The Medicare program began in 1965 as an extension of the Social Security entitlement program. It is a national heath care program cover over 40 million seniors age 65 and older. The program is designed to meet the in-patient and out-patient needs of the participants and its rising cost. It is funded primarily by a part of the FICA wage tax employees and employers pay.
In the year that a person turns 65, beginning three months prior and ending three months after, initial enrollment begins. If enrollment dies not occur during that period, a person waits until January 1st of the following year to enroll. This general enrollment period lasts between January and March and the Medicare benefits take effect on July 1st.
When first enrolling into Medicare the hospital benefit program or Part A is obtained premium-free. This pays for all costs associated with in-patient hospitalizations. Part A will pay associated costs, up to a maximum number of days. This includes a hospital stay in a semi-private room, medications associated with the hospitalization only, and even three pints of blood. The three pints of blood are after the initial three pints have been paid for or provided by the insured.
Part B is for medical services received on an out-patient basis. Part B has a monthly premium costs that is determined based on the insured's income. This is an optional program and pays for doctor's office visits and other associated costs. It also pays for blood, again after the first three pints have been paid for by the insured. Premium costs for the program do increase on an annual basis to reflect the rise in medical costs.
The Medicare Modernization Act of 2003 created Part D or the prescription drug benefit program. This program, which is an optional program, provides a way for seniors to meet the rising cost of prescription drugs. The program requires participation in either Part A or Parts A and B. The Act also reformed Part C that is the Medicare Advantage program, which provides a managed care option. Part C requires the insured's participation in both Parts A and B.
Costs not paid for in Parts A or B such as deductibles and co-pays as well as the initial three pints of blood are covered in supplement plans. Private insurers endorsed by Medicare offer Medicare supplements. Each of the 12 letters plans (A through L) pay for some or all of the associated expenses of in-patient or out-patient care.
The growth in Medicare from 4 million in 1965 to over 40 million has placed burdens on the ability to continue to provide this coverage. The baby boomers born between 1946 and 1964 will increase this burden as they age and turn 65. This burden will require new ways to fund or provide this essential entitlement program for all individuals.
The government, as in years past, is working with seniors, interest groups, insurers and others to determine the best course of action. Ideas such as halts in cost of living increases, increased premiums and cost sharing or reduction in benefits are just some of the ideas. At present, inaction may result in the program going bankrupt by the year 2030.