Question 1

If you don't want Medicare ever, is it something that can be opted out of?

Accepted Answer

Medicare Part A is automatic. You get it when you turn 65 and it's free, so there's really no opting out.

Medicare part B, C, and D are all optional. You become eligible at 65, but have to pay a monthly premium for whichever part(s) you decide to enroll in. If you don't sign up when you turn 65, and you aren't getting coverage from your employer, then you will have to pay penalties whenever you do sign up.

Question 2

At 10:23 it says that Medicare can buy you private insurance. Why don't they just save on overhead charges and expand coverage?

Accepted Answer

Some people believe that private insurance will be able to provide better services at a reduced cost. So the government can pay an insurance company the same amount of money they would spend to manage a member, and the member can potentially get better care. These Medicare Advantage companies do generally have much higher overhead costs, but spend less money to cover each member, which is how they make a profit.

Originally, Medicare Advantage companies were paid a higher rate (115% of traditional Medicare) per member than the government would have allowed traditional Medicare to spend. This allowed the private insurers to earn a profit even if they didn't spend less money on their members. Since then, the amount of premium private insurers are paid per member has gone down to roughly the same amount that traditional Medicare is paid (this is fairly complicated; some areas are still paid more, but some are actually paid less)

Question 3

Isn't part of the problem with health care costs the massive overhead of administrating care and handling all the complex billing issues with a multitude of insurers?

I was always under the impression that Medicare had extremely low administrative costs in comparison to private health insurance.  Was this ever the case?  If so is it still the case or has the system become convoluted and experienced increased administrative cost inflation?

Accepted Answer

Medicare does have very low administrative cost as a percent of total expense when compared to most private insurance companies. There are arguments that this is partially due to the fact that there are a lot more expenses for Medicare beneficiaries, causing administrative cost to be less of by percentage without necessarily being less in total dollars. When comparing administrative expense per beneficiary, the numbers look much more equal. However, that isn't necessarily better, as more services would naturally bump up the need for administrative cost.

It's very difficult to get a true "apples to apples" comparison, but one good marker is to look at how much administrative cost it takes to pay a claim. On that front, Medicare does in fact come out ahead of private health insurance.

It's very difficult to get a true "apples to apples" comparison, but one good marker is to look at how much administrative cost it takes to pay a claim. On that front, Medicare does in fact come out ahead of private health insurance.

Question 4

At 9:35, the speaker was describing Medicare Part D and stated, "and for the first time now...you also got prescription drugs paid for,".  Isn't it true that seniors have to pay to receive Medicare Part D?

Accepted Answer

I think it would have been better to say that after Part D was passed, seniors had help in paying for prescription drugs as the cost of coverage is generally less than the cost of the drugs.

Question 5

Why doesn't the federal government raise the tax on people with high income? This way, they only need to raise it a little to make a lot more, but they won't really be affecting anyone because those with high income will probably be fine from the tax raise.

Accepted Answer

What you're describing is a progressive tax. This is the argument commonly associated with the left-wing, liberal side of politics. Arguments against this rationale would include:
1) If we excessively tax the ultra-rich, they will leave for a country with lower tax rates, thereby decreasing the overall tax revenue earned and losing the GDP to fuel other jobs and therefore even more tax dollars.
2)There are very few ultra-rich people. So even if you can get 100x more money from one person, there are 1/1000 as many of them to take money from. (numbers are made up here)
3)Rich people are already paying more tax dollars and receiving fewer tax benefits, so it's not fair to ask them to pay an even higher percent of their income in taxes.

I personally think these arguments are not strong enough to outweigh the benefits that you mentioned. However, there is plenty of room for debate, which is exactly why this has been one of the most central points of contention between republicans and democrats over the last century.

It is worth mentioning that most all other developed countries do have much more progressive tax rates than the U.S.

Question 6

Is everyone over 65 automatically qualified for Medicare? Does the household income matter?  In other words, will Bill Gates be qualified for Medicare?

Accepted Answer

No, household income does not matter, at least currently.  Everyone who paid in to the system for 10 years is eligible.  So, yes, Bill Gates will be eligible.  The amount that a senior pays for Part B goes up as income goes up.

Question 7

At around 2:00, it mentions kidney failure and ALS are somehow included in Part A. Does that mean other chronic, serious issues like, say, cancers are not? I don't understand why those two health issues were added.

Accepted Answer

Intense Congressional lobbying - plain and simple.  Initially, many Congressmen thought it was only a matter of time until the US would have universal health care coverage so including people with kidney failure was no big deal, just allowing them to jump the gun so to speak.  Alas, it did not work out that way.

Question 8

At 4:06 Dr. Darshak Sanghavi talks about how Part A & B are funded by a tax.  At 9:44 he mentions the controversy over Part D not having a funding plan attached to it which contributed to the Federal Debt.  How is Part C funded?  Where does the government get the money?

Accepted Answer

I am not sure that the government pays the Medicare Advantage company more if the patient is unhealthy than if he/she is healthy.  I would guess the government payment is the same in both cases which is why Medicare Advantage companies tend to cherry pick only the healthiest people over 65 patients.

Question 9

I am a UK citizen. Want to migrate to USA. I am 32 and work full time as management accountant. I take tecfedera for my MS here I get free medicine what will be in USA.
How to choose Insurance for this drug ?

Accepted Answer

Unfortunately, you face the same uncertainty of many U.S. citizens in regard to paying for medication. Unlike the highly regulated single payer (government) system you have in the UK, the U.S. system consists of many payers (private insurance, federal programs, state programs, cash paying patients). I expect you will be offered a range of insurance plans through your employer upon hiring. Most insurance plans offer prescription benefits. These benefits can be dependent on many variables. For instance, your insurance plan my require you to use specific pharmacies to fill your prescription and only cover a percentage of its cost, other plans have copays based on drug class. Most U.S. citizens with insurance do not know what the cost of their medications will be until they take their prescription to a pharmacy unless they have researched their coverage throughly. Many large corporations have a "benefits coordinator" in their human resources department who will be happy to assist employees with questions regarding the insurance the company offers. Best of luck to you! Cheers!

Course: The Brookings Institution > Unit 1

Medicare

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