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Republican Study Committee Proposes Positive Changes To Medicare Services

Medicare Services [Photo: AARP]
Medicare Services [Photo: AARP]

The Republican Study Committee has proposed positive changes to Medicare Services. The Congress has to deal with the issues in Medicare before one of its sources of funds becomes insolvent in 2028.

Republican Study Committee [Photo: The Heritage Foundation]

Republican Study Committee [Photo: The Heritage Foundation]

Congressional lawmakers in the House negotiate over the amount of money the U.S. government can borrow. One of the concerns in this negotiation is reducing the budget for Medicare. However, House Speaker Kevin McCarthy has already guaranteed that the budget for Medicare, as well as the Social Security, will not be involved in these negotiations. Nonetheless, experts say that the Congress has to deal with the issues in Medicare before one of its sources of funds becomes insolvent as projected in 2028.

According to O’Brien, the Medicare consists of Part A (hospital insurance), Part B (outpatient care coverage), Part C (Medicare Advantage Plans), and Part D (prescription drug coverage). The majority of Medicare’s 64.5 million beneficiaries are aged at least 65 years old and those who are younger but with permanent disabilities. 

The Republican Study Committee directs its proposals towards these coverages and beneficiaries. Among the study group’s proposals is increasing the age of eligibility from 65 to 67 just as the Social Security has. In addition, it was proposed that Parts A, B, and D would be consolidated into only one plan with one premium. Premium subsidies would also be available, but it would depend on a person’s income. These proposals reportedly address the issues in Medicare that would guarantee the service’s solvency in the distant future.

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What Medicare Insolvency in 2028 Means

According to King, the trust fund of Part A (hospital insurance) is what is expected to be insolvent in 2028. If the Congress would not step in, the funds for Part A will be able to pay only 90% of claims starting in 2028. Most of Part A’s funds come from the dedicated taxes paid by employees and employers.

On the other hand, Part B (outpatient care coverage) and Part D (prescription drug coverage) receive their budget from the federal government’s general revenue and the monthly premiums paid by Medicare beneficiaries. Every year, the premiums are adjusted to consider the anticipated expenses and make sure that there would be no shortage.

However, despite the projected insolvency, senior fellow at the Heritage Foundation, Robert Moffit, thinks that reducing Medicare’s budget would not be practical. This is because as the population ages, the beneficiaries of Medicare as well as the expenses to provide medical care continue to increase.

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