Medicare Profits $83.4 Billion, Surplus Secure
Medicare achieved an $83.4 billion surplus in 2022, according to a report released by the Medicare trustee. This surplus represents a significant turnaround for the program, which for the first time in decades saw an increase in its trust fund. The key driver of this success is the growing enrollment in Medicare Advantage plans, which now cover over half of Medicare members at significantly lower costs compared to traditional fee-for-service Medicare.
The data from the trustee report reveals that the Medicare Advantage program, also known as Medicare Part C, has experienced an average annual cost increase of about 4%. This lower rate of cost increase has contributed to Medicare’s profitability, in contrast to the expenses associated with Medicare Part A and Part B programs, which typically exceed the 6.7% average annual increase, resulting in financial losses for Medicare.
Furthermore, the capitation model used by Medicare Advantage, in which a set payment is made for each patient rather than a fee for each service rendered, has proven to be highly effective in controlling costs. As a result, the Medicare trust fund is now secure from long-term deficits and financial deterioration that had been predicted by policy analysts for many years.
However, despite these achievements, critics of the Medicare Advantage program have raised objections, claiming that the reported 17% discounts from fee-for-service Medicare are not real and that the program’s costs are actually much higher than claimed. These objections have been refuted by the financial report and the actual numbers, which show that the 17% discounts are indeed real and have contributed to the $83.4 billion surplus.
The success of Medicare Advantage in controlling costs and delivering high-quality care is further evidenced by the significantly lower rate of amputations among its members compared to fee-for-service Medicare. By focusing on preventative care and best practices, these plans have been able to provide better health outcomes for their members while reducing overall healthcare costs.
Furthermore, the surplus generated by Medicare Advantage plans has enabled them to offer additional benefits such as dental, vision, and hearing coverage, as well as in-home support and Part D drug benefits. These benefits, while enhancing the quality of care provided to Medicare members, also contribute to the program’s overall profitability.
Ultimately, the success of Medicare Advantage in turning Medicare into a profit center for the government underscores its crucial role in achieving financial sustainability and improving benefits for members. By embracing this new model of care and cost management, Medicare can continue to provide high-value benefits to its members while ensuring its long-term viability as a vital government program.
