Medicare Primer

Patricia A. Davis, Coordinator
Specialist in Health Care Financing

Medicare is a federal insurance program that pays for covered health care services of qualified beneficiaries. It was established in 1965 under Title XVIII of the Social Security Act as a federal entitlement program to provide health insurance to individuals 65 and older, and has been expanded over the years to include permanently disabled individuals under 65. Medicare, which consists of four parts (A-D), covers hospitalizations, physician services, prescription drugs, skilled nursing facility care, home health visits, and hospice care, among other services.

Generally, individuals are eligible for Medicare if they or their spouse worked for at least 40 quarters in Medicare-covered employment, are 65 years old, and are a citizen or permanent resident of the United States. Individuals may also qualify for coverage if they are a younger person with a permanent disability, have End-Stage Renal disease (permanent kidney failure requiring dialysis or transplant), or have amyotrophic lateral sclerosis (ALS, Lou Gehrig's disease).

In FY2010, the program will cover an estimated 47 million persons (39 million aged and 8 million disabled) at an estimated total cost of about $521 billion, accounting for approximately 3.6% of GDP. Medicare is an entitlement program, which means that it is required to pay for services provided to eligible persons so long as specific criteria are met.

Since 1965, the Medicare program has undergone considerable changes. Most recently, the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (HCERA, P.L. 111-152), signed into law on March 23, 2010, and March 30, 2010, respectively, made numerous changes to the Medicare program that modify provider reimbursements, provide incentives to increase the quality and efficiency of care, and enhance certain Medicare benefits.

Having passed health reform legislation in March 2010, the remaining months of the 111th Congress may be partly spent working on addressing Medicare physician payment issues and on identifying and making any necessary technical fixes to the March legislation. Over the long term, Congress' focus will include monitoring the implementation and effects of payment and program changes made by the new health care reform laws.


Date of Report: July 1, 2010
Number of Pages: 27
Order Number: R40425
Price: $29.95

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