Medicare E

Medicare E

Introduction

Medicare is a federal health insurance program administered by the United States government for the elderly and individuals living with a permanent disability. In 2005, Medicare was a source of health insurance coverage for 42.4 million Americans: 35.4 million elderly and 7 million nonelderly people with permanent disabilities. Medicare was originally established in 1965 as Title XVIII of the Social Security Act, designated “Health Insurance for the Aged and Disabled.”

Discussion

The program serves all eligible beneficiaries regardless of income or medical history. The Medicare program plays a vital role in ensuring the health of beneficiaries and the elderly population by covering critical healthcare services, including a newly implemented prescription drug benefit. The program is pivotal to the U.S. healthcare system and integral to the global healthcare market. Medicare accounts for 14 percent of the total U.S. federal budget and is the largest payer for health services in the world (Biles, Dallek and Nicholas, 2004).

Medicare is a federally legislated program that provides low-cost hospitalization and medical insurance primarily for American seniors over the age of 65, who currently account for about one third of all health care dollars spent in the United States—more than $300 billion annually. Although a presidential committee considered creating a health insurance program for the elderly as early as 1934, it was not until 1965 that President Lyndon Johnson signed Medicare into law as part of the Social Security Act (Biles, Dallek and Nicholas, 2004). Medicaid, a health safety net program for low-income Americans, was enacted the same year. Initially, both programs were the responsibility of the Social Security Administration. As the programs expanded and became more complex, the Health Care Financing Administration (HCFA) was created in 1977 to effectively coordinate and manage them. Further growth of the programs prompted the restructuring of HCFA in 2001, which was renamed the Centers for Medicare and Medicaid Services. This organization has three general divisions. First, the Center for Medicare Management focuses on traditional Medicare programs and government contracts with health care organizations. It sets up Medicare policies, determines reimbursement rates for service providers, and manages Medicare paperwork. Second, the Center for Beneficiary Choices codifies and regulates supplemental programs that provide coverage for services that traditional Medicare plans do not cover. Third, the Center for Medicaid and State Operations coordinates the Medicaid program with state governments (U.S. Department of Health and Human Services, 2004).

In 2004, Medicare served approximately 42 million Americans, of which 35.4 million beneficiaries were people over the age of 65 who either paid into Medicare throughout their working lives or enrolled by paying an extra premium. Another 6.3 million beneficiaries were individuals who required dialysis due to end-stage renal disease and low-income people with disabilities who had received Social Security disability benefits for 2 years. In the fiscal year 2004, Medicare benefit payments totaled $295 billion (U.S. Department of Health and Human Services, 2004), accounting for 17% of the nation's total health spending, or 2.8% of the gross domestic product. It is the second largest nondefense program ...