Kaiser Family Foundation
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Overview of Medicare Spending
Medicare, the federal health insurance program for 57 million people ages 65 and over and people with permanent disabilities, helps to pay for hospital and physician visits, prescription drugs, and other acute and post-acute care services. In 2015, spending on Medicare accounted for 15% of the federal budget (Figure 1).
Employer- and union-sponsored retiree health benefits have served as an important source of supplemental coverage for people on Medicare. Retiree health plans help fill the gaps in Medicare’s benefit design, often cover some or all of Medicare’s cost-sharing requirements and deductibles, and include a cap on out-of-pocket spending – a benefit that is required to be provided by all Medicare Advantage plans, but not covered under traditional Medicare, and of great value to retirees needing costly medical care. For retirees, employer-sponsored supplemental coverage limits the costs they would otherwise incur for their medical care.
Proposals to modify the benefit design of traditional Medicare have been frequently raised in federal budget and Medicare reform discussions, including in the June 2016 House Republican health plan as part of a broader set of proposed changes to Medicare.1 Typically, benefit design proposals include a single deductible for Medicare Part A and B services, modified cost-sharing requirements, and a new annual cost-sharing limit, combined with restrictions on “first-dollar” Medigap coverage. Some proposals also include additional financial protections for low-income beneficiaries. Objectives of these proposals may include reducing federal spending, simplifying Medicare cost sharing, providing people in traditional Medicare with protection against catastrophic medical costs, providing low-income beneficiaries with additional financial protections, and reducing the need for beneficiaries to buy supplemental coverage.
Prescription drugs play an important role in medical care for 57 million seniors and people with disabilities, and account for $1 out of every $6 in Medicare spending. The majority of Medicare prescription drug spending is for drugs covered under the Part D prescription drug benefit, administered by private stand-alone drug plans and Medicare Advantage drug plans. Medicare Part B also covers drugs that are administered to patients in physician offices and other outpatient settings.
After a period of relatively slow growth, total and per capita Part D spending has increased more rapidly in the past few years mainly due to treatments for Hepatitis C, and is projected to increase more rapidly in the next decade as more high-priced specialty drugs become available, according to the recently-released annual report of the Medicare Boards of Trustees.
Sounds Like A Good Idea? Selling Insurance Across State Lines
Presidential candidates like to propose solutions to long-standing problems. Health care is no exception.
But there’s a reason some problems are “long-standing.” They may have no easy solution. Or the solution is not politically feasible. Or there’s a solution that sounds good on the campaign trail but is not likely to actually work.
In this first of a series of videos of health policy promises that “sound like a good idea,” Julie Rovner explores why increasing competition in health insurance by allowing sales of policies across state lines might not be such a good idea after all.