or state.
Part D refers to drug coverage and represents the services required for prescription drug coverage. It is optional and is subject to monthly premiums, which are set up as part of Medicare Advantage or a different plan (Centers for Medicare and Medicaid Services, 2019b). Also, unlike the other parts, Part D is publicly available and does not require any special conditions other than age 65 or older and U.S. citizenship and exclusions.
Medicare Reimbursement vs. Private Insurance: The Difference and Impact
Medicare insurance rates are lower compared to private insurance, and as a result, the organization’s clinic receives less reimbursement. Lopez et al. (2020) state that private insurance generates 1.5 to 2 times more revenue than Medicare. According to Bailey (2022), the cost to private payers would be 224% of the cost to Medicare participants. The level of reimbursement is based on the number of services provided by private or social insurance programs and the average cost of all services per patient (Andersen, 2018). As a consequence, net profits increase when private insurance-based payers are enrolled. However, because of the high cost of private insurance, more and more people are switching to Medicare or Medicaid.
Conclusion
Medicare includes a wide range of services available primarily to the elderly over 65. In order to qualify for benefits, one must meet not only age but also certain conditions: for example, a government job or a disability. The program is financed by both the state and taxation and trust funds. Private insurance is now nearly twice as profitable, but as Social Security expands, it is fading into the background.
References
Andersen, M. S. (2018). Effects of Medicare coverage for the chronically ill on health insurance, utilization, and mortality: Evidence from coverage expansions affecting people with end-stage renal disease. Journal of Health Economics, 60, 75–89.
Bailey, V. (2022). Hospital prices 224% higher for private payers than Medicare. Recycle Intelligence. Web.
Centers for Medicare & Medicaid Services. (2019a). Medicare current beneficiary survey. Web.
Centers for Medicare and Medicaid Services. (2019b). Medicare program: General information. Web.
Cubanski, J., & Boccuti, C. (2015). Medicare coverage, affordability, and access. Generations, 39(2), 26-34. Web.
Kaiser Family Foundation. (2019). An overview of Medicare. Web.
Lopez, E., Claxton, G., Schwarts, K., Rae, M., Ochieng, N., & Neuman, T. (2020). Comparing private payer and medicare payment rates for select inpatient hospital services. KFF. Web.
Madden, J. M., Bayapureddy, S., Briesacher, B. A., Zhang, F., Ross-Degnan, D., Soumerai, S. B., Gurwitz, J. H., & Galbraith, A. A. (2021). Affordability of medical care among Medicare enrollees. JAMA health forum, 2(12). Web.