Please ensure Javascript is enabled for purposes of website accessibility

The 3 Biggest Medicare Headlines in 2015

By Dan Caplinger - Jan 17, 2016 at 8:02AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Find out what last year's biggest events could mean for 2016 and beyond.


Medicare dealt with some big issues in 2015, and the millions of Americans who rely on the program to help them with their healthcare costs watched closely as policymakers and others worked through those issues. Although the resulting policy moves didn't give everyone what they wanted, they still gave participants viable strategies to follow in 2016 and beyond. Let's take a look at the biggest Medicare headlines of 2015 to see how they'll affect you in the future.

Medicare Trust Fund to run out in 2030
On the plus side, the annual report of the Medicare Trustees showed some signs of long-term strength for the program. The report said that the Trust Fund for the program would run out of money in 2030, the same year as it had projected in its previous report. The Trustees pointed to factors affecting the financial health of Medicare in both directions, such as the improving economy helping to bolster Medicare payroll tax withholding revenue versus greater participation in private Medicare Advantage plans boosting the program's overall costs. Even after the trust fund runs out, Medicare receipts will be enough to pay 86% of benefits.

In the longer run, Medicare's Trustees were optimistic about the future. The Trustees pointed to healthcare reform initiatives in seeing a slower rate of increase in costs in the distant future beyond 2050. Nevertheless, participants will need to keep an eye on the program to make sure that current projections work out the way the Trustees expect.

Medicare reform solves an ongoing headache
After years of short-term annual measures designed to put off dealing with the problem, lawmakers finally moved forward with permanent reform for one of Medicare's most challenging issues. The Congressional decision to replace the sustainable growth rate formula made it easier for doctors and other medical professionals to predict how much Medicare will reimburse them for the services they provide, and it also gave the program a chance to implement changes in how it sets reimbursement rates.

In particular, the new reforms will set a new baseline for Medicare reimbursements. It also implements incentives based on doctor efficiency, quality of care, and coordination among different medical professionals. Although some practitioners could see reimbursement declines under the new system, there will also be opportunities for substantial reimbursement increases for those who perform well under the standards set in place.

Medicare premiums rise -- but not as much as feared
The most important even for Medicare participants came late in the year, when lawmakers implemented a plan that prevented what would have been a huge premium increase for Medicare Part B medical coverage. Coming into the end of the year, two things had conspired to create a tough situation for Medicare. First, extremely high cost increases required Medicare to pass through added costs to its participants. Second, the lack of a cost-of-living adjustment for Social Security recipients in 2016 prevented Medicare from imposing those cost increases on the roughly 70% of participants who also receive Social Security. As a result, the 30% of participants who didn't qualify for the so-called hold harmless provision faced potential premium increases of more than 50%, with most seeing premiums go from $104.90 to as much as $159.30.

Instead, lawmakers made a deal on Medicare to limit the amount of the increase to about 16%, making 2016 Part B monthly premiums $121.80 for most participants. For future years, the deal includes a continuing $3 per month surcharge that participants will pay until Medicare essentially gets paid back for the money it gave up by imposing smaller premium increases than previous law called for.

Once inflation gives Social Security recipients cost-of-living increases in future years, the premium increase will be applied fairly across all Medicare participants. Nevertheless, the episode once again highlighted some of the structural difficulties involved in managing Medicare's finances.

Medicare will continue to face challenges in 2016 and beyond. But with the changes that occurred in Medicare in 2015, there's reason for hope that the program will be able to handle future issues effectively.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.