medicare (united states) medicare (united states) medicare is a government national health insurance program in the united states, begun in 1965 under the social security administration (ssa) and now administered by the centers for medicare and medicaid services (cms). it primarily provides health insurance for americans aged 65 and older, but also for some younger people with disability status as determined by the ssa, including people with end stage renal disease and amyotrophic lateral sclerosis (als or lou gehrig's disease). not to be confused with medicaid. centers for medicare and medicaid services logo in 2018, according to the 2019 medicare trustees report, medicare provided health insurance for over 59.9 million individuals—more than 52 million people aged 65 and older and about 8 million younger people. according to annual medicare trustees reports and research by the government's medpac group, medicare covers about half of healthcare expenses of those enrolled. enrollees almost always cover most of the remaining costs by taking additional private insurance and/or by joining a public part c or part d medicare health plan. in 2020, us federal government spending on medicare was $776.2 billion. households that retired in 2013 paid only 13 to 41 percent of the benefit dollars they are expected to receive. no matter which of those two options the beneficiaries choose—or if they choose to do nothing, beneficiaries also have other healthcare-related costs. these additional costs can include deductibles and co-pays; the costs of uncovered services—such as for long-term custodial, dental, hearing, and vision care; the cost of annual physical exams (for those not on part c health plans that include physicals); and the costs related to basic medicare's lifetime and per-incident limits. medicare is funded by a combination of a specific payroll tax, beneficiary premiums, and surtaxes from beneficiaries, co-pays and deductibles, and general u.s. treasury revenue. medicare parts. medicare is divided into four parts: a, b, c and d. part a covers hospital, skilled nursing, and hospice services. part b covers outpatient services. part d covers self-administered prescription drugs. additionally, part c is an alternative that allows patients to choose their own plans that provide the same services as parts a and b, but with additional benefits. the specific details on these four plans are as follows: part a covers hospital (inpatient, formally admitted only), skilled nursing (only after being formally admitted to a hospital for three days and not for custodial care), home health care, and hospice services. part b covers outpatient services including some providers' services while inpatient at a hospital, outpatient hospital charges, most provider office visits even if the office is "in a hospital", durable medical equipment, and most professionally administered prescription drugs. part c is an alternative called managed medicare or medicare advantage, which allows patients to choose health plans with at least the same service coverage as parts a and b (and most often more), often the benefits of part d, and always an annual out-of-pocket expense limit which a and b lack. a beneficiary must enroll in parts a and b first before signing up for part c. part d covers mostly self-administered prescription drugs. history lyndon b. johnson signing the medicare amendment. former president harry s. truman (seated) and his wife, bess, are on the far right. originally, the name "medicare" in the united states referred to a program providing medical care for families of people serving in the military as part of the dependents' medical care act, which was passed in 1956. president dwight d. eisenhower held the first white house conference on aging in january 1961, in which creating a health care program for social security beneficiaries was proposed. in july 1965, under the leadership of president lyndon johnson, congress enacted medicare under title xviii of the social security act to provide health insurance to people age 65 and older, regardless of income or medical history. johnson signed the social security amendments of 1965 into law on july 30, 1965, at the harry s. truman presidential library in independence, missouri. former president harry s. truman and his wife, former first lady bess truman became the first recipients of the program. before medicare was created, only approximately 60% of people over the age of 65 had health insurance, with coverage often unavailable or unaffordable to many others, as older adults paid more than three times as much for health insurance as younger people. many of this group (about 20% of the total in 2015) became "dual eligible" for both medicare and medicaid with the passing of the law. in 1966, medicare spurred the racial integration of thousands of waiting rooms, hospital floors, and physician practices by making payments to health care providers conditional on desegregation. medicare has been operating for just over a half-century and, during that time, has undergone several changes. since 1965, the program's provisions have expanded to include benefits for speech, physical, and chiropractic therapy in 1972. medicare added the option of payments to health maintenance organizations (hmos) in the 1970s. the government added hospice benefits to aid elderly people on a temporary basis in 1982, and made this permanent in 1984. congress further expanded medicare in 2001 to cover younger people with amyotrophic lateral sclerosis (als, or lou gehrig's disease). as the years progressed, congress expanded medicare eligibility to younger people with permanent disabilities who receive social security disability insurance (ssdi) payments and to those with end-stage renal disease (esrd). the association with hmos that began in the 1970s was formalized and expanded under president bill clinton in 1997 as medicare part c (although not all part c health plans sponsors have to be hmos, about 75% are). in 2003, under president george w. bush, a medicare program for covering almost all self-administered prescription drugs was passed (and went into effect in 2006) as medicare part d. administration health care in the united states government health programs federal employees health benefits program (fehbp) indian health service (ihs) medicaid / state health insurance assistance program (ship) medicare prescription assistance (spap) military health system (mhs) / tricare children's health insurance program (chip) program of all-inclusive care for the elderly (pace) veterans health administration (vha) private health coverage consumer-driven healthcare flexible spending account (fsa) health reimbursement account (hra) health savings account (hsa) high-deductible health plan (hdhp) medical savings account (msa) private fee-for-service (pffs) health insurance in the united states managed care (ccp) exclusive provider organization (epo) health maintenance organization (hmo) preferred provider organization (ppo) medical underwriting health care reform law emergency medical treatment and active labor act (1986) health insurance portability and accountability act (1996) medicare prescription drug, improvement, and modernization act (2003) patient safety and quality improvement act (2005) health information technology for economic and clinical health act (2009) patient protection and affordable care act (2010) state level reform municipal health coverage healthcare in california healthy san francisco healthy way la my health la fair share health care act (maryland) healthy howard (howard co., maryland) the centers for medicare and medicaid services (cms), a component of the u.s. department of health and human services (hhs), administers medicare, medicaid, the children's health insurance program (chip), the clinical laboratory improvement amendments (clia), and parts of the affordable care act (aca) ("obamacare"). along with the departments of labor and treasury, the cms also implements the insurance reform provisions of the health insurance portability and accountability act of 1996 (hipaa) and most aspects of the patient protection and affordable care act of 2010 as amended. the social security administration (ssa) is responsible for determining medicare eligibility, eligibility for and payment of extra help/low income subsidy payments related to parts c and d of medicare, and collecting most premium payments for the medicare program. the chief actuary of the cms must provide accounting information and cost-projections to the medicare board of trustees to assist them in assessing the program's financial health. the trustees are required by law to issue annual reports on the financial status of the medicare trust funds, and those reports are required to contain a statement of actuarial opinion by the chief actuary. since the medicare program began, the cms (that was not always the name of the responsible bureaucracy) has contracted with private insurance companies to operate as intermediaries between the government and medical providers to administer part a and part b benefits. contracted processes include claims and payment processing, call center services, clinician enrollment, and fraud investigation. beginning in 1997 and 2005, respectively, these part a and b administrators (whose contracts are bid out periodically), along with other insurance companies and other companies or organizations (such as integrated health delivery systems, unions and pharmacies), also began administering part c and part d plans. the specialty society relative value scale update committee (or relative value update committee; ruc), composed of physicians associated with the american medical association, advises the government about pay standards for medicare patient procedures performed by doctors and other professionals under medicare part b. a similar but different cms process determines the rates paid for acute care and other hospitals—including skilled nursing facilities—under medicare part a. the rates paid for both part a and part b type services under part c are whatever is agreed upon between the sponsor and the provider. the amounts paid for mostly self-administered drugs under part d are whatever is agreed upon between the sponsor (almost always through a pharmacy benefit manager also used in commercial insurance) and pharmaceutical distributors and/or manufacturers. the expenditures from the trust funds under parts a and b are fee for service whereas the expenditures from the trust funds under parts c and d are capitated. in particular, it is important to understand that medicare itself does not purchase either self-administered or professionally administered drugs. in part d, the part d trust fund helps beneficiaries purchase drug insurance. for part b drugs, the trust funds reimburse the professional that administers the drugs and allows a mark up for that service. financing medicare has several sources of financing. part a's inpatient admitted hospital and skilled nursing coverage is largely funded by revenue from a 2.9% payroll tax levied on employers and workers (each pay 1.45%). until december 31, 1993, the law provided a maximum amount of compensation on which the medicare tax could be imposed annually, in the same way that the social security payroll tax operates. beginning on january 1, 1994, the compensation limit was removed. self-employed individuals must calculate the entire 2.9% tax on self-employed net earnings (because they are both employee and employer), but they may deduct half of the tax from the income in calculating income tax. beginning in 2013, the rate of part a tax on earned income exceeding $200,000 for individuals ($250,000 for married couples filing jointly) rose to 3.8%, in order to pay part of the cost of the subsidies mandated by the affordable care act. parts b and d are partially funded by premiums paid by medicare enrollees and general u.s. treasury revenue (to which medicare beneficiaries contributed and may still contribute). in 2006, a surtax was added to part b premium for higher-income seniors to partially fund part d. in the affordable care act legislation of 2010, another surtax was then added to part d premium for higher-income seniors to partially fund the affordable care act and the number of part b beneficiaries subject to the 2006 surtax was doubled, also partially to fund ppaca. parts a and b/d use separate trust funds to receive and disburse the funds mentioned above. the medicare part c program uses these same two trust funds as well at a proportion determined by the cms reflecting that part c beneficiaries are fully on parts a and b of medicare just as all other beneficiaries, but that their medical needs are paid for through a sponsor (most often an integrated health delivery system or spin out) to providers rather than "fee for service" (ffs) through an insurance company called a medicare administrative contractor to providers. in 2018, medicare spending was over $740 billion, about 3.7% of u.s. gross domestic product and over 15% of total us federal spending. because of the two trust funds and their differing revenue sources (one dedicated and one not), the trustees analyze medicare spending as a percent of gdp rather than versus the federal budget. retirement of the baby boom