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02-12-2012 | Article

Foundation paints a sobering overview of Medicare


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medwireNews: One in six Americans are covered by Medicare, 50% of whom have incomes below $ 22,000, while 23% have cognitive or mental impairments, according to a health policy snapshot published by the Kaiser Family Foundation (KFF) in the Journal of the American Medical Association.

In a Visualizing Health Policy infographic, KFF took an overarching look at Medicare by illustrating - among other aspects - its demographics, the kinds of services that beneficiaries use, and the factors that policymakers must contend with when setting payments.

"Discussions about Medicare are now happening related to the federal budget [as] the rapid growth of enrollment in the program is driving concerns about sustaining it, " explained Juliette Cubanski, associate director of KFF's Medicare policy program.

Of the 50 million people who receive Medicare benefits, 40% have at least three chronic conditions, 17% are disabled and are younger than 65 years of age, while just 10% account for 57% of total spending.

When tallying up the proportion of Medicare beneficiaries who use at least one medical service in a year, KFF found that 77% visited a physician, 28% had gone to the emergency department, and 19% had experienced hospital stays as an inpatient.

Almost half (48%) of the benefit payments that Medicare made in the 2012 fiscal year went to hospital inpatient services and Medicare Advantage plans, which is a program that functions through a private provider. Health services delivered at home and hospital outpatient services received the least amount of benefit payments at a total of 10%.

Budget-wise, at least half of the beneficiaries' annual income stems from Social Security with 26% of it going toward out-of-pocket spending on drug and insurance-related costs in 2010. This share is expected to remain unchanged by 2020. In comparison, 15% of the federal budget went toward Medicare in 2010, which equates to $ 3.5 trillion. Federal spending is expected to rise to $ 4.9 trillion by 2020, or 19% of the budget.

From 2011 to 2020, the average annual increase in Medicare spending per person is projected to be 3.1%, which is slower than private insurance's 4.9% growth.

Ultimately, the KFF overview foresees fiscal challenges caused by increasing healthcare costs and population growth, predicting that 80 million Americans will rely on Medicare in 2030.

Furthermore, with the Affordable Care Act (ACA) in place, payments for hospital care are expected to last until 2024. However, if the ACA was repealed, those same funds are projected to dry up by 2016.

By Peter Sergo, medwireNews Reporter