7 Myths About Medicare

With the November U.S. presidential election fast approaching, debate is raging in the political arena regarding Medicare, specifically how it is or isn’t working. Additionally, there is some confusion among senior citizens (and their loved ones) as to how the recent Affordable Care Act will benefit or perhaps threaten Medicare. To help sort out the facts from the rhetoric, take a look at these seven popular and perpetuated myths about Medicare.

  1. Medicare is an unearned entitlement:

    While this statement may be a factual falsehood, there are people who are philosophically opposed to the entire idea of a federal health program designed to ensure that citizens over 65 who are in need of medical care will not face financial destitution. But philosophical systems aside, the fact is that American employees “earn” the entitlement of Medicare by paying in to social security during their working years. Interestingly, this form of so-called “socialized” health care works exactly like private insurance: some customers pay more than they receive back, others get back more than they pay in.

  2. Medicare’s budget is out of control:

    Medicare is described by its critics as a big, bloated, inefficient, wasteful federal expense. However, according to the Kaiser Family Foundation, Medicare’s spending growth rate through 2019 is projected at 3.1%, more or less matching the growth of the U.S. economy, while spending by private insurers will increase 4.9%. In addition to being run more efficiently than private plans, Medicare spends much less on administrative overhead, including fighting fraud and abuse.

  3. Medicare costs are out of control:

    Medicare has always and is projected to continue to cost significantly less per beneficiary than private insurance. While it is true that Medicare spending will increase as the number of senior citizens in the U.S. continues to grow, the program is expected to remain remarkably cost-friendly thanks to lower payment rates to health care providers and its aforementioned lower administrative costs. These savings are passed along to the benefit of people enrolled in Medicare.

  4. Market competition brings down the cost of private plans administering Medicare:

    Medicare Advantage, which originated in 1997 with the passing of that year’s Balanced Budget Act, is offered by private providers who are paid by Medicare as well as premiums and co-payments. It was believed that market competition among Medicare Advantage’s participating insurance providers would bring down the costs of health care plans, but anyone 65 or older will tell you that definitely did not happen. The Affordable Care Act will continue to reward Medicare Advantage providers who provide high quality, comprehensive care, but will also gradually reduce the subsidies Medicare is paying to these providers. As a result, it’s likely that instead of becoming less expensive and more consumer friendly, private companies will raise their premiums and co-payments or elect to drop out of the Medicare program altogether.

  5. Medicare is government healthcare:

    Medicare is sometimes referred to as “government healthcare” or “socialized medicine.” By definition, a socialized health care system would mean the government paid for all health care, employed all health care providers, and ran all of the country’s health care facilities. But the health care providers, pharmacies, and nursing homes that fall under Medicare’s coverage are all privately owned.

  6. Medicare is going to be broke in 2024:

    Medicare is funded by a combination of payroll taxes, taxes paid on social security benefits, interest earned on Medicare trust fund investments, premiums from people enrolled in Medicare part B and D, general revenue, and other funds identified by congress. While insolvency has been predicted for the Medicare nearly every year since 1972, various acts of congress and revisions to the program have managed to keep it solvent. There’s no question that both social security and Medicare are facing serious financial challenges, even though savings in the Affordable Care Act keeps Medicare financially stable through 2024, and funding sources are in no danger of suddenly disappearing. Given how important Medicare is for the country’s growing senior citizen population, it’s important the government continue to identify additional sources for funding Medicare and changes that will cut costs and improve its efficiency.

  7. Repealing the Affordable Care Act will save Medicare:

    The Affordable Care Act greatly expands health coverage for its beneficiaries. For instance, those who have been denied insurance because of a pre-existing condition, including children under the age of 19, can now get insurance. Insurance companies cannot drop your coverage if you get sick. Repealing the Affordable Care Act will only send Medicare back to square one and take the latest life-saving benefits away from millions of Americans.