A Reminder of How Medicare Works in Three Weekly Installments
The Kaiser Family Foundation has a recent report “Medicare a Primer 2010,” which explains the Medicare program in terms that lay people can understand. It highlights key elements of the Medicare program, which now provides health coverage to 47 million people (people age 65 and older and younger adults with permanent disabilities.) Medicare is an estimated 12 percent of the federal budget and 20 percent of total national health expenditures. It is often a significant part of discussions about how to moderate the growth of both federal spending and health care spending in the U.S. The Kaiser Report looks at the characteristics of the Medicare population, what benefits are covered, how much people with Medicare pay for their benefits and the program’s overall costs and future financing challenges.
This short article highlights (1) What is Medicare?, (2) Who is Eligible? and (3) Medicare’s Future Financing Challenges.
WHAT IS MEDICARE? Taken from page 1 of the Kaiser Family Foundation “Medicare a Primer 2010.”
Source: Kaiser Family Foundation (February 2010)
Read the primer: http://www.kff.org/medicare/7615.cfm
WHAT IS MEDICARE?
Medicare is the nation’s health insurance program for Americans age 65 and older, and for younger adults with permanent disabilities.
Established in 1965 under Title XVIII of the Social Security Act, Medicare was initially established to provide health insurance to individuals age 65 and older, regardless of income or medical history. The program was expanded in 1972 to include individuals under age 65 with permanent disabilities receiving Social Security Disability Insurance payments and people suffering from end-stage renal disease (ESRD). In 2001, Medicare eligibility expanded further to cover people with amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease). As of 2010, 47 million people rely on Medicare for their health insurance coverage: 39 million people age 65 and over and 8 million people under age 65 with disabilities.
Medicare consists of four parts, each covering different benefits.
PART A, also known as the Hospital Insurance (HI) program, covers inpatient hospital services, skilled nursing facility, home health, and hospice care. Part A is funded by a tax of 2.9 percent of earnings paid by employers and workers (1.45 percent each). In 2009, Part A accounted for approximately 36 percent of total Medicare benefit spending. An estimated 45.6 million people were enrolled in Part A in 2009.
PART B, the Supplementary Medical Insurance (SMI) program, helps pay for physician, outpatient, home health, and preventive services. Part B is funded by general revenues and beneficiary premiums ($110.50 per month in 2010; $96.40 per month for beneficiaries held harmless from the premium increase. In 2009, Part B accounted for 27 percent of total benefit spending. Medicare beneficiaries who have higher annual incomes (over $85,000 per individual; $170,000 per couple in 2010) pay a higher, income-related monthly Part B premium, ranging from $154.70 to $353.60 in 2010 depending on income. Part B is voluntary; some people age 65 and older (such as those with employer sponsored health coverage) delay enrollment until they retire. An estimated 42.4 million people were enrolled in Part B in 2009.
PART C, also known as the Medicare Advantage program, allows beneficiaries to enroll in a private plan, such as a health maintenance organization (HMO), preferred provider organization (PPO), or private fee-for-service (PFFS) plan. These plans receive payments from Medicare to provide Medicare-covered benefits, including hospital and physician services, and in most cases, prescription drug benefits. Part C is not separately financed, and accounted for 23 percent of benefit spending in 2009. As of February 2010, 11.4 million beneficiaries are enrolled in Medicare Advantage plans.
PART D is the outpatient prescription drug benefit, delivered through private plans that contract with Medicare; either stand-alone prescription drug plans (PDPs) or Medicare Advantage prescription drug (MAPD) plans. Authorized by the Medicare Modernization Act of 2003 (MMA) and launched in 2006, Part D plans are required to provide a “standard” benefit (or one that is equivalent) and may provide enhanced benefits. Individuals with modest income and assets are eligible for additional assistance with premiums and cost-sharing amounts. Part D is funded by general revenues, beneficiary premiums, and state payments, and accounted for 10 percent of benefit spending in 2009. As of February 2010, 27.6 million beneficiaries are enrolled in a Part D plan, 17.7 million of whom are enrolled in stand-alone PDPs.
Stayed tuned for part 2 WHO IS ELIGIBLE?
Coming Friday March 12th.