Medicare is the federal health insurance program created in 1965 for people ages 65 and over, regardless of income, medical history, or health status. The program was expanded in 1972 to cover certain people under age 65 who have a long-term disability. Today, Medicare plays a key role in providing health and financial security to 60 million older people and younger people with disabilities. The program helps to pay for many medical care services, including hospitalizations, physician visits, prescription drugs, preventive services, skilled nursing facility and home health care, and hospice care. In 2017, Medicare spending accounted for 15 percent of total federal spending and 20 percent of total national health spending. Show
Most people ages 65 and over are entitled to Medicare Part A if they or their spouse are eligible for Social Security payments, and do not have to pay a premium for Part A if they paid payroll taxes for 10 or more years. People under age 65 who receive Social Security Disability Insurance (SSDI) payments generally become eligible for Medicare after a two-year waiting period, while those diagnosed with end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS) become eligible for Medicare with no waiting period.
Characteristics of People on MedicareMany people on Medicare live with health problems, including multiple chronic conditions and limitations in their activities of daily living, and many beneficiaries live on modest incomes. In 2016, nearly one third (32%) had a functional impairment; one quarter (25%) reported being in fair or poor health; and more than one in five (22%) had five or more chronic conditions, (Figure 1). More than one in seven beneficiaries (15%) were under age 65 and living with a long-term disability, and 12 percent were ages 85 and over. Nearly two million beneficiaries (3%) lived in a long-term care facility. In 2016, half of all people on Medicare had incomes below $26,200 per person and savings below $74,450. Figure 1: Characteristics of the Medicare Population What Medicare CoversMedicare covers many health services, including inpatient and outpatient hospital care, physician services, and prescription drugs (Figure 2). Medicare benefits are organized and paid for in different ways: Figure 2: Medicare Benefit Payments by Type of Service in 2017
Figure 3: Total Medicare Private Health Plan Enrollment, 1999-2018
Benefit Gaps and Supplemental CoverageMedicare provides protection against the costs of many health care services, but traditional Medicare has relatively high deductibles and cost-sharing requirements and places no limit on beneficiaries’ out-of-pocket spending for services covered under Parts A and B. Moreover, traditional Medicare does not pay for some services that are important for older people and people with disabilities, including long-term services and supports, dental services, eyeglasses, and hearing aids. In light of Medicare’s benefit gaps, cost-sharing requirements, and lack of an annual out-of-pocket spending limit, most beneficiaries covered under traditional Medicare have some type of supplemental coverage that helps to cover beneficiaries’ costs and fill the benefit gaps (Figure 4). Figure 4: Distribution of Types of Supplemental Coverage Among Beneficiaries in Traditional Medicare in 2016
In 2018, one-third of all beneficiaries were enrolled in Medicare Advantage plans rather than traditional Medicare, some of whom also have coverage from a former employer/union or Medicaid. Medicare Advantage plans are required to limit beneficiaries’ out-of-pocket spending for in-network services covered under Medicare Parts A and B to no more than $6,700, and may also cover supplemental benefits not covered by Medicare, such as eyeglasses, dental services, and hearing aids. Medicare Beneficiaries’ Out-of-Pocket Health Care SpendingIn 2016, beneficiaries in traditional Medicare and enrolled in both Part A and Part B spent $5,806 out of their own pockets for health care spending, on average (Figure 5). Nearly half (45%) of beneficiaries’ average total spending was for premiums for Medicare and other types of supplemental insurance, and 55 percent was for medical and long-term care services. Figure 5: Average Out-of-Pocket Spending on Services and Premiums by Traditional Medicare Beneficiaries in 2016 Among different types of services, average per capita spending was highest for long-term care facility services, followed by medical providers and supplies, prescription drugs, and dental services. Out-of-pocket spending rises with age among beneficiaries ages 65 and over and is higher for women than men. Not surprisingly, Medicare beneficiaries with poorer self-reported health status spend more than those who rate themselves in better health. Medicare Spending Now and In the FutureIn 2017, Medicare benefit payments totaled $688 billion; 21 percent was for hospital inpatient services, 14 percent for outpatient prescription drugs, and 10 percent for physician services; 30 percent was for payments to Medicare Advantage plans for services covered by Part A and Part B (see Figure 2). Medicare spending is affected by a number of factors, including the number of beneficiaries, how care is delivered, the use of services (including prescription drugs), and health care prices. Both in the aggregate and on a per capita basis, Medicare spending growth has slowed in recent years, but is expected to grow at a faster rate in the next decade than since 2010 (Figure 6). Looking ahead, Medicare spending (net of income from premiums and other offsetting receipts) is projected to grow from $583 billion in 2018 to $1,260 billion in 2028. The aging of the population, growth in Medicare enrollment due to the baby boom generating reaching the age of eligibility, and increases in per capita health care costs are leading to growth in overall Medicare spending. Figure 6: Actual and Projected Average Annual Growth Rates in Medicare and Private Health Insurance Spending, 1990-2027 Rising prescription drug costs are a particular concern in relation to Medicare spending. The average annual growth rate in per beneficiary costs for the Part D prescription drug benefit is projected to be higher in the coming decade (4.6%) than between 2010 and 2017 (2.2%) (Figure 7). This is due in part to projected higher Part D program costs associated with expensive specialty drugs. Figure 7: Actual and Projected Average Annual Growth in Medicare Part D Per Enrollee Spending How Medicare is FinancedMedicare is financed by general revenues (41% in 2017), payroll tax contributions (37%), beneficiary premiums (14%), and other sources (Figure 8). Figure 8: Sources of Medicare Revenue in 2017
Medicare Payment and Delivery System ReformPolicymakers, health care providers, insurers, and researchers continue to debate how best to introduce payment and delivery system reforms into the health care system to tackle rising costs, quality of care, and inefficient spending. Medicare has taken a lead in testing a variety of new models that include financial incentives for providers, such as doctors and hospitals, to work together to lower spending and improve care for patients in traditional Medicare. The goals of these financial incentives generally link a portion of Medicare’s payments for services to “value” as determined by providers’ performance on spending and quality targets. Accountable Care Organizations (ACOs) are one example of a delivery system reform model currently being tested within Medicare. With over 10 million assigned beneficiaries in 2018, ACO models allow groups of providers to accept responsibility for the overall care of Medicare beneficiaries and share in financial savings or losses depending on their performance in meeting spending and care quality targets. Other new models include medical homes, bundled payments (models that combine Medicare payments to multiple providers across a single episode rather than pay for each service separately), and initiatives aimed to reduce hospital readmissions. Many of these Medicare payment models are managed through the Center for Medicare and Medicaid Innovation (CMMI), which was created by the Affordable Care Act (ACA). These models are being evaluated to determine their effect on Medicare spending and the quality of care provided to beneficiaries. The Secretary of Health and Human Services (HHS) is authorized to expand or extend models that demonstrate quality improvement without an increase in spending, or spending reduction without a decline in quality. Looking to the FutureMedicare faces a number of critical issues and challenges, perhaps none greater than providing affordable, quality care to an aging population while keeping the program financially secure for future generations. While Medicare spending is on a slower upward trajectory now than in past decades, total and per capita annual growth rates appear to be edging away from their historically low levels of the past few years. Medicare prescription drug spending is also a growing concern, with the Medicare Trustees projecting a comparatively higher per capita growth rate for Part D in the coming years than in the program’s earlier years due to higher costs associated with expensive specialty drugs. To address the health care financing challenges posed by the aging of the population, a number of changes to Medicare have been proposed, including restructuring Medicare benefits and cost sharing; raising the Medicare eligibility age; shifting Medicare from a defined benefit structure to a “premium support” system; and allowing people under age 65 to buy in to Medicare. As policymakers consider possible changes to Medicare, it will be important to evaluate the potential effect of these changes on total health care spending and Medicare spending, as well as on beneficiaries’ access to quality care and affordable coverage and their out-of-pocket health care costs. Which groups of people are covered by Medicare quizlet?Medicare provides health insurance coverage to people 65 and older and to younger adults with long-term disabilities who have received Social Security Disability Insurance (SSDI) benefits for at least two years, and also to people with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS, or Lou ...
Is Medicare for seniors only?Generally, Medicare is available for people age 65 or older, younger people with disabilities and people with End Stage Renal Disease (permanent kidney failure requiring dialysis or transplant). Medicare has two parts, Part A (Hospital Insurance) and Part B (Medicare Insurance).
What are three groups of people covered by Medicare quizlet?Medicare is the federal program that provides healthcare coverage for three groups of people. These groups are people over the age of 65, disabled persons, and end-stage renal disease patients of any age.
Who receives Medicare quizlet?What is Medicare? Federal program that provides health insurance coverage to people ages 65 and older and younger people with permanent disabilities. The 4 part program covers all those who are eligible regardless of their health status, medical conditions, or incomes.
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