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External Analysis of a Health Care Organization

The United States health care is supported and provided by many different organizations where the health care services themselves are owned separately. Most of the health care facilities in the United States are the best systems of health care in the whole world despite the poor quality, waste in administration and the massive of not taking insurance. There are many programs that do provide the spending and health care through health insurance for the employees in the public sector. This is mainly provided by the government. These programs include Tricare, Medicaid, Medicare, Veterans Health Administration and the Children’s Health Insurance Program, (Sultz, 2011).

Medicare Health Organization History

Medicare is managed by the U.S. federal government and it is a country-wide social insurance program which offers access to health insurance for the citizens of America, especially the aging and the young people, who are disabled and also those with renal diseases. The for-profit insurers do administer their portfolio of risk by regulating their pricing depending on the risk perceived, which is unlike the Medicare, as it spreads the risks which are illness-associated across the society so as to have everyone protected. This is mainly the financial risk. There has been an increase in the life expectancy and advancement in medicine and science since the Medicare creation. The U.S. government thus increased the benefits of hospice so as to help the elderly and this benefit slowly became a permanent benefit.


Medicare’s enrollees are proportionately females and whites and their populations vary in different ways depending on the population in general. Most of its enrollees live in a life of poverty and have health care needs as compared to the general population. The elderly do lack the necessary skills required to gain the important health facilities they need to make comprehensive decisions about their health.


Medicare is managed by the government as it is a single-payer program since there is only one entity which is in charge of the insurance function and reimbursement. The Centers for Medicare and Medicaid Services (CMS) Chief Actuary has the duty to provide information on accounting and projections on costs to the Board of Trustees of Medicare so as to help them assess the financial reports of Medicare.


The long-run deficits in actuaries of Medicare got worse in the year 2012 due to incorporation of recommendations by the Trustees that increased the growth rate assumptions. The cause of the increase in actuarial deficit was due to the incorporation of assumptions and updated economic data. Legislative modifications are therefore necessary so as to escape the disruptive strict measures for the beneficiaries and the tax payers as the Medicare cannot support the projected long-run costs under the currently scheduled financing. The program accounts for 36% of the federal expenditures in the fiscal year 2011 and it experiences cost growth in an excess GDP in the next decades due to the aging population. The growth in expenditures exceeds in per capita GDP per beneficiary. Medicare costs are projected to grow rapidly from 3.7% GDP – 5.7% GDP by 2035 and then rise gradually afterwards to about 6.77% GDP by 2086. The 75- year actuarial deficit that was projected in the HI Trust Fund is 1.35% taxable payroll which is up from 0.79% that was projected in the last years report.

The HI fund also fails in the test of short-range financial adequacy as the projected assets are below a year’s projected expenditures and are also declining. With the HI expenditures, the Medicare trustees believe that the shares that can be financed by the HI dedicated revenues will slowly decline to 67% in the year 2045, and then eventually start rising but in a slow rate until it reaches 69% in the year 2086. This, therefore, brings the HI 75-year-old actual imbalances to amount to 36%of the tax receipts (McIntyre, 2009).

Adoption of the short-range assumptions have eventually worsened the HI long-term finances and also affected by long range cost methods of projection which were recommended by the 2010-2011 Medicare technical review panels. With the assumptions, there was increase in projected short-range costs, but the increases are only temporary by a roughly 2%reduction in 2013-2021 Medicare outlays which are required by the budget control act of the year 2011. Below is the diagram of the internal value chain of the Medicare Organization showing the distribution of different costs.


Medicare is a federal program and its coordination covers people aged 65 years and older$the employer size is a factor, too. For those with more than twenty employees, Medicare acts as the secondary payer as there is Part A, which is the hospital coverage and Part B, which is medical services. All enrollees should join Part A as it is free when they become eligible. If an employer has less than twenty employees, Medicare acts as the primary employer and if the employees do not enroll in Medicare, then they will have to pay for their own. In order to be able to handle Medicare choices, all the employees should get details about their employer provided from the Medicare services. Affordable Medicare services are efficient for growing the economy (Niles, 2011).

All the law-makers are supposed to address the financial challenges that Medicare faces and take action soon so as to pave ways for more options to prepare the public for them.