Impending Medicare Problems


            Just like in the Social Security program, high costs of medical services and the increasing change in the economy are bound to affect Medicare service significantly. Expenditure on Medicare just as in social security will definitely grow tremendously over the years with the increase in the aging population as opposed to the tax paying population (Bilirakis, 1997). Medicare is usually provided to persons over sixty five years of age as a form of medical insurance. People with disabilities and people with renal diseases are also supported in the program but are usually restricted to the end stage. The Medicare expenses by the government are threatening to overshadow the taxes it is currently receiving. The same problem is facing social security and it is estimated that by 2017 the amount of expense may exceed the revenue obtained from taxes (Welch, 2005). The amount of expenditure spent on medical care in 2007 reached an all time high of 16% of the total government expenditure. This was approximately $440 billion dollars. In 2008, expenses were already exceeding receipts as more people demanded the service. Welch (2005) notes that the recent study showing that the Medicare fund is likely to be extinct by the year 2018 is quite shocking.  In 2004, President Bush made Medicare and social security the number one priority due to the looming threat in future trends. Currently the health care costs are running at almost two times of the inflation rate. With the government’s desire to provide proper health for its people, the danger of losing the battle is almost inevitable.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now


            The number of Americans relying on Medicare is at least forty one million. Recently in 2006 the congress of the United States approved the incorporation of prescription drugs into the budget of Medicare (Magleby, 2008). In the height of the world’s economic difficulties however the government cannot evade the issue of Medicare presenting impending problems. Medicare is increasingly becoming a burden to the state because of high costs of medication. These have been triggered by several factors. The constant development in technology is highly unpredictable considering that hospitals want to make up for the amount of investment used on these machines. Population is also growing at a rate that was not incorporated in the original Medicare plans when tax was set at 2.9%. Demographic pressure as it has been referred combined with the health cost problem is the sole cause of the overburdened Medicare program (Maglebt, 2008). There has been a debate about the system of payment of this tax with claims that it is regressive in nature. This is explained by the fact that each person pays 2.9% from the payroll (1.49% is paid by employer while the employee pays 1.49%) which leaves the rich paying a smaller portion of their income. Suggestions have been put forward to reform this so that the tax can be progressive and more funds for use in Medicare. These reforms also apply to social security (Diamond, 2002).
Solving this problem is invaluable if the government has to continue government providing for Medicare beneficiaries. A move to abolish or reduce provision of Medicare would of course lead to a public outcry with people claiming they are paying taxes for nothing. This is especially so to those who cannot afford and have to rely on Medicare. Significant changes are required if the government can be able to cater for the rising portion of Medicare in the overall spending in the country .The government has suggested social security reform as a means to solve the situation(Diamond, 2002); but what about Medicare? President Bush in addressing the problem of Medicare in 2005 chose to deal with social security issue first. According to him, Medicare could be tackled later as it could wait (Welch, 2005). This could explain the reason as to why the bush government increased the spending on security which could mean fewer funds for Medicare and other sectors in the economy in 2008. This could raise a question as to the commitment of the government in tackling the Medicare issue.

             Many questions then arise concerning the reduction of Medicare costs. Should the government reduce the number of items to be covered? What if they restrict the eligibility of beneficiaries by increasing the number of years required? Maybe consider cutting the amounts of payment that the doctors get out of the Medicare bills? Can they even consider denying the aged the privilege of obtaining cheap health care? All these questions are possible solutions that the government could take to try and ease the burden of Medicare. It may not be easy to implement any of these options either because of the social impacts and opposition that the government would face. The public would most certainly not take any option as a solution as it would mean selective medical care provision with the financially able getting better health than the rest. It is also likely that the public would not agree to the raising of taxes to increase the amount available for Medicare. In an effort to reduce the costs, couldn’t the government consider entering the free market so as to influence prices of medical care? A considerable amount of evidence as stated by Magleby et al (2008) is that fraud severally been associated with Medicare with employees paying taxes that do not necessarily end up in the Medicare basket leading to difficulties in the payments. Another question here arises; can there be mechanisms to help in identifying sources of such frauds in order to redirect the lost funds back to the hands of the public? Are these government officials fit to be working in public offices? There are a great deal of problems facing the Medicare today including delays in payment of bills making hospitals to refuse patients paying with Medicare. Can such problems be solved? These are some of the issues that need to be addressed if the social security and Medicare reforms can work out. The incorporation of medical bills into Medicare is supposed to reduce Medicare costs in future because it will ensure that once people get the right drugs they can avoid going to hospital again to treat such diseases. Is this true and is it possible for the budget to go down as a result of this initiative? Is the government losing it or will they be able to address the various problems in Medicare? What can individuals do about making health affordable without relying on the government fully? The following portion of my paper seeks to analyze the questions posed above so as to establish the possibility of correcting problems in Medicare.

            The government realizes consequences of an age increase or reduction in spending on the aging group would have a drastic effect. The most important consideration is that this group of people is usually income earners and cannot afford proper medical care on their own (Bilirakis, 1997). President Clinton in 1994 also noted that it would be quite difficult to reform the health care system because trying to make limits in the Medicare would only deny the aging the opportunity to get proper health care. There have been cases of physicians declining to treat Medicaid patients brought in their hospitals due to fears of payment by the government. The debate of reducing the doctor’s fee was discussed in congress in 2004. The idea proposed was to decrease the figures by 4.5% for the year 2004. However, most of the congress members voted for an increase of 1.5%. According to Welch (2005), they considered the idea of motivating physicians and reducing possibilities of refusal to treat Medicare patients.

Conclusions and Recommendations.

            The Medicare fund has shown outstanding performance and help in provision of health to the elderly. This function however is being threatened by various impending Medicare problems that should be addressed to save this invaluable service. Many elderly lives have been saved with ease on their pockets. Those with low income or who cannot sustain themselves such as the disabled would stand to lose a lot if the system was to run out of funds. Currently, the ratio of number of people paying taxes in the US is 4:1.This number is bound to decrease with more people retiring than those joining the workforce. The government has a right to exercise authority in conducting any kind of reforms in the national interest. My suggestion therefore is that the congress should discuss on raising tax by a small percentage say up to 3.1%. This would not have a very high impact on people’s payroll yet it could provide a significant increase in the Medicare fund. As much as the people may complain over the tax increase, the government can convince them to help it out of the situation. Furthermore they stand to gain from these funds someday. It can also consider rising the age of qualifying beneficiaries. According to Welch (2005), if the government could rise the age of Medicare by two years then the reduction in the government budget would be quite significant. Welch (2005) notes that it would reduce beneficiaries by eleven percent and thereby reducing the expenditure by almost $28 billion per year. The suggestion made by the congress to try and privatize social security could also work in Medicare. The idea put across in 2005 suggested that money obtained from individuals could be invested in corporate bonds as well as treasury bills so that it could earn interest. By the time of one’s retirement there would be a lot of funds in their account. This could apply to Medicare as well to save the US of the current economic difficulties that it is facing. All corrupt officials should be investigated and proper measures taken to avoid any form of fraud that denies citizens of their rights to receive proper medical care. Instead of charging the usual 2.9% on payroll as Medicare tax to all contributors, the government should make the tax progressive so that those with higher incomes can contribute more towards the fund. This will not only increase the amount collected for Medicare but also reduce income inequality among its citizens. Maybe it is the high time Americans start saving for their old age medical requirements instead of relying solely on the government to pay for their bills. It is becoming increasingly important that people invest in life insurance programs so as to cater for any future health related bills. Insurance also comes in handy because one’s beneficiaries can benefit from the investment in case of death of the insured. Solutions can be found if only all the stakeholders including the public and the government agree to co-operate. What is important is that the United States cannot afford to lose Medicare under any circumstances.

Word Count (1794).


Bilirakis, M. (1997). Medicare Provider Service Networks: Hearing before the Committee on      Commerce, U.S. House of Representatives. Collingdale, PA: DIANE Publishing.

Diamond, P. A. (2002). Social Security Reform. Oxford: Oxford University Press.

Magleby et al. (2008). Government by the People. Upper Saddle River NJ: Prentice Hall.

Welch, W. M. (2005). Medicare: The next riddle for the ages. Retrieved on March 12th 2009 from   


Leave a Reply
Your email address will not be published.


I'm Ricky!

Would you like to get a custom essay? How about receiving a customized one?

Check it out