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1 1 (July 8, 2024)

handle is hein.crs/govepvl0001 and id is 1 raw text is: Medicare Overview Updated July 8, 2024 Medicare 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 aged 65 and older, and it was expanded in 1972 to include permanently disabled individuals under the age of 65. The Centers for Medicare and Medicaid Services (CMS) administer the program, but individuals enroll in Medicare through the Social Security Administration. CMS also contracts with private entities to provide certain services, such as claims processing, auditing, and quality oversight. Medicare serves approximately one in five Americans and virtually all of the population aged 65 and older. In 2022, the program covered an estimated 65 million people (57 million aged and 8 million disabled). All beneficiaries are entitled to the same coverage regardless of income or medical history. Funding for Medicare benefits is considered mandatory spending and is not subject to the annual congressional appropriations process. Medkcare Structure Medicare consists of four distinct parts. Parts A, B, and D each cover different services, while Part C provides a private plan alternative for Parts A and B. Together, Parts A and B of Medicare comprise original or traditional Medicare. Part A (Hospital Insurance, or HI) covers inpatient hospital services, skilled nursing care, hospice care, and some home health services. Part B (Supplementary Medical Insurance, or SMI) covers a range of medical services and supplies, including physician, laboratory, outpatient hospital and some home health services, physician-administered drugs, and durable medical equipment. Enrollment in Part B is optional, but most beneficiaries with Part A also enroll in Part B. Part C (Medicare Advantage, or MA) is a private plan option that covers all services under Parts A and B, except hospice. MA plans may offer additional benefits or require lower co-payments or deductibles than original Medicare. Those who enroll in MA must also be enrolled in Parts A and B. About half of Medicare beneficiaries are enrolled in MA. Part D is an optional outpatient prescription drug benefit. Part D is provided through private prescription drug plans (PDPs), which offer only drug coverage, or through Medicare Advantage prescription drug plans (MA-PDs), which offer drug coverage that is integrated with the health care coverage provided under Part C. About three-quarters of eligible Medicare beneficiaries are enrolled in Part D. Medkare Spending Medicare spending is driven by a variety of factors, such as level of enrollment, complexity of medical services, health care inflation, and life expectancy. The Congressional Budget Office (CBO) estimates that total Medicare spending in 2024 will be about $1.052 trillion; of this amount, about $1.041 trillion will be spent on benefits. (See Figure 1.) Figure I. Projected Medicare Benefit Spending by Category, FY2024 Skilled Nursing Facility 3% A &/or B Part A Part B Part C <K PartOD > Hospital Outpatient S ervices Home Health 21% Source: CRS figure based on CBO, June 2024 Medicare Baseline. Notes: Totals may not add to 100% due to rounding. CBO estimates that the federal portion of Medicare spending (after deduction of beneficiary premiums and other offsetting receipts) will be about $867 billion in 2024. This accounts for close to 13% of total federal spending and 3% of GDP. Over the next 10 years, Medicare spending is expected to more than double, driven mainly by increasing enrollment and health care costs. Eigibity and Enrornent Most persons aged 65 or older are automatically entitled to premium-free Part A because they or their spouses paid Medicare payroll taxes for at least 10 years. Persons under 65 who receive cash disability benefits from Social Security for at least 24 months and individuals of any age with end- stage renal disease (ESRD) are also entitled to Medicare Part A. Eligible individuals who are not entitled to premium-free Part A may obtain coverage by paying a monthly premium. All persons entitled to Part A may enroll in Part B by paying a monthly premium of $174.70 in 2024. Some Part B enrollees may pay less due to a hold-harmless provision in the Social Security Act. Beneficiaries with high incomes pay higher premiums, and those with low

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