By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Will “Medicare As We Know It” Persist, or Will It Change?
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Health Reform > Will “Medicare As We Know It” Persist, or Will It Change?
BusinessHealth ReformPolicy & LawPublic Health

Will “Medicare As We Know It” Persist, or Will It Change?

StephenSchimpff
StephenSchimpff
Share
5 Min Read
medicare
SHARE

Stephen C Schimpff, MD is a quasi-retired internist, professor of medicine and public policy, former CEO of the University of Maryland Medical Center. He chairs the advisory committee for Sanovas, Inc. and is a senior advisor to Sage Growth Partners.

Stephen C Schimpff, MD is a quasi-retired internist, professor of medicine and public policy, former CEO of the University of Maryland Medical Center. He chairs the advisory committee for Sanovas, Inc. and is a senior advisor to Sage Growth Partners. He is the author of The Future of Health Care Delivery- Why It Must Change and How It Will Affect You from which this post is partially adapted.medicare

(Editor’s Note: Stephen Schimpff has been a member of our Advisory Board since the very beginning. He has given us numerous exclusive posts; here is his latest!)

Since the nomination of Congressman Paul Ryan last summer as the vice presidential candidate of the Republican Party, Medicare became front and center in the political discussions and, although there is less attention just now, it will return with a vengeance once again to dominate. To understand the dialogue requires an understanding of Medicare, how it works, where the money comes from, how it is spent and why there is such concern for its future costs. Here is an overview in a few bite sized pieces.

More Read

custom software development is changing healthcare
How Does Custom Software Development Affect the Healthcare Sector?
Innovating Technology to Drive Collaborative Care [VIDEO]
High Salt + Low Activity = Cognitive Loss
1135 Waivers and Hospital Evacuation
PSA screening: Does It or Doesn’t It?

Medicare was designed in 1965 to serve as “major medical” insurance to cover the unexpected large expenses of, say, surgery or hospitalization. Individuals paid out of pocket for routine care. Medicare has morphed over the years; it now covers preventive care, screening, annual exams and most routine care. This broadening of coverage, the relentless rise of healthcare costs and huge enrollee additions by baby boomers will continue to increase Medicare expenditures.

Medicare covers about 50 million older Americans for general health care insurance and another approximately 8 million with coverage for disabilities and end stage renal disease. 

Medicare pays about 75% of covered services and about half of the total costs of health care for older Americans, i.e., it pays for only certain specified medical services or “covered” costs. The remaining 25% of covered services as defined by Centers for Medicare and Medicaid Services (CMS) is paid for either via a private Medigap policy and/or out of pocket by the beneficiary. Since 2004, prescription drugs have also been covered.

Medicare is such a large part of the health care insurance market that it establishes two critical parameters for all of health care reimbursement. First, it sets the standard level for reimbursement which all other insurers ultimately follow.

Second, Medicare does not pay it full share of the costs it does cover. Basically it pays some percentage below actual costs leading the providers – hospitals, doctors, or other  – to cost shift, i.e., charge their other patients who have commercial insurance a higher amount than costs to make up for what they did not receive from Medicare. What this means for the young person who has either a company sponsored health insurance plan or buys it directly in the individual market, is that he or she paying a “Medicare tax” over what the insurance would have otherwise cost. This is on top of the Medicare Trust Fund tax of 2.9%.

Government estimates are that Medicare will increase its expenditures over the coming decade at a rate of about 4% per annum. This is greater than both inflation and the GDP rate of growth. Medicare which now accounts for about 15% of the federal budget will rise from almost $600 billion per year now to about $1 trillion per year by 2022 – levels that will severely strain the capability of the system. Indeed, it a growth rate that is just not sustainable; it will eventually bankrupt the federal treasury.

Next: Where the money comes from and why it costs so much.

TAGGED:MedicareMedicare by Schimpff
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

a woman walking on the hallway
6 Easy Healthcare Ways to Sit Less and Move More Every Day
Health
September 9, 2025
Clinical Expertise
Healthcare at a Crossroads: Why Leadership Matters More Than Ever
Global Healthcare
September 9, 2025
travel nurse in north carolina
Balancing Speed and Scope: Choosing the Nursing Degree That Fits Your Goals
Nursing
September 1, 2025
intimacy
How to Keep Intimacy Comfortable as You Age
Relationship and Lifestyle Senior Care
September 1, 2025

You Might also Like

BusinessMedical EthicsPolicy & Law

The Daraprim Debacle – The Smell Test Sniffs Out Price Gouging.

October 19, 2015

Wireless Devices Will Dramatically Change How Medicine Is Practiced

December 2, 2011
health insurance plans
Health care

Health Insurance Claims & Plans: Understanding The ICHRA

August 13, 2021
Health careHome HealthMental Health

Mental Health And Debt: How Are They Associated

July 29, 2019
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?