Research shows that 65 million people aged 65 and older as well as younger people with disabilities are covered by Medicare. This is a federal health insurance program that helps pay for care services including hospital and medical provider visits, in-home care, prescriptions, and more. In this article, we’ll explain some of the recent trends in Medicare costs.
If you or a loved one is in need of in-home care services in or near Columbia, SC, the professionals at Caring Healthcare can provide you with the services you need. We have served this area for more than 25 years and we only hire qualified caregivers that we would trust our own loved ones with.
Overview of Spending
Medicare plays a significant role in the healthcare system. In fact, some research shows that it accounts for approximately 21% of national healthcare spending, equating to 26% of hospital/physician care and 32% of prescription drugs. Additionally, Medicare accounts for 10% of the federal budget.
Historical and Projected Spending
In 2021, Medicare spending on Part A, B, and D totaled $829 billion, which is up from the $541 billion spent only a decade prior in 2011. This reflects gross spending, not taking out any premiums or other offsets, and includes spending on traditional Medicare as well as Medicare Advantage. By 2031, Medicare benefit spending is expected to increase to $1.8 trillion.
Research shows that from 2021 to 2032, Medicare spending will grow as part of the federal budget from 10.1% to 17.8% and the nation’s economy from 3.1% to 4.3% of the gross domestic product, or GDP. The projected spending is based on a few factors:
- Increased enrollment n Medicare/increased aging population
- Increased use of medical services
- Increased intensity of care
- Increasing cost of healthcare
By 2052, Medicare spending is expected to increase to 5.9% of the GDP. Approximately 2/3 of Medicare spending over the next 30 years will be due to the rising costs of healthcare and 1/3 will be due to the aging of the population.
Spending on Outpatient Services
While spending has increased between 2011 and 2021, the distribution of payments by Medicare Part A, Medicare Part B, and Medicare Part D has changed.
Spending on Part A, which primarily covers inpatient services, decreased from 47% to 39%, which reflects a shift to outpatient services. Spending on Part B, which is primarily outpatient services, increased from 41% to 48%, causing this to become the largest area of spending for Medicare. By 2031, Medicare spending on Part B is expected to increase to almost 50%, while Part A is expected to continue to decrease.
Spending on Part D has been fairly constant since its inception in 2006, at approximately 12% to 13%. Experts expect it to remain about the same by 2031. This does not take into consideration the provisions regarding prescription drugs in the Inflation Reduction Act which is projected to reduce the federal deficit by $237 billion by 2031.
Looking to the Future
Trends in Medicare costs are not done fluctuating. According to the experts, Medicare faces a lot of financial pressures due to the number of people who are becoming eligible for coverage, increased enrollment, and the higher cost of healthcare. However, there are some changes that have been proposed, including increasing the age of Medicare eligibility and moving to a premium-based system.
In order to sustain this system, policymakers may consider making some broader changes to the program including reducing benefits, changes in payments to healthcare providers, and more.
If you or a loved one is in need of in-home care in or near Columbia, SC, let the professional caregivers at Caring Healthcare help. We provide a variety of services including transportation to and from medical providers, personal care, medical care, and more.