What Are the Pros and Cons of Medicare?
- Like many things, Medicare has its advantages and disadvantages. Learn about some of the pros and cons of Medicare, including the federally administered Medicare program and private Medicare plans.
You’ve probably heard about some of the advantages and disadvantages of Medicare. Like so many things, Medicare has both pros and cons, both of which we will highlight below.
The Pros of Medicare: Is Medicare a Good Thing?
Original Medicare (Medicare Part A and Part B) is administered by the federal government under the authority of the Center for Medicare & Medicaid Services (CMS), which is part of the Department of Health & Human Services. In 2021, federal spending on Medicare will account for just over 15% of all federal spending for the year.1
Some of the pros of Medicare include:
Health Insurance Coverage for People Who Need It
Medicare is the single largest health insurance program in the U.S., providing hospital insurance (Medicare Part A) and medical insurance (Medicare Part B) coverage to more than 60 million Americans.
If Medicare didn’t exist, tens of millions of seniors and people with disabilities would have to rely on some form of private health insurance in order to have suitable coverage, something that might not be affordable for many people.
Medicare coverage includes a wide variety of benefits, from inpatient hospital stays to outpatient surgeries to medical equipment such as wheelchairs and walkers. Important preventive care, health screenings and so much more are also covered by Medicare.
During the COVID-19 pandemic of 2020 and 2021, Medicare began covering COVID-19 tests, treatments and vaccines for all eligible beneficiaries. The CMS also expanded the telehealth and telemedicine services the Medicare covers in response to stresses placed on the national health care system due to the novel coronavirus.
Low Monthly Premiums
Most people do not pay a premium for Medicare Part A benefits, and the standard monthly premium for Medicare Part B is $148.50 per month in 2021.
As a comparison, the average monthly premium for a Marketplace (sometimes called Obamacare) benchmark silver premium for a 40-year-old in 2021 is $452 per month. These premium costs can increase dramatically for older beneficiaries.
Mix of Public and Private Coverage
Medicare is among the best examples of the public sector and private sector working together.
- The public portion of Medicare (Parts A and B) cover many of the health services older adults and younger people with disabilities may need.
- Private Medicare plans – such as Medicare Part D prescription drug plans, Medicare Advantage (Part C) plans and Medicare Supplement (Medigap) plans – can offer other benefits or cover certain out-of-pocket health care costs.
If beneficiaries want to take advantage of the benefits and advantages of having private Medicare plan coverage, there may be a range of options available to them depending on where they live.
Straightforward Eligibility Requirements
In most cases, Medicare does not have strict eligibility requirements.
If you’re a U.S. citizen or legal permanent resident who has lived in the country for 5 years, and if you are at least 65 years old, you will likely qualify for Medicare.
If you qualify for disability benefits from Social Security or the Railroad Retirement Board, you may also qualify. People who have end-stage renal disease (ESRD) or who have amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease) may also qualify for Medicare benefits.
Original Medicare is accepted in all 50 U.S. states and even the U.S. territories, as long as you visit a doctor, hospital or other provider who accepts Medicare patients. No matter where you go in the country, you can typically find doctors and other health care providers who accept Medicare. And because Original Medicare does not tie you to a specific network, you can take your Medicare coverage with you when you travel to another state.
No Referrals Needed
In most cases, beneficiaries of Original Medicare do not need to obtain a referral from their primary care doctor in order to see a specialist.
Cons of Medicare: What Are the Problems With Medicare?
Of course there are also some drawbacks to the Medicare program, including:
Limited Coverage of Some Key Needs
Original Medicare doesn’t typically cover prescription drugs or routine dental, vision or hearing care, all of which are important to the health of many older adults. Beneficiaries who are only enrolled in the public portion of Medicare must find other means of coverage for these services, or they must pay out of pocket.
Most privately sold Medicare Advantage plans cover prescription drugs, and many plans also cover things like dental care, hearing care, hearing aids, vision care, glasses, memberships to fitness programs, non-emergency transportation and more. Medicare Part D plans cover most commercially available prescription drugs, and many plans work with participating pharmacies such as CVS, Walmart, Walgreens and more in order to serve beneficiaries in their community.
Potentially High Hospital Costs
When a Medicare beneficiary receives inpatient hospital care, they can face out-of-pocket Medicare costs that can potentially be very high. Beneficiaries need to satisfy a $1,484 deductible in 2021 before their Medicare Part A benefits kick in.
No Out-of-Pocket Limit
Original Medicare also does not include an annual out-of-pocket spending limit. That means there is no cap to a beneficiary’s potential spending on Medicare deductibles, copayments and coinsurance for a single year, and a serious injury or illness could potentially weigh heavily on one’s finances.
Some beneficiaries may choose to enroll in a Medicare Advantage plan because these plans are required to include an annual out-of-pocket spending limit. Other beneficiaries may choose instead to apply for a Medicare Supplement Insurance plan, which pays for certain out-of-pocket costs such as Medicare copays, coinsurance, deductibles and more.
Some Providers Don’t Accept Medicare
While Medicare is widely accepted across the U.S., it’s not necessarily accepted by every health care provider. And private Medicare plans often include networks of participating providers, which can limit the choice of providers available to a beneficiary depending on the rules of their plan.
It’s Rife With Waste and Fraud
Billions of dollars are wasted every year on improper Medicare payments, fraud and abuse. In 2017, improper Medicare payments were estimated to cost the Medicare program approximately $52 billion.
The Advantages and Disadvantages of Private Medicare Plans
Private Medicare plans, which include Medicare Advantage, Medicare Part D and Medicare Supplement Insurance, have some of their own pros and cons as well.
The pros of private Medicare plans can include:
- Coverage for benefits not found in Original Medicare
Many Medicare Advantage plans offer dental, vision, hearing and prescription drug coverage. Plus, some private Medicare health plans even cover things like gym memberships, non-emergency medical transportation, acupuncture, home modifications and more. Plan benefits vary, and certain benefits may not be available with the plans that are offered in every area.
- Bundled coverage
A private Medicare Advantage plan that includes prescription drug coverage can allow you to bundle all of your health insurance coverage under one plan, using just one insurance card.
- Out of pocket spending protection
Medicare Advantage plans are required by law to include an out-of-pocket spending limit each year.
Some of the cons of private Medicare plans can include:
- Provider network restrictions
Depending on the type of Medicare Advantage or Part D plan, you may be restricted to visiting only certain providers or pharmacies that are part of the plan network.
- Additional monthly premiums
Though some Medicare Advantage plans may feature $0 premiums, other plans might require an additional premium for the private Medicare plan on top of your monthly Part B premium.
- Referrals may be required before you can see a specialist
Certain Medicare Advantage plans may require you to first obtain a referral before being able to visit a specialist. This isn’t always the case, and it depends largely on the type of Medicare Advantage plan (such as an HMO plan or PPO plan) as well as the specific terms and rules of the plan.
- Plan selection and cost can vary by location
Private Medicare plan selection and costs can vary quite a bit according to location, so not everyone will have access to the same options.
Office of Management and Budget (OMB). (Feb. 10, 2020). Budget of the U.S. Government, Fiscal Year 2021. Summary Tables [pdf]. https://www.govinfo.gov/content/pkg/BUDGET-2021-BUD/pdf/BUDGET-2021-BUD-26.pdf.