Medicare’s long -term financial prospects are in close close ones. While spending is already historically high, the Congress Budget Office (Cbo) projects that, without fundamental reform, things will only worsen.
According to the CBO, total government spending will increase from 23.3% of GDP in 2025 to 26.6% in 2055. Nearly two -thirds of this growth are expected to come from Medicare costs out of control. In short, in its current trend, Medicare is simply unacceptable. It also undermines the viability of the wider healthcare system.
Such a terrible perspective seemly contradicts patients’ view of the program. According to Kff91% of the beneficiaries of more than 65 Medicare total performance as excellent or good. Of course, why wouldn’t it be?
Beneficiaries are satisfied with Medicare, because the program highlighted for providers. Imagine how satisfied you will be with your car insurance provider if the company could pay the car shop less than 40 cents on the dollar for the cost of repairs.
This is exactly what Medicare does. As 2024 RAND The research report was documented: “In all hospital patients and external patients (including the establishment and relevant professional claims), employers and private insurers paid on average 254% of what Medicare would have paid for the same facilities.”
The 254% premium that private insurers and employers pay are not representative of the actual cost of care. The costs that the private sector has to pay doctors and hospitals is higher than due to the non -financial levels of Medicare compensation.
In other words, patients with private or employer insurance subsidize the cost for patients with Medicare-not to mention uninsured and patients with Medicaid, who also have non-financial compensation rates. This cost shift makes Medicare look like it is better insurance than it is. But at the expense of the deterioration of the crisis to access health care for everyone else.
Medicare depreciation also undermine the financial viability of healthcare providers. In accordance with AAMCHospitals lose money in almost all services they provide to Medicare patients. Specifically, they found that “hospitals saw a total loss of $ 4.9 billion or average loss of $ 2,244 per exemption” for each medical hospital medical.
As documented by American medical associationMedicare’s low compensation rates hurt private practices and discourage doctors from accepting new Medicare patients. When combined with other pressures on doctors, inadequate Medicare compensation contributes to the problem of a doctor’s lack.
Nor is there a reasonable basis for Medicare’s devalues. Get the benefit of health care in Medicare’s home as an example. Medicare & Medicaid Services (CMS) Centers is “They are ready to impose the fourth consecutive permanent health rate of the home in four years” almost “almost 13%”. The creation of healthcare saving is essential, but the problem, in this case, is that these actions may be a pen-sided, but they are also pounds-foolish.
A study by Penn Leonard Davis Institute of Health Economics He showed that “home health care was connected to an average savings of $ 4,514 in total Medicare payments in 60 days after the first admission to the hospital”.
The subparagraph of home health care is in danger of these largest systematic savings. As National alliance of care at home Notes, “half of all US counties lost healthcare services between 2020 and 2024 and” in over 70% of counties, organizations face fewer traditional Medicare patients “.
These realities show that fundamental reform is essential. Otherwise, Medicare will either bankrupt the country or provide the elderly extremely inadequate health care.
As I argued in a syntactic Forbes in June 2025, reforms should restructure Medicare as a cash benefit system similar to the way the government pays social security benefits. At current levels of expenditure, Medicare can pay any beneficiary of $ 15,150 ($ 30,300 for a married couple) annually to cover the cost of insurance and expenditure for health care. If it is deposited in a Health Savings Account (HSA), then any funds that have not passed in a given year could be used in the coming years.
When patients control health care costs, they naturally seek the most effective and appropriate adjustment for their needs. Home Healthcare is a perfect example. Given the choice and the financial incentive, many patients recovering from hospital stay will choose home care, where the results are comparable or better and the cost is much lower, rather than being sent to an institutional installation of high costs simply because the type of return of Medicare.
Providing control of patients in their own expenditure on health care also encourages providers and insurers to focus on the needs of patients not on the decrees of government bureaucrats. Thus, strengthened, providers will be encouraged to find new innovative ways to provide care and reduce costs. The benefits of this reform could be further enhanced by the introduction of reforms that similarly enhance patients with private insurance-so much plans funded by the employer and healthcare exchanges.
A cash -based model, directed by the patient, aligns financial and clinical incentives: patients spend wisely, providers compete in value, and care migrates to lower -cost, higher -satisfaction such as home health. On the contrary, when payment decisions are dictated by government types and schedules, the system rewards ineffectiveness, distorts care options and leads the costs higher.
Medicare is not financially unsustainable and undermines the viability of the healthcare system. Although it is easy to overlook these issues and focus on patient satisfaction surveys, this is similar to the success of the Titanic journey based on the dinners served by first grade visitors. It may create short -term reviews, but in the end things are not going to finish well.
