Medicare Turns 50 Amidst Serious Challenges

Written by Katherine G. Watts | July 31, 2015

Medicare turns 50 this week with a number of substantial challenges in its future, and its overall success may be one of the largest contributing factors. When Medicare was created in 1965, nearly half of all seniors in the United States were uninsured. The program covers 55 million people today, providing medical care to one in every six Americans.

So what are some of the challenges Medicare faces?

Financing – As members of the Baby Boom generation reach age 65, the large number of Medicare participants threatens to bankrupt the system. The number of younger workers, who fund the program with payroll deductions, is decreasing as the number of Medicare recipients increases. Solving the funding problem is central to Medicare’s continued existence.
Affordability – Medicare can be expensive for lower- and middle-income seniors. There is no cap on out-of-pocket expenses and the program doesn’t cover items such as dental care and eyeglasses. Many recipients can’t afford supplemental insurance. According to a Kaiser Family Foundation analysis, Medicare and supplemental insurance consumed up to 42 percent of average out-of pocket medical expenditures in 2010.
Managing Chronic Disease – Chronic diseases such as diabetes and heart disease can be very expensive to treat, and a majority of the senior population could have one or both of these conditions by 2030, according to analysis by the Urban Institute. Reducing the rate of chronic disease by only a few percentage points could positively affect Medicare.

The guiding principle for healthcare reform – the Triple Aim of “better care for individuals, better health for populations, and lower costs for healthcare overall” – may also be the key to saving Medicare. Making healthcare providers responsible for patient outcomes, rather than rewarding the number of procedures performed, may be a strategy to controlling costs because the healthier the population is, the less costly their care will be.

And in the new vision for healthcare, the quality of care is paramount. Reducing hospital readmissions by simply following a discharged patient to his or her home or to the next care facility can be highly effective. Problems after a hospital stay can be addressed earlier rather than later, providing better outcomes and cost savings.

In another effort, some healthcare systems have decreased readmission rates by addressing the needs of the patient and the patient’s caregivers. Simple tactics such as ensuring the caregiver understands the aftercare instructions can have a major impact on the patient’s health after a hospital stay.

Other community-based initiatives can also help, such as providing easier access to nutritional food choices in underserved neighborhoods, helping chronically ill patients find healthy, permanent housing, or ensuring access to safe physical activity. Small increases in health across an at-risk population can create substantial savings.

Of course the healthcare system, including Medicare, is in transition. We aren’t able to show even adoption across the entire country, but changes are making a difference in the cost and quality of care. Medicare faces serious challenges in its next 50 years, but with thoughtful action and a focus on a healthier population, it's well positioned to serve future generations.

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