Medicare

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Obamacare glossary • Effect of Obamacare • Centers for Medicare and Medicaid Services

Medicare is the federal program that provides health insurance for people 65 or older, as well as certain younger people with disabilities and people with permanent kidney failure requiring dialysis or a transplant, sometimes called end-stage renal disease (ESRD), legally considered a disability. The program was established by Title XVIII of the Social Security Act, which President Lyndon Johnson signed into law on July 30, 1965. The program consists of four parts (Parts A through D), covering everything from hospitalization, doctor visits and special services, medical devices, and prescription drugs, and is administered by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services. In 2012, Medicare served nearly 50 million beneficiaries, mostly seniors, and in 2009 total federal Medicare spending amounted to $471.2 billion.[1][2][3][4]

HIGHLIGHTS
  • Former President Harry Truman received the first Medicare card.
  • Some individuals can be dual eligible for both Medicare and Medicaid. By 2011, nearly 10 million Medicare beneficiaries were also receiving Medicaid.
  • The Affordable Care Act of 2010 closed the "donut hole" of Medicare prescription drug coverage by covering part of the costs for beneficiary drug spending amounting between $2,250 and $5,100 per year.

    • History

    Lyndon Johnson signing Medicare bill, with Harry Truman, July 30, 1965

    In the 1960s, several labor unions, such as the United Auto Workers and the AFL-CIO, formed the National Council of Senior Citizens to advocate for a healthcare program for the elderly. The cause was endorsed by President John Kennedy and later by President Johnson, who received a popular mandate for his Great Society program after winning a landslide election in 1964. He then worked with Representative Wilbur Mills, chairman of the Ways and Means Committee, to pass Medicare legislation. Initially, there were several plans proposed by various congressmen. Rep. Mills grouped three of them into a single bill, composed of Medicare Part A (hospital insurance), Medicare Part B (outpatient insurance), and Medicaid (medical aid to the needy).[5][6][7]

    The Medicare insurance program was designed according to the fee-for-service model, in which the government reimbursed hospitals and doctors for the "usual, customary, and reasonable" fees they charged for each service, and the program did not manage any hospitals or provider networks. The reimbursement process generally functioned through "fiscal intermediaries," private companies that wrote checks on behalf of the government. The Kaiser Foundation Health Plan had testified before Congress in an effort to allow managed care into the program, but the influence of the American Medical Association, which preferred fee-for-service plans, ensured that managed care was initially left out of the plan.[8]

    When the Medicare program began in 1966, 19 million people enrolled. Former President Harry Truman received the first Medicare card.[9][10]

    President Richard Nixon signed Public Law 92-603 on October 30, 1972, which amended Title XVIII of the Social Security Act. The law expanded Medicare coverage to disabled people who had been receiving Social Security benefits for at least two years and to people with serious kidney disease, which the law legally classified as a disability.[11]

    This expansion of eligibility contributed to Medicare's increasing costs. In 1967, Medicare's yearly expenses were $4.2 billion. By 1973, they had risen to $9.3 billion. In 2002, the average yearly cost to cover an elderly beneficiary was $6,002, but the average yearly cost to cover a person with serious kidney disease was $41,696.[12]

    Administration

    The U.S. Department of Health and Human Services building

    Medicare was originally administered by the Social Security Administration (SSA), which was a part of the Department of Health, Education, and Welfare (renamed the Department of Health and Human Services in 1980). In 1977, the program was transferred from the SSA to the Health Care Financing Administration, later renamed the Centers for Medicare and Medicaid Services (CMS). The Patient Protection and Affordable Care Act of 2010, also known as Obamacare, established a new government agency called the Independent Payment Advisory Board (IPAB) with power over the Medicare program. The IBAP was modeled on a proposal by former senator Tom Daschle, who had modeled it after the Federal Reserve Board. The IPAB's decisions were binding and would require a three-fifths supermajority from Congress in order to be overturned. The Department of Health and Human Services would automatically implement its recommendations unless overridden by Congress. However, the law stipulated that the IPAB could not ration healthcare, raise premiums, or restrict eligibility.[13][14]

    Part A

    Part A, which was universal for anyone receiving Social Security benefits, covered hospitalization. The recipient paid a deductible about equal to the first day of hospitalization, and Medicare then paid for the next 60 days. After 60 days, Medicare then paid part of the costs for up to 150 days of the hospitalization; after 150 days, Medicare did not pay any costs. Medicare also paid the costs of 20 days in a skilled nursing facility after a hospital stay and then part of the costs for up to 100 days. Medicare did not cover long-term care in a nursing home. Part A was funded by payroll taxes on current workers and their employers. By 2015, 55 million people were enrolled in Part A.[15]

    Part B

    Part B covered physician and outpatient services, such as doctor visits, X-rays, and laboratory tests, after the beneficiary met a small yearly deductible. About 25 percent of the funds for Part B came from premiums paid by beneficiaries, initially with all beneficiaries paying the same premium. The rest of Part B was funded out of the federal government's general revenues. Enrollment in Part B was voluntary, but most seniors elected coverage. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 introduced changes to Medicare Part B by charging higher premiums to higher-income beneficiaries (individuals with incomes over $85,000 and couples with incomes over $170,000). By 2015, 51 million people were enrolled in Part B.[15]

    Part C

    President Bill Clinton signing the Balanced Budget Act on August 5, 1997.

    President Clinton signed the Balanced Budget Act on August 5, 1997. The law instituted important changes to Medicare. Previously, the Tax Equity and Fiscal Responsibility Act of 1982 had given Medicare beneficiaries the option of enrolling in Medicare through private managed care plans rather than through the traditional fee-for-service Medicare plan. The Balanced Budget Act of 1997 expanded and formalized this option, later known as Medicare Part C or Medicare Advantage. Under Part C, the federal government paid the private plans for each beneficiary accepted, amounting to 95 percent of the Medicare average per capita cost. The insurance plans were not allowed to choose which individuals could enroll, but they could choose which geographic areas to serve. They were required to offer all traditional Medicare benefits but could also offer additional benefits beyond traditional Medicare, such as vision and dental benefits.

    By 2015, about 15 million Medicare beneficiaries—30 percent of all Medicare beneficiaries—were enrolled in Medicare Advantage plans. Studies showed that Medicare Advantage health maintenance organizations (HMOs) (but not other types of Medicare Advantage plans) tended to perform better than traditional Medicare in providing preventive services and controlling overall costs; however, beneficiaries perceived traditional Medicare more favorably. Because of these perceptions, older and less healthy recipients have tended to enroll in traditional Medicare, so the private Medicare Advantage plans may have actually received higher payments than they needed for their relatively healthy enrollees. To account for this, the Affordable Care Act of 2010 cut funding to private insurance companies that contract with the federal government to offer Medicare Advantage plans.[15][16][17]

    Part D

    Medicare did not originally cover any prescription drug costs. The price and importance of pharmaceutical drugs increased sharply over the decades since Medicare's original passage, and by 2004 the average Medicare beneficiary was spending over $1,000 out-of-pocket each year on prescription drugs. When President George W. Bush was elected in 2000, he promised to provide prescription drug coverage to seniors. Congress designed a program, endorsed by AARP, that functioned through private insurers.

    President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act on December 8, 2003, and it took effect on January 1, 2006. The law, sometimes known as Medicare Part D, established four successive tiers of coverage:

    • Tier 1: The patient paid the first $250 per year in prescription drug costs ("deductible").
    • Tier 2: Prescription drug costs between $250 and $2,250 per year were 75 percent paid for by Medicare and 25 percent paid for by the patient.
    • Tier 3: After costs hit $2,250 for the year, the patient was responsible for 100 percent of costs (this was known as the "donut hole" of Medicare coverage—a period of no coverage between two coverage levels).
    • Tier 4: After costs hit $5,100 for the year, Medicare would once again help cover 95 percent of costs.[18]

    Enrollment in the coverage was voluntary. Medicare beneficiaries who chose to enroll could do so in three ways: by purchasing separate drug coverage, if they were already enrolled in the government plan for Parts A or B; by enrolling in a private Medicare plan; or through their former employer's retirement benefits program. Beneficiaries paid premiums to enroll in the program, which were higher for those with a higher income.

    At the time of its passage, the program was officially estimated to cost $400 billion for the first 10 years of operation. However, an actuary from the executive branch estimated the true cost to be $530 billion, yet kept his estimates secret from Congress until months after the bill was signed. But by 2014, the Congressional Budget Office concluded that Medicare Part D spending had proved lower than either estimate.[19][20] [21]

    The Affordable Care Act of 2010 closed the "donut hole" of Medicare prescription drug coverage. The Affordable Care Act covered part of the costs for drug spending in this range and also required pharmaceutical companies to provide discounts to Medicare beneficiaries. By 2014, about 37 million Medicare beneficiaries were enrolled in the prescription drug program.[22]

    Dual eligibility with Medicaid

    See also: Medicaid and Medicare dual eligibility

    Medicare and Medicaid are separate but related programs. Title XIX of the Social Security Act, which was signed at the time as Title XVIII, established Medicaid. Medicaid was primarily created to offer healthcare coverage to children and pregnant women receiving Aid to Families with Dependent Children; however, older adults and (after the 1972 amendment) people with disabilities could be "dual-eligible" for both programs. Since Medicaid covered nursing home care while Medicare did not, Medicaid was an attractive option for many elderly people. By 2011, nearly 10 million Medicare beneficiaries were also receiving Medicaid. These dual eligibles accounted for 39 percent of Medicaid spending.[15][23]

    In some states, elderly people must have assets below $2,000 for an individual or $3,000 for a couple in order to qualify for Medicaid. To meet the eligibility requirements, some people dedicate the monetary difference between their assets and the eligibility limit elsewhere so that it is inaccessible, such as making a monthly payment toward hospital debt or placing one's home into a trust. This is known as "spending down" one's assets.[23][24]

    Debate

    Critics have pointed out that elderly people often own more assets than younger people, and that Medicare should therefore be a means-tested program in order to avoid spending tax dollars on wealthy seniors. Medicare has also been criticized for not covering nursing home care, home healthcare, or hospital stays over 150 days, many of which are needed by elderly people suffering from debilitating illness.[25][26]

    Supporters argue that Medicare is a popular program among senior citizens and provides good, affordable coverage. Medicare has been praised for allowing seniors to have insurance no matter where they live. Many seniors also live on a fixed income, and Medicare allows them to spend this income on goods and services other than healthcare.[27]

    Statistics

    The Henry J. Kaiser Family Foundation is an organization that has devoted itself to tracking and reporting various statistics related to healthcare in the United States. Below are some Medicare figures collected by the Kaiser Foundation.

    Spending, 2009

    Medicare accounted for 14 percent of the federal budget in 2013. In 2009, the most recent year for which state spending data is available, total federal Medicare spending amounted to $471.2 billion. Between 1991 and 2009, Medicare's average annual rate of growth in the country was 8 percent.[28][29][30][31]

    To view this data for each of the fifty states and the District of Columbia across the country, click "Show" on the bar blow. Click the column headings to sort the data.

    Spending by service, 2011

    The Kaiser Foundation released a report that broke down Medicare spending according to different types of service during 2011. Nearly 30 percent of all Medicare spending in the country went toward hospital inpatient services. Post-acute spending (nursing homes or other long-term care) and spending classified as "other" each took up nearly 20 percent of Medicare's budget.

    To view this data for each of the fifty states and the District of Columbia across the country, click "Show" on the bar blow. Click the column headings to sort the data.

    Beneficiaries

    In 2012, there were approximately 49.4 million Medicare beneficiaries in the United States, which was equal to about 16 percent of the country's total population. About 81 percent of Medicare beneficiaries were eligible based on age, while the remaining 19 percent were eligible because of a disability.

    To view this data for each of the fifty states and the District of Columbia across the country, click "Show" on the bar blow. Click the column headings to sort the data.

    Recent news

    The link below is to the most recent stories in a Google news search for the terms Medicare. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

    Medicare - Google News

    See also

    External links

    Footnotes

    1. ↑ Medicare.gov, "What is Medicare?" accessed July 1, 2015
    2. ↑ Medical News today, "What is Medicare / Medicaid?" accessed July 1, 2015
    3. ↑ The Henry J. Kaiser Family Foundation, "Total Medicare Spending by State (in millions)," accessed July 17, 2015
    4. ↑ The Henry J. Kaiser Family Foundation, "Total Number of Medicare Beneficiaries," accessed January 5, 2015
    5. ↑ Thomas.gov, "Medicare From the Start to Today"
    6. ↑ The New Yorker, "How Medicare Was Made," February 15, 2015
    7. ↑ Ball, R. (1995). "What the Medicare Architects Had in Mind." Health Affairs 14(4)
    8. ↑ Eldridge, G. (2007) The Medicaid Evolution: The Political Economy of Medicaid Federalism. (page 95)
    9. ↑ Center for Medicare and Medicaid Services, "Brief Summaries of Medicare and Medicaid," November 2009
    10. ↑ Social Security Administration, "Medicare is Signed Into Law," accessed December 23, 2015
    11. ↑ Nixon, Richard. "Statement on Signing the Social Security Amendments of 1972," October 30, 1972
    12. ↑ Barr, D. (2010) Introduction to U.S. Health Policy. Baltimore, MD: Johns Hopkins University Press. (pages 139-140)
    13. ↑ Social Security Administration, "Administering Social Security: Challenges Yesterday and Today," 2010
    14. ↑ Congressional Research Service, "The Independent Payment Advisory Board," April 17, 2013
    15. ↑ 15.0 15.1 15.2 15.3 The Henry J. Kaiser Family Foundation, "A Primer on Medicare," March 20, 2015
    16. ↑ The Henry J. Kaiser Family Foundation, "Medicare Spending and Financing: A Primer," February 2011
    17. ↑ National Bureau of Economic Research, "The Consequences of Risk Adjustment in the Medicare Advantage Program"
    18. ↑ Barr, D. (2011). Introduction to U.S. Health Policy. John Hopkins University Press: Baltimore, MD. (pages 230-236)
    19. ↑ New York Times Economix Blog, "Medicare Part D: Republican Budget-Busting," November 19, 2013
    20. ↑ Congressional Budget Office, "Competition and the Cost of Medicare's Prescription Drug Program," July 30, 2014
    21. ↑ Washington Examiner, "Medicare Part D Saves Money and Lives," May 26, 2015
    22. ↑ The Henry J. Kaiser Family Foundation, "The Medicare Prescription Drug Benefit Fact Sheet," September 19, 2014
    23. ↑ 23.0 23.1 The Henry J. Kaiser Family Foundation, "Dual Eligibles: Medicaid's Role for Low-Income Medicare Beneficiaries," May 2011
    24. ↑ U.S. News and World Report, "Some Dos and Don'ts of a Medicaid Spend-Down," April 14, 2015
    25. ↑ Twight, C. (1997) "Medicare's Origin: The Economics and Politics of Dependency." Cato Journal. (page 321)
    26. ↑ Twight, C. (1997) "Medicare's Origin: The Economics and Politics of Dependency." Cato Journal. (page 321)
    27. ↑ Social Work Helper, "The Good, the Bad, and the Ugly of Medicare," March 19, 2013
    28. ↑ The Henry J. Kaiser Family Foundation, "Total Medicare Spending by State (in millions)," accessed July 17, 2015
    29. ↑ The Henry J. Kaiser Family Foundation, "Average Annual Percent Growth in Medicare Spending, by State," accessed July 17, 2015
    30. ↑ The Henry J. Kaiser Family Foundation, "Medicare Spending Per Enrollee, by State," accessed July 17, 2015
    31. ↑ The Henry J. Kaiser Family Foundation, "Average Annual Percent Growth in Medicare Spending per Enrollee, by State," accessed July 17, 2015
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