Medicare Turns 55

Medicare was enacted by President Lyndon Johnson on July 30, 1965. For 55 years now, Medicare has provided health insurance to people 65 and older, and to those with disabilities. Here are some Medicare updates as the program celebrates its 55th birthday.  

Expected Population Growth 

In 2019, 62 million Americans were on Medicare. This population is expected to increase to over 80 million by 2030, as the baby-boom generation transitions into Medicare. According to recent reports, the boomers have lower rates of smoking and longer life expectancies, but also have higher rates of diabetes and obesity. So, while we know the number of Medicare users will grow over the next decade, it’s unclear how much the health of these beneficiaries will change. There are reasons for optimism and reasons for concern. 

Increased Deductibles and Premiums

Each year brings some Medicare changes. This year, the standard monthly Part B premium increased, so did Part A premiums, deductible, and coinsurance. These trends are likely to continue in the coming years. Meanwhile, newly-eligible beneficiaries can no longer purchase Medigap Plans C and F. 

Medicare Advantage Enrollment 

Medicare Advantage (MA) plans, or Medicare Part C, are a full-function alternative to original Medicare. MA enrollment has doubled over the past 10 years. Consider these statistics and projections:

• Roughly 68 million people are enrolled in Medicare in 2020. Of this 68 million, 24.1 (36%) are enrolled in Medicare Advantage. Compare that to twenty years ago, when 6.8 million beneficiaries (17%) were enrolled in MA. So, there has been a steady increase in MA enrollment. 

• By 2028, 42% of users are projected to be enrolled in Medicare Advantage.

• MA enrollment varies by state. Over 40% of beneficiaries are enrolled in MA plans in nine states: FL, MN, HI, WI, OR, AL, MI, CT, PA. 

• The nature of the coronavirus pandemic is uncertain. However, MA plans are able to forgo certain requirements relating to coverage and cost-sharing in cases of emergency or disaster — like the COVID-19 outbreak. As a result, most MA carriers have said they’re removing cost-sharing requirements for COVID treatment. 

Medicare Supplements

Medicare Supplement (Medigap) plans offer special benefits for some health care expenses that aren’t covered by Original Medicare. As the number of Medicare users continues to rise, it’s likely that more of those individuals will look to private insurance to help meet their healthcare needs through Medicare supplement coverage.  

Supplements: Projected Enrollment Increase

From 2005-2012, there was a slight decrease in the percentage of beneficiaries who enrolled in supplement policies, before the number began to gradually ascend.  

By 2025, a projected 27.5% of Medicare users will sign up for supplemental coverage. So, the projected enrollment increase is slower for supplement plans than advantage plans. Still, the future forecast for the supplement market continues to be bright, thanks to:

• Overall growth in Medicare
• Overall market stability
• Low barriers to market entry

National Health Expenditures Will Go Up

Since Medicare enrollment is expected to increase, the more will be spent on medical services to care for the enrollees.

National health expenditures (NHE) are projected to grow at an average rate of 5.4% per year. By 2028, the total spending may reach $6.2 trillion. This anticipated growth primarily correlates to hospital, physician, and clinical services, as well as prescription drugs. For more on projected health expenditures, view this CMS report.

Need Medicare Help?

Health insurance can be complex, but we’re here for guidance and support. At Bobby Brock Insurance, we help our clients find the best Medicare coverage at the best rates. It’s what we have done and will continue to do for many years. Call (662) 844-3300 to speak with an experienced Medicare agent.