Medicare: Health Insurance in the United States and Social Security

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Chapter 7:
1. Who is eligible for Medicare?
Person eligible for Medicare include individuals ages sixty-five and over, those with disabilities, and those with end-stage renal disease (Hammaker, 2011). here are three basic entitlement categories: persons 65 years of age or over who are eligible for retirement under Social Security or the railroad retirement system, persons under 65 years of age who have been entitled for at least 2 years to disability benefits under Social Security or the railroad retirement system, and persons with ESRD who do not otherwise meet the age or disability requirements. The latter two groups together are known as the "under 65" enrollees (Petrie, 1992). 2. As the baby boomers approach age sixty-five, how many people will soon be eligible for Medicare? What effect will that have on available resources?

Soon, over one hundred million people will be eligible for Medicare, meaning the demand will likely exhaust the resources (Hammaker, 2011). Policymakers periodically advocate rising the age of eligibility for Medicare beyond sixty-five to contain program costs, which will grow rapidly once the large baby-boom cohort begins to receive benefits. Proponents argue that improvements over time in the health of the aged population now permit many older adults to work past age sixty-five, which reduces the need for Medicare coverage before beneficiaries reach their late sixties (Davidoff, 2003). 3. What would make more sense than the current Medicare prescription drug coverage, which has a gap? What is a purpose of the gap?

Compared to rational catastrophic coverage with a deductible, Part D reduced coverage for people with high expenses (where, in theory, people would have gotten the most economic utility value form coverage) to offer generous coverage for people with low expenses (where, in theory, coverage should be less valuable), to provide most beneficiaries with a return on their premium. While concentrating more of the Medicare prescription drug money on upper-end, catastrophic coverage makes more sense; the gap in the middle allows the federal government to provide the largest number of people either some benefit from this plan (Hammaker, 2011). Advocates for Medicare recipients consistently suggest that people look carefully over Part D plans to make sure they drugs they need are covered in the plan they pick. Besides greater competition driving down price, Medicare Part D costs to insurers are expected to drop as the patents on some prescription drugs expire this year and next, allowing doctors to use less expensive generics instead (Sturdevant, 2011). 4. Why do about ninety percent of those receiving Medicare supplement their benefits with other forms of coverage? What are some sources of supplemental insurance coverage?

Only about one in ten individuals over sixty-five relies solely on Medicare; the rest have Medicaid, supplementary health insurance, or some other form of coverage in addition to Medicare. Medicare has high cost arrangements, no limit on out-of-pocket spending, and a coverage gap in the Part D prescription drug plan. Employer-sponsored health insurance, Medicaid, and Medigap (Medicare supplemental policies offered through private insurers) overlay each of the four types of Medicare and help with cost-sharing requirements and benefit gaps. Most Medicare beneficiaries’ have some form of supplemental health insurance (Hammaker, 2011). Many of these retirees purchase privately administered supplemental plans, called "Medigap," that pay for the deductibles, co pays, and coinsurance fees that Medicare would otherwise charge. Because these charges are largely contained, it is very inexpensive- and highly profitable- for insurers to underwrite Medigap plans (Roy, 2011). 5. Why is Medicare a more progressive program than Social Security?

Medicare is financed by payroll taxes, general federal revenue, beneficiary premiums, and payments from states, taxation on...
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