[TheMercenary]

A nice little summary of how Medicare is saving us soooo much money and is soooo efficent.

CHAPTER 7 - MEDICARE

Content Last Updated: 6/17/2009 9:28:21 AM
Graphics Last Updated: 6/15/2009 9:01:51 AM
Charts and graphs for this chapter are listed in the right column of the page.


Originally written by Gail Wilensky, Ph.D.,
Project HOPE, former chairman of the Medicare Payment Advisory Commission and former administrator of the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services)
This chapter was made possible by the Robert Wood Johnson Foundation.


Suggest Edits


FAST FACTS

Medicare is a federal program that covered 44.1 million people in calendar year 2007 -- 36.9 million aged 65 and over and 7.2 million who met Medicare’s definition of disability. 1
The first of the baby boomers will reach age 65 – the Medicare eligibility age for non-disabled people – in 2011. By 2030, when the youngest boomer turns 65, there are expected to be 78 million people on Medicare.2
Annual expenditures for Medicare were $436 billion in 2007 and are expected to rise to $887 billion in 2018.3
Financial assets of the Hospital Insurance Trust Fund that pays for Part A of Medicare are projected to be exhausted by 2019.4
To finance Part A’s expected needs through 2083, the Medicare payroll tax would need to be increased immediately by 122 percent, program outlays would need to be reduced by 51 percent immediately, or some combination of the two, according to the program’s trustees.5
The American Recovery and Reinvestment Act of 2009 includes Medicare incentive payments to encourage physicians and hospitals to “meaningfully use” electronic health records. The incentives phase out over six years, followed by penalties for non-adopters.6


Suggest Edits

BACKGROUND

Medicare is a federal program that helps pay medical bills for people age 65 and older, and a relatively small group of people who are judged to be severely and permanently disabled.

The program was signed into law in 1965 but has since been expanded in terms of services and populations covered. The most important of these expansions were the decision to cover people with end-stage renal disease (ESRD) in 1972 and the coverage of outpatient prescription drugs enacted in 2003.

At age 65, a person automatically becomes eligible for Medicare if he or she is a U.S. citizen or a legal resident (green card holder), and has lived in the U.S. for at least five years in a row.7 The eligibility rules for people with disabilities are more complicated but generally, if a person qualifies for cash benefits under Social Security Disability Insurance (SSDI), they can qualify for Medicare after a two-year waiting period.8 Special rules apply for those with ESRD or ALS, also known as Lou Gehrig’s disease.

As with Social Security, eligibility for Medicare does not depend on income. Also like Social Security, much of Medicare is funded on a “pay-as-you-go basis,” which means it depends primarily on today’s working population to fund the expenses of today’s beneficiaries.





Suggest Edits



Medicare covers benefits that fall into four parts. (Click here to see text box with details on what's covered by each part and how much beneficiaries have to pay for premiums and services under each.)

Part A - Hospital Insurance
Part A, known as the Hospital Insurance (or HI) program, covers inpatient hospital care, skilled nursing care up to 100 days after a hospitalization, home health and hospice care. It is funded by a portion of the wage tax – 2.9 percent, with employers and employees each paying 1.45 percent. Beneficiaries pay a deductible ($1,068 for each “spell of illness” in 2009), and substantial copayments for extended inpatient hospital or skilled nursing facility stays. If they have worked in the U.S. for 10 years or more (40 quarters of Medicare-covered employment), beneficiaries pay no Part A premium. (See text box, “What Medicare Covers,” for Part A premiums charged to those who have worked fewer than 40 quarters of Medicare-covered employment.)

Part B - Supplementary Medical Insurance
Part B, known as Supplementary Medical Insurance (or SMI), covers physician services, outpatient care and home health care after 100 visits. It is funded partly by premiums, which accounted for 24.8 percent of the Part B income in 2007.9 The rest comes from general revenue. The monthly premium for most beneficiaries is $96.40 in 2009. Some with higher incomes pay higher, income-related premiums; some with low incomes and assets pay no premiums. Most face a Part B deductible of $135 in 2009. In 2009, premiums for the wealthiest beneficiaries will cover 80 percent of their Part B costs.10

Part C - Medicare Advantage
Part C replaces the benefits from parts A, B and D by enrollment in a private plan called a Medicare Advantage (or MA) plan, which includes at least the benefits associated with traditional Medicare. In 2008, around 10 million beneficiaries were enrolled in MA plans.11 (See the Glossary for more.)

Part D - Prescription Drug Benefit
Part D is the outpatient prescription drug benefit which took effect in 2006. The benefit is provided by free-standing private drug plans (except for those beneficiaries who are enrolled in Medicare Advantage plans with a prescription benefit). It is funded by general revenue, contributions from the states and premium payments from beneficiaries (an amount that made up 7.9 percent of Part D income in 2007).12 Each plan sets its own premium; the national average in 2009 is $30.36 per month. The deductible cannot be more than $295.

There are also some important benefits that Medicare does not cover. These include custodial long-term care, dental services and most vision and hearing services.

For a detailed description of what Medicare covers and how it is financed, go to the websites for the Medicare Rights Center (www.medicarerights.org) and the official U.S. government website for people with Medicare (www.medicare.gov).

Assuring adequate funding for both Social Security and Medicare faces the problem that, with the aging of the population, there will be fewer workers supporting each retiree. (See chart, “Historical and Projected Number of Medicare Beneficiaries and Number of Workers Per Beneficiary.”)

More:

http://www.allhealth.org/sourcebookcontent.asp?CHID=70