<DOC>
Ways and Means Committee Print WMCP:106-14]
[2000 Green Book]
[From the U.S. Government Printing Office Online via GPO Access]

                                OVERVIEW

    Medicare is a nationwide health insurance program for the 
aged and certain disabled persons. The program consists of two 
parts--part A, hospital insurance (HI) and part B, 
supplementary medical insurance (SMI). Total program outlays 
were $212.0 billion in fiscal year 1999. Net outlays after 
deduction of beneficiary premiums were $190.5 billion.

                                Coverage

    Almost all persons over age 65 are automatically entitled 
to Medicare part A. Part A also provides coverage, after a 24-
month waiting period, for persons under age 65 who are 
receiving Social Security cash benefits on the basis of 
disability. Most persons who need a kidney transplant or renal 
dialysis may also be covered, regardless of age. In fiscal year 
1999, part A covered an estimated 38.8 million aged and 
disabled persons (including those with chronic kidney disease).
    Medicare part B is voluntary. All persons over age 65 and 
all persons enrolled in part A may enroll in part B by paying a 
monthly premium--$45.50 in 2000. In fiscal year 1999, part B 
covered an estimated 36.9 million aged and disabled persons.

                                Benefits

    Part A provides coverage for inpatient hospital services, 
up to 100 days of posthospital skilled nursing facility (SNF) 
care, some home health services, and hospice care. Patients 
must pay a deductible ($776 in 2000) each time their hospital 
admission begins a benefit period. (A benefit period begins 
when a patient enters a hospital and ends when she has not been 
in a hospital or SNF for 60 days.) Medicare pays the remaining 
costs for the first 60 days of hospital care. The limited 
number of beneficiaries requiring care beyond 60 days are 
subject to additional charges. Patients requiring SNF care are 
subject to a daily coinsurance charge for days 21-100 ($97 in 
2000). There are no cost-sharing charges for home health care 
and limited charges for hospice care.
    Part B provides coverage for physicians' services, 
laboratory services, durable medical equipment (DME), hospital 
outpatient department (OPD) services, and other medical 
services. The program generally pays 80 percent of Medicare's 
fee schedule or other approved amount after the beneficiary has 
met the annual $100 deductible. The beneficiary is liable for 
the remaining 20 percent.

                         Payments for Services

    Taken together, spending for inpatient hospital and 
physicians' and related services accounts for close to 70 
percent of Medicare fee-for-service payments (spending for 
managed care plans is not broken down by service category). 
Medicare makes payments for inpatient hospital services under a 
prospective payment system (PPS); a predetermined rate is paid 
for each inpatient stay based on the patient's admitting 
diagnosis. Payment for physicians' services is made on the 
basis of a fee schedule. Specific payment rules are also used 
for other services.

                             Administration

    Medicare is administered by the Health Care Financing 
Administration (HCFA) within the U.S. Department of Health and 
Human Services (DHHS). Much of the day-to-day work of reviewing 
claims and making payments is done by intermediaries (for part 
A) and carriers (for part B). These are generally commercial 
insurers or Blue Cross Blue Shield plans.

                               Financing

    Medicare part A is financed primarily through the HI 
payroll tax levied on current workers and their employers. 
Employers and employees each pay a tax of 1.45 percent on all 
earnings. The self-employed pay a single tax of 2.9 percent on 
earnings.
    Part B is financed through a combination of monthly 
premiums levied on program beneficiaries and Federal general 
revenues. In 2000, the premium is $45.50. Beneficiary premiums 
have generally represented about 25 percent of part B costs; 
Federal general revenues (i.e., tax dollars) account for the 
remaining 75 percent.

                            Federal Outlays

    Total program outlays were $212.0 billion in fiscal year 
1999. Net outlays (i.e., net of premiums beneficiaries pay for 
enrollment, largely for part B) were $190.5 billion.
    Tables 2-1, 2-2, and 2-3 provide historical spending and 
coverage data for Medicare. Table 2-4 provides State-by-State 
information for fiscal year 1998.