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Summary

Medicare is the nations federal insurance program that pays for covered health care services of qualified beneficiaries. It was established in 1965 under Title XVIII of the Social Security Act as a federal entitlement program 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 Gehrigs disease). In FY2009, the program will cover an estimated 45 million persons (38 million aged and 7 million disabled) at an estimated total cost of about $492 billion, accounting for over 3% of GDP. Medicare is an entitlement program, which means that it is required to pay for services provided to eligible persons, so long as specific criteria are met. The 111th Congress is likely to continue the work of previous Congresses in addressing the rapid rise in Medicare spending, its growing share of GDP, and the inability of Medicares current funding mechanisms to sustain the program over the long term. A combination of factors have contributed to the rapid increase in Medicare spending, including increases in overall medical costs, advances in health care delivery and medical technology, the aging of the population, and longer life spans. In addition, both the shrinking employment base and the impact of the economic downturn on Medicare revenues further exacerbate the issues facing Medicare. The issues confronting the program are not new; nor are the possible solutions likely to get any easier. For a number of years, various reform options have been suggested; however, legislative changes have focused mainly on short-term solutions. Achieving consensus is more difficult for both long-term solutions and Medicares position within the broader context of health reform. This report provides an overview of Medicare and will be updated to reflect any legislative changes.

Related Legislation:
• S.65

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