Medicare

History of Medicare Program

The Medicare program was established in 1965 through Title XVIII of the Social Security Act. The program was designed to provide health insurance coverage for adults aged 65 and older. The eligibility criteria for the program were modified in 1972 to waive the age requirements for individuals with long-term disabilities or end-stage renal disease so that they could begin receiving Medicare coverage. In 1977, a government agency, the Health Care Financing Administration (HCFA; now the Centers for Medicare and Medicaid Services [CMS]) was created to oversee the Medicare program. The Medicare Catastrophic Coverage Act of 1988 expanded benefits and added coverage for outpatient prescription drugs; however, this act was repealed in 1989 due to complaints regarding high premiums charged for those with higher incomes.

The Balanced Budget Act of 1997 (BBA) was designed to control spending on Medicare and resulted in substantial changes to the Medicare program. The act introduced additional health plan choices for people with Medicare, including Medicare-managed care plans and private fee-for-service plans, referred to as Medicare + Choice plans. The act also mandated that HCFA/CMS educate and inform beneficiaries, including providing comparative plan information, with the goal of helping beneficiaries make more informed health plan decisions.

The most recent changes to the program resulted from the passing of the Medicare Drug Improvement and Medicare Modernization Act (MMA) in 2003. The act continued the evolution of Medicare with the Medicare Advantage (MA) program (replacing the Medicare + Choice program of the BBA), a prescription drug discount card program to assist beneficiaries with the cost of prescription drugs, until the prescription drug insurance program was [Page 752]implemented in 2006, and additional coverage for preventive care services.

Decision Making in Medicare

Beneficiaries must go through several steps when selecting their Medicare coverage, including deciding whether to purchase certain components (parts) of Medicare, understanding the various plan types and the rules and cost implications for each, selecting a specific plan within the type they have chosen after evaluating the individual plan's premiums and co-payments, and considering other possible types of coverage available to them.

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