Patricia A. Davis, Coordinator Specialist in Health Care Financing
Scott R. Talaga, Coordinator Analyst in Health Care Financing
Cliff Binder Analyst in Health Care Financing
Jim Hahn Specialist in Health Care Financing
Suzanne M. Kirchhoff Analyst in Health Care Financing
Paulette C. Morgan Specialist in Health Care Financing
Sibyl Tilson Specialist in Health Care Financing
is a federal program that pays for covered health care services of qualified beneficiaries.
It was established in 1965 under Title XVIII of the Social Security Act 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).
The program is administered by the Centers for Medicare & Medicaid Services
(CMS), and by private entities that contract with CMS to provide claims
processing, auditing, and quality oversight services.
In FY2013, the program will cover approximately 52 million persons (43 million
aged and 9 million disabled) at a total cost of about $598 billion.
Spending under the program (except for a portion of administrative costs)
is considered mandatory spending and is not subject to the appropriations
process. Services provided under Parts A and B (also referred to as “traditional Medicare”)
are generally paid directly by the government on a “fee-for-service” basis,
using different prospective payment systems or fee schedules. Under Parts
C and D, private insurers are paid a monthly “capitated” amount to provide
enrollees with at least a minimum standard benefit. Medicare is required
to pay for all covered services provided to eligible persons, so long as specific
criteria are met.
Since 1965, the Medicare program has undergone considerable change. For
example, during the 111th Congress,
the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 and P.L. 111- 152)
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. However, in the absence of
further congressional action, the Medicare program is expected to be
unsustainable in the long run. The Hospital Insurance (Part A) trust fund has
been estimated to become insolvent in 2024. Additionally, although the
Supplementary Medical Insurance (Parts B and D) trust fund is financed in
large part through federal general revenues and cannot become insolvent,
associated spending growth is expected to put increasing strains on the country’s
competing priorities. As such, Medicare is expected to be a high-priority issue
in the 113th Congress, and Congress may consider
a variety of Medicare reform options ranging from further modifications of
provider payment mechanisms to redesigning the entire program.
Date of Report: February 28, 2013
Number of Pages: 37 Order Number: R40425 Price: $29.95
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