their delivery systems to become less costly and more efficient. physician assistants and advanced registered nurse practitioners may begin assuming more responsibilities that traditionally fell to doctors, but do not necessarily require the advanced training and skill of a physician. legislation and reform 1960: pl 86-778 social security amendments of 1960 (kerr-mills aid) 1965: pl 89-97 social security act of 1965, establishing medicare benefits 1980: medicare secondary payer act of 1980, prescription drugs coverage added 1988: pl 100-360 medicare catastrophic coverage act of 1988 1989: medicare catastrophic coverage repeal act of 1989 1997: pl 105-33 balanced budget act of 1997 2003: pl 108-173 medicare prescription drug, improvement, and modernization act 2010: patient protection and affordable care act and health care and education reconciliation act of 2010 2013: sequestration effects on medicare due to budget control act of 2011 2015: extensive changes to medicare, primarily to the sgr provisions of the balanced budget act of 1997 as part of the medicare access and chip reauthorization act (macra) 2016: changes to the social security "hold harmless" laws as they affect part b premiums based on the bipartisan budget act of 2015 2022: inflation reduction act included medicare negotiation provisions, allowing negotiation of prescription drug prices beginning in 2026 in 1977, the health care financing administration (hcfa) was established as a federal agency responsible for the administration of medicare and medicaid. this would be renamed to centers for medicare & medicaid services (cms) in 2001. by 1983, the diagnosis-related group (drg) replaced pay for service reimbursements to hospitals for medicare patients. president bill clinton attempted an overhaul of medicare through his health care reform plan in 1993–1994 but was unable to get the legislation passed by congress. in 2003 congress passed the medicare prescription drug, improvement, and modernization act, which president george w. bush signed into law on december 8, 2003. part of this legislation included filling gaps in prescription-drug coverage left by the medicare secondary payer act that was enacted in 1980. the 2003 bill strengthened the workers' compensation medicare set-aside program (wcmsa) that is monitored and administered by cms. on august 1, 2007, the us house of representatives voted to reduce payments to medicare advantage providers in order to pay for expanded coverage of children's health under the schip program. as of 2008, medicare advantage plans cost, on average, 13 percent more per person insured for like beneficiaries than direct payment plans. many health economists have concluded that payments to medicare advantage providers have been excessive. the senate, after heavy lobbying from the insurance industry, declined to agree to the cuts in medicare advantage proposed by the house. president bush subsequently vetoed the schip extension. effects of the patient protection and affordable care act the patient protection and affordable care act ("ppaca") of 2010 made a number of changes to the medicare program. several provisions of the law were designed to reduce the cost of medicare. the most substantial provisions slowed the growth rate of payments to hospitals and skilled nursing facilities under parts a of medicare, through a variety of methods (e.g., arbitrary percentage cuts, penalties for readmissions). congress also attempted to reduce payments to public part c medicare health plans by aligning the rules that establish part c plans' capitated fees more closely with the ffs paid for comparable care to "similar beneficiaries" under parts a and b of medicare. primarily these reductions involved much discretion on the part of cms and examples of what cms did included effectively ending a part c program congress had previously initiated to increase the use of part c in rural areas (the so-called part c pffs plan) and reducing over time a program that encouraged employers and unions to create their own part c plans not available to the general medicare beneficiary base (so-called part c egwp plans) by providing higher reimbursement. these two types of part c plans had been identified by medpac as the programs that most negatively affected parity between the cost of medicare beneficiaries on parts a/b/c and the costs of beneficiaries not on parts a/b/c. these efforts to reach parity have been more than successful. as of 2015, all beneficiaries on a/b/c cost 4% less per person than all beneficiaries not on a/b/c. but whether that is because the cost of the former decreased or the cost of the latter increased is not known. ppaca also slightly reduced annual increases in payments to physicians and to hospitals that serve a disproportionate share of low-income patients. along with other minor adjustments, these changes reduced medicare's projected cost over the next decade by $455 billion. additionally, the ppaca created the independent payment advisory board ("ipab"), which was empowered to submit legislative proposals to reduce the cost of medicare if the program's per-capita spending grows faster than per-capita gdp plus one percent. the ipab was never formed and was formally repealed by the balanced budget act of 2018. the ppaca also made some changes to medicare enrollees' benefits. by 2020, it will "close" the so-called "donut hole" between part d plans' initial spend phase coverage limits and the catastrophic cap on out-of-pocket spending, reducing a part d enrollee's' exposure to the cost of prescription drugs by an average of $2,000 a year. that is, the template co-pay in the gap (which legally still exists) will be the same as the template co-pay in the initial spend phase, 25%. this lowered costs for about 5% of the people on medicare. limits were also placed on out-of-pocket costs for in-network care for public part c health plan enrollees. most of these plans had such a limit but aca formalized the annual out of pocket spend limit. beneficiaries on traditional medicare do not get such a limit but can effectively arrange for one through private insurance. meanwhile, medicare part b and d premiums were restructured in ways that reduced costs for most people while raising contributions from the wealthiest people with medicare. the law also expanded coverage of or eliminated co-pays for some preventive services. the ppaca instituted a number of measures to control medicare fraud and abuse, such as longer oversight periods, provider screenings, stronger standards for certain providers, the creation of databases to share data between federal and state agencies, and stiffer penalties for violators. the law also created mechanisms, such as the center for medicare and medicaid innovation to fund experiments to identify new payment and delivery models that could conceivably be expanded to reduce the cost of health care while improving quality. proposals for reforming medicare as legislators continue to seek new ways to control the cost of medicare, a number of new proposals to reform medicare have been introduced in recent years. premium support since the mid-1990s, there have been a number of proposals to change medicare from a publicly run social insurance program with a defined benefit, for which there is no limit to the government's expenses, into a publicly run health plan program that offers "premium support" for enrollees. the basic concept behind the proposals is that the government would make a defined contribution, that is a premium support, to the health plan of a medicare enrollee's choice. sponsors would compete to provide medicare benefits and this competition would set the level of fixed contribution. additionally, enrollees would be able to purchase greater coverage by paying more in addition to the fixed government contribution. conversely, enrollees could choose lower cost coverage and keep the difference between their coverage costs and the fixed government contribution. the goal of premium medicare plans is for greater cost-effectiveness; if such a proposal worked as planned, the financial incentive would be greatest for medicare plans that offer the best care at the lowest cost. this concept is basically how public medicare part c already works (but with a much more complicated competitive bidding process that drives up costs for the trustees, but is very advantageous to the beneficiaries). given that only about 1% of people on medicare got premium support when aaron and reischauer first wrote their proposal in 1995 and the percentage is now 35%, on the way to 50% by 2040 according to the trustees, perhaps no further reform is needed. there have been a number of criticisms of the premium support model. some have raised concern about risk selection, where insurers find ways to avoid covering people expected to have high health care costs. premium support proposals, such as the 2011 plan proposed by senator ron wyden and rep. paul ryan (r–wis.), have aimed to avoid risk selection by including protection language mandating that plans participating in such coverage must provide insurance to all beneficiaries and are not able to avoid covering higher risk beneficiaries. some critics are concerned that the medicare population, which has particularly high rates of cognitive impairment and dementia, would have a hard time choosing between competing health plans. robert moffit, a senior fellow of the heritage foundation responded to this concern, stating that while there may be research indicating that individuals have difficulty making the correct choice of health care plan, there is no evidence to show that government officials can make better choices. henry aaron, one of the original proponents of premium supports, has recently argued that the idea should not be implemented, given that medicare advantage plans have not successfully contained costs more effectively than traditional medicare and because the political climate is hostile to the kinds of regulations that would be needed to make the idea workable. currently, public part c medicare health plans avoid this issue with an indexed risk formula that provides lower per capita payments to sponsors for relatively (remember all these people are over 65) healthy plan members and higher per capita payments for less healthy members. changing the age of eligibility a number of different plans have been introduced that would raise the age of medicare eligibility. some have argued that, as the population ages and the ratio of workers to retirees increases, programs for the elderly need to be reduced. since the age at which americans can retire with full social security benefits is rising to 67, it is argued that the age of eligibility for medicare should rise with it (though people can begin receiving reduced social security benefits as early as age 62). the cbo projected that raising the age of medicare eligibility would save $113 billion over 10 years after accounting for the necessary expansion of medicaid and state health insurance exchange subsidies under health care reform, which are needed to help those who could not afford insurance purchase it. the kaiser family foundation found that raising the age of eligibility would save the federal government $5.7 billion a year, while raising costs for other payers. according to kaiser, raising the age would cost $3.7 billion to 65- and 66-year-olds, $2.8 billion to other consumers whose premiums would rise as insurance pools absorbed more risk, $4.5 billion to employers offering insurance, and $0.7 billion to states expanding their medicaid rolls. ultimately kaiser found that the plan would raise total social costs by more than twice the savings to the federal government. during the 2020 presidential campaign, joe biden proposed lowering the age of medicare eligibility to 60 years old. a kaiser family foundation study found that lowering the age to 60 could reduce costs for employer health plans by up to 15% if all eligible employees shifted to medicare. negotiating the prices of prescription drugs currently, people with medicare can get prescription drug coverage through a public medicare part c plan or through the standalone part d prescription drug plans (pdps) program. each plan sponsor establishes its own coverage policies and could if desired independently negotiate the prices it pays to drug manufacturers. but because each plan has a much smaller coverage pool than the entire medicare program, many argue that this system of paying for prescription drugs undermines the government's bargaining power and artificially raises the cost of drug coverage. conversely, negotiating for the sponsors is almost always done by one of three or four companies typically tied to pharmacy retailers each of whom alone has much more buying power than the entire medicare program. that pharmacy-centric versus government-centric approach appears to have worked given that part d has come in at 50% or more under original projected