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Removing the Inefficiencies of Medicare Expenses

Removing ageist policies in healthcare and restructuring Medicare are crucial components to helping ensure that medical and health-related services are accessible and affordable for those who truly need them.

Big Picture:

Although Social Security and Medicare funds are running low for the senior population of the U.S., every year, an average of $63 billion is spent on unnecessary medical procedures, surgeries and hospital stays due to Medicare fraud and ageist policies that restrict the autonomy of senior citizens. It is vital to remove these ageist policies that result in unnecessary expenses and to restructure Medicare in such a way that healthcare services are only provided to those in true need. 

Operative Definitions:

  1. Old-Age and Survivors Insurance Trust Fund: A trust fund in the U.S. treasury derived from payroll taxes that provides automatic spending authority to the Social Security Administration to pay monthly benefits to survivors of insured employees who have passed away and to elderly beneficiaries and their families. 

  2. Medicare: A U.S. federal health insurance program that provides various types of healthcare coverage for people ages 65 years and older, as well as people with specific disabilities.

  3. Centers for Medicare and Medicaid Services (CMS): A government agency whose purpose is to maintain the operations of Medicare, Medicaid, the Children’s Health Insurance Program and the Health Insurance Marketplace.

  4. Pay-for-performance (P4P): A term that refers to providing financial incentives to service providers in exchange for logistic-focused results, patient happiness and established best practices as opposed to a simple fee-for-service system.

  5. Patient Decision Aids (PtDA): A tool for patient health literacy that provides patients with information such as procedure reasoning, risk, support sources, conflicts of interest, etc.., so that they can make an informed decision. 

Important Facts and Statistics:

  1. The Old Age and Survivors Insurance Trust Fund is projected to be exhausted by the year 2031.

  2. It is estimated that 26% of the entire population of Medicare beneficiaries meet the diagnostic criteria for a mental health disorder; nonetheless, merely 1% of all Medicare expenditures is allotted to mental health services. This statistic has also increased due to COVID-19.

  3. According to a report by Sheffield et al., “In a 5% sample of Medicare claims data, 2,803 patients underwent preoperative stress testing without any indications.”

Three-Point Plan:

(1) Expand P4P initiatives in Medicare and involve patients in decision-making. Patients need to be provided with PtDAs that enable them to make an informed decision on whether they would like to forgo a recommended surgery, medical procedure or testing. This payment model would help break the assumption that a physician's judgment always reflects medical needs and patient demand. 

(2) Remove the Medicare mandate that requires a 72-hour hospital stay for joint arthroplasty. Hip and knee arthroplasties are common surgeries that older adults are often coerced to have done unnecessarily. Additionally, research shows that patients are safe for discharge on the second day of recovery from such surgeries. As such, patients should be given the option to leave on their second day of recovery, thus reducing high hospital stay costs.

(3) Redistribute Medicare funds to be more inclusive of mental health resources. Senior citizens are less likely to be diagnosed with mental health diseases because of negative perceptions regarding the aging process. Medicare needs to invest in mental health resources for the senior population. 

Why This Initiative is Important:

Medicare is a necessity for millions of Americans for basic medical care coverage. The Medicare program spends over $829 billion of the federal budget. Despite this, the program is inefficient in providing healthcare services due to wasteful administrative costs, procedure price disparities and treatment inefficiencies. Ageist attitudes and prejudices are also prevalent in public policies and within the healthcare system. These policies create an unequal distribution, where certain senior citizens are overtreated, while others are undertreated. Additionally, when public policy provides more autonomy to its senior patients, it breaks through ageist attitudes and reduces the harmful stereotype of older populations being highly dependent.


The opinions expressed in this article represent those of the individual authors, whose information can be found below. The following student worked on this proposal: Min-Fang (Amber) Luo, Suffolk University graduate (Masters of Arts in Global Public Policy).

To see all sources consulted/reviewed/interviewed to write this article and/or to learn more about this article's author, click HERE.

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