Medicare Health Article

Definition

Medicare is a national health insurance program created and administered by the federal government in the United States to address the medical needs of older American citizens. Medicare is available to U.S. citizens 65 years of age and older and some people with disabilities under age 65.

Description

Medicare is the largest health insurance program in the United States. The program was created as part of the Social Security Act in 1965 and was put into effect in 1966. At the end of 1966, Medicare served approximately 3.9 million individuals; today it serves about 39 million people.

In 1973, the Medicare program was expanded to include people who have permanent kidney failure and need dialysis or transplants and people under the age of 65 who have specific types of disabilities. Medicare was originally administered by the Social Security Administration, but in 1977, the program was transferred to the Health Care Financing Administration (HCFA), which is a part of the United States Department of Health and Human Services (DHHS). HCFA also administers Medicaid and the State Children's Heath Insurance Program.

Medicare is an entitlement program similar to Social Security and is not based on financial need. Medicare benefits are available to all American citizens over the age of 65 because they or their spouses have paid Social Security taxes through their working years. Since Medicare is a federal program, the rules for eligibility remain constant throughout the nation and coverage remains constant regardless of where the person receives treatment in the United States.

Medicare benefits are divided into two different types referred to as Part A or B. Medicare Part A is hospital insurance and it provides basic coverage for hospital stays and post-hospital nursing facilities, home health care, and hospice care for terminally ill patients. Most people automatically receive Part A when they turn 65 and do not have to pay a premium because they or their spouse paid Medicare taxes while they were working.

Medicare Part B is medical insurance. It covers most fees associated with basic doctor visits and laboratory testing. It also pays for some outpatient medical services such as medical equipment, supplies, and home health care and physical therapy. However, these services and supplies are only covered by Part B when medically necessary and prescribed by a doctor. Enrollment in Part B is optional and the Medicare recipient pays a premium of approximately $50 per month for these added benefits. Not every person who receives Medicare Part A enrolls in Part B.

Although Medicare provides fairly broad coverage of medical treatment, neither Part A or B pays for the cost of prescription drugs or other medications.

Medicare is funded solely by the federal government. States do not make matching contributions to the Medicare fund. Social Security contributions, monthly premiums paid by program participants, and general government revenues generate the money used to support the Medicare program. Insurance coverage provided by Medicare is similar to that provided by private health insurance. Medicare usually pays 50–80% of the medical bill, while the recipient pays the remaining balance for services provided.