CRS Issue Statement on Medicare Reform

Patricia A. Davis, Coordinator
Specialist in Health Care Financing

Medicare is the nation's federal insurance program that pays for covered health services for most persons 65 years and older and for most permanently disabled individuals under the age of 65 years. It consists of four parts, each responsible for paying for different benefits, subject to different eligibility criteria and financing mechanisms.1 The rising cost of health care, the impact of the aging baby boomer generation, and declining revenues in a weakened economy continue to challenge the program's ability to provide quality and effective health services to its 45 million beneficiaries in a financially sustainable manner. 

Similar to other purchases of health care, Medicare spending has been growing much faster than the general economy, and concerns about Medicare's long-term sustainability continue to intensify. Studies by the Congressional Budget Office, the Medicare Payment Advisory Commission and others attribute most of the cost growth to the development and increasing utilization of new treatments and other forms of medical technology. The Medicare trustees estimate that if Medicare benefits and payment systems remain as they are today, the Hospital Insurance trust fund will become insolvent by 2017. These financial pressures are likely to result in Congress considering changes to control Medicare expenditures, such as reducing provider payments or program benefits, and/or to raise additional revenues, such as through increasing taxes or beneficiary cost-sharing.


Date of Report: January 15, 2010
Number of Pages: 4
Order Number: IS40347
Price: $7.95

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