Medicare is one of the health care programs created by the United States of America focusing on the elderly persons with an age of sixty-five years and above, those with permanent dysfunctions of the kidney and those that have long term disability issues. Additionally, this is the most extensive healthcare system. Initially, before the inception of Medicare, a small number of the elderly and the retired citizens had reliable insurance coverage. Nonetheless, the insurance cover that was at their disposal was costly, inadequate and could sometimes not get renewed. Consequently, the elderly lived in fear of bankruptcy emanating from treatment costs of severe sicknesses or lack of treatment since they lacked the funds to pay for that. That was the main trigger for the birth of Medicare which has had a tremendous impact in the lives of millions of Americans.

Finance and accounting reforms to Medicare

There has been a reduction in Medicare spending over the past few years which is a commendable step towards sustainability. However, the move is not sufficient since the program is expected to meet the requirements of close to 76 million baby boomers together with their offspring, thus creating a need to modernize the scheme. Despite the slowdown, studies reveal that Medicare expenditure will expand over the next decade from $600 billion to more than $trillion. This implies that if adequate measures are put in place, taxpayers are going suffer a great deal as they will be expected to pay an additional $27 trillion to Medicare to adequately cater for excessive long-term costs. Consequently, reforms in finance and accounting embedded in other policies will aid reduce costs and make the program more effective.

Firstly, the ideal policy to manage the skyrocketing cost in Medicare is to reduce payments to hospitals, doctors and other service providers. The cost problem is enormous, and mere cutting payments rats will not provide a viable long-term solution because the issue is more of a structural one. Despite the introduction of new ways to pay for care through the Affordable Care Act (ACA) to help reduce unnecessary spending, it does not solve the problem in Medicare financing. The doctors and hospitals are guaranteed pay for every service they provide to Medicare patients. This structure offers overuse of services and less value to the patient. Nonetheless, it should be corrected by implementing a program that promotes better spending.

Secondly, the program ought to be reformed to provide comprehensive coverage which is identical to what some efficient employers give to their workers. This implies that one is deducted once for all the services. This provides a simple set of co-payments and guards against catastrophic costs. There could be limits included that require each beneficiary to make an additional at least $500 of Medicare costs annually. Moreover, designing the program to be value based will form an incentive to the patients to make the required steps to prevent and control diseases.

Thirdly, a new way of making payments should be designed that which enhance quality and efficiency in traditional Medicare. Effectiveness will be promoted by clients paying for a bundle of complementary services instead of making payment for separate functions. Furthermore, Medicare costs can potentially be reduced by insisting on competitive bidding for standardized types of services like laboratory testing services or procurement of durable medical equipment. There are also some avoidable clinical issues that consume a considerable amount of money though could be eliminated through making payments based on providers performance. These ideas need to be incorporated in Medicare actively for the results to be seen.



Advantages of Medicare

Medicare provides coverage to persons who would not have coverage

Medicare has been beneficial many people since its invention, and millions of aging adults are now in a position to receive the coverage and its benefits when they would not have received suppose the Medicare arrangement was absent. Before Medicare was formed, that is years before 1965, the number of uncovered adults was close to nine million. However, the numbers have been going down significantly, and by 2014, close to four hundred thousand adults were not insured. Additionally, a plethora of young Americans who have suffered disability due to many reasons are now also in apposition to get healthcare that they could otherwise not have.

Suppose the Medicare was not available, older citizens who are one of the most vulnerable lot that requires the most treatment would be facing hard times. That is because they would have to finance their medical costs from their pockets directly. Consequently, this situation would deplete their incomes because the total amount paid towards medication would most likely be more than incomes earned. On the other hand, those with disabilities would also face challenging times as they would depend on caretakers who may not be in a position to afford the costs. Medicare is very helpful since it covers many people.

The monthly cost of Medicare is minimal and affordable

Medicare subscriptions unlike is generally less costly, unlike other schemes. Those enrolling are qualified for free for part A. |Nonetheless, they are to pay a small figure of close to one hundred and thirty-four dollars per month. When the amount spent is compared seeking medication out of pocket cost of operation, prescriptions and other costs associated, there is a considerable saving.

There is additional coverage associated with Medicare

There has been an uptrend in the enrolment of Americans on Medicare over the past few years, and the uptake is expected to rise in future. The registration increased to 5.3 trillion in 2016 compared to 17.6 million in 2004. Additionally, this there was an expansion to part c of the enrollees which comprise 31 percent of the total enrolment as at 2016. Medicare Advantage plans also provide the beneficiaries with an option to access Medicare benefits through partnerships with other private insurance firms which have formed a working relationship with the centers for Medicare and Medicaid services. Consequently, the client can get all the benefits of part A hospital insurance and also part B that comprise of medical insurance automatically when they enroll on part C. Moreover, the Medicare Advantage plan also offers some additional benefits that are mostly required by the aged like dental and vision at a subsidized cost.

Medicare has led to the emergence of innovations in prescription

The introduction of Medicare stimulated growth of the market for drug firms. That is because there was a sudden positive change and the Americans were now in a position to get prescriptions that they were not able to get initially in the absence of Medicare. There was massive investment in the development of pharmaceuticals because the companies saw a potential that has not been utilized. Moreover, the drugs were tailor-made to meet the present and emerging needs. The Americans were also able to get access to a broad prescription courtesy of the addition of Medicare part D since the drugs were now administered through Medicare and also private insurance companies. There has also been an increase in the registration of persons to the plans every year. Therefore, due to the expansion of the number of Americans receiving Medicare prescription benefits, this may have provided a chance for pharmaceutical companies to engage in developing drugs to suit the market.

There has been increased medical standards

When the Medicare was first formed, the Congress enacted a law coupled with set standards which ought to be met by any hospital that desired enrolment to the programs. Furthermore, the government intensified its oversight role in overseeing the program to make it a success, and it is now mandatory for the health facilities to file some data with the government on some critical areas like infection rates received and the number of readmissions. This public accountability has forced the hospitals to perform diligently and in the manner in which they would not have performed should the Medicare program be absent. Also, when hospitals find out that they are not performing to standards of other hospitals, they get serious with improving service delivery. For instance, when they discover the possibility of lowering the infection rate, they will endeavor to research and implement good practices that help them achieve their goal.

Disadvantages of Medicare

The cost of administering Medicare is enormous.

The cost associated with Medicare is high. For instance, the money allocated to the program in 2016 was five hundred and eighty-eight billion dollars which accounts for approximately 15% of the federal budget. Moreover, the number is expected to increase as years move with an expectation of close to 18 percent increase in the coming decade. This is an opportunity cost. For instance, when the similar amount is channeled to other valuable programs like education, poverty eradication programs, curing of mental illness and social justice, it could make an impact leading to some debate among people on the effectiveness of the program.

Poor health would cost more

According to research, there was an increased out of pocket expenditure on medication of more than 2.5 times higher on people who reported to be deficient in health compared to those that are healthier. Since these statistics is derived from self-reporting which is a requirement in Medicare, it is not reliable and raises concerns about the program. Moreover, Medicare is not actively engaged in availing information regarding preventive programs that could have reduced cost when implanted efficiently increasing the number of admissions which could have been prevented.

Hospital accommodations are still costly

Despite enrolment into the program, the cost of staying in the hospital is still huge and sometimes unmanageable by the clients. Since many of the patients enrolled in Medicare suffer from preventive conditions which in turn make them hospitalized. The cost of being hospitalized for these patients further drives up the cost. Additionally, these stay costs are unaffordable because a vast percentage of those enrolled in Medicare are low-income earners who find themselves in awkward positions when faced by these situations. Despite Medicare providing health solution, it, however, strains the entire medical team.

Medicare cost for older beneficiaries has increased

According to research by Kaiser Family Foundation, Medicare joiners having attained over 85 years spend more on medication compared to those aged between 65-74 years. However, it is expected that someone’s medical complication begin worsening as they get older. On the other hand, this reveals a deficiency in the Medicare system in the manner in which they adapt to the aging adults. A prudent and efficient system would analyze the cost implications for this group of people and spread it across all beneficiaries.

The program has also attracted fraudulent doctors

There have been various culprits charged with medical fraud in the recent past by the US government. In 2017, a total of 412 doctors were arraigned in court over alleged fraud with an amount of close to one billion, three hundred million dollars. A huge percentage of the culprits are directly linked to the opioid catastrophe that has engulfed the nation. The doctors and their accomplices siphoned funds by billing for drugs that were never bought, receiving funds for false rehabilitation treatments and examinations and even gave prescriptions in exchange of cash according to the prosecutor.

Medicare costs a huge amount of taxpayers’ money

A huge chunk of the money allocated to Medicare is derived from taxes. For instance, close to 38% of the total Medicare fund was financed by taxpayers in 2014. Additionally, the Medicare tax rate is pegged at 2.9% which is divided between the employer and the employees and a further 0.9% which is also loaded on the citizens that make than $200,000. This is a huge amount of money that is deducted from each paycheck.


Medicare has brought tremendous benefits to the aging population and those with disabilities in America and without the scheme, may be suffering due to the high costs of medication. Some of the benefits include little monthly premiums, additional coverage offered, and improved standards among others. Nonetheless, it also has its cons like upcoming of fraudulent doctors. Additionally, funding and maintaining the scheme consumes a considerable portion of the country’s budget which has brought up a debate on its benefits against cost and how it can be improved. In reducing costs, accounting and finance reforms can be included in the program to make it more efficient. Some of the changes involve improving payment systems, remitting pay to service providers based on how they have performed among others. Despite the debate on Medicare, it is indisputable that the scheme has transformed lives and ought to be supported through different reforms to make it sustainable.


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