Unformatted text preview: Medicare a PriMer 2010 MedicAre A PriMer
April 2010 INTRODUCTION
Established in 1965, Medicare is a social insurance program that provides health and financial security for individuals ages 65 and older and for younger people with permanent disabilities. Prior to 1965, roughly half of all seniors lacked medical insurance; today, virtually all seniors have health insurance under Medicare. Medicare provides health insurance coverage to 47 million people in 2010: 39 million people ages 65 and older and 8 million people with permanent disabilities who are under age 65. The program helps to pay for many important health care services, including hospitalizations, physician services, and prescription drugs. Individuals contribute payroll taxes to Medicare throughout their working lives and generally become eligible for Medicare when they reach age 65, regardless of income or health status. The health care reform law enacted in March 2010 (P.L. 111-148)1 expands prescription drug and prevention benefits covered under Medicare and introduces new programs designed to improve the quality and delivery of care to people covered by Medicare. In addition, the law reduces the growth in Medicare payments to health care providers and Medicare Advantage plans, and includes other provisions designed to slow the growth in Medicare spending and strengthen the solvency of the Medicare Hospital Insurance Trust Fund, including the creation of a new Independent Payment Advisory Board. Comprising an estimated 12 percent of the federal budget and more than one-fifth of total national health expenditures in 2010, Medicare is often a significant part of discussions about how to moderate the growth of both federal spending and health care spending in the U.S.2 With the dual challenges of providing increasingly expensive medical care to an aging population and keeping the program financially secure for the future, discussions about Medicare are likely to remain prominent on the nation's agenda in the years ahead. 1 Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152). 2 The Medicare share of the federal budget is from Office of Management and Budget (OMB), Budget of the U.S. Government, Fiscal Year 2011, February 2010. The Medicare share of national health expenditures is from Centers for Medicare & Medicaid Services (CMS), Office of the Actuary (OACT), National Health Expenditure Projections 2009-2019, February 2010. MEDICARE: A PRIMER
What is Medicare? ..............................................................................................................................1 Medicare is a federal entitlement program that provides health insurance coverage to 47 million people, including people age 65 and older, and younger people with permanent disabilities, end-stage renal disease, and Lou Gehrig's disease. Who is eligible for Medicare?..............................................................................................................2 Individuals become eligible for Medicare when they reach age 65, if they or their spouse made payroll tax contributions for 10 or more years. People under age 65 qualify for Medicare after 24 months of receiving Social Security Disability payments, or if they have end-stage renal disease or Lou Gehrig's disease. What are the characteristics of people with Medicare? .....................................................................3 Medicare covers a diverse population. Most people with Medicare live on modest incomes and many have multiple chronic conditions. What does Medicare cover and how much do beneficiaries pay for benefits?...................................5 Medicare covers basic health services, including hospital stays, physician visits, and prescription drugs. Many benefits are subject to deductibles and cost-sharing requirements. Medicare does not cover most long-term care services, vision or dental care, or hearing aids. What is the Medicare prescription drug benefit? ...............................................................................7 Medicare helps cover the cost of prescription drugs offered through private drug plans. More than half of all beneficiaries are enrolled in a Part D drug plan, with 90 percent having some source of drug coverage. What is Medicare Advantage? ............................................................................................................9 Medicare Advantage plans are private health plans that receive payments from Medicare to provide Medicare-covered benefits to enrollees. Nearly one-fourth of all beneficiaries are enrolled in a Medicare Advantage plan. What types of supplemental insurance do beneficiaries have? .......................................................11 Most beneficiaries have some type of supplemental insurance to help pay Medicare's cost-sharing requirements and fill gaps in Medicare's benefit package. Primary sources of supplemental coverage include employer-sponsored plans, Medicaid (for those with limited incomes and assets), Medigap policies, and Medicare Advantage plans. How do Medicare beneficiaries fare with respect to access to care? ...............................................13 The enactment of Medicare dramatically improved access to care for millions of elderly Americans. Beneficiaries generally enjoy broad access to physicians, hospitals, and other providers, and report relatively low rates of problems across a number of access measures. How is Medicare financed? ...............................................................................................................14 Funding for Medicare comes primarily from general revenues (40 percent) and payroll taxes (38 percent), followed by premiums paid by beneficiaries (12 percent). How much does Medicare cost and how is the money spent? .........................................................15 Medicare is estimated to account for 12 percent of federal spending in 2010. Inpatient hospital services comprise the largest share of Medicare benefit payments (27 percent), followed by payments to Medicare Advantage plans (24 percent) and physicians and other suppliers (18 percent). The drug benefit accounts for 11 percent of total payments. How is the health care reform law expected to affect future Medicare spending? .........................17 The 2010 health care reform law includes a number of provisions that are expected to reduce the growth in Medicare spending over the next decade and beyond, thereby maintaining the solvency of the Medicare Part A (Hospital Insurance) Trust Fund through 2029. What are Medicare's future financing challenges?...........................................................................19 With rising health care costs, an aging population, and a declining ratio of workers to retirees, financing care for future beneficiaries remains a challenge. Medicare Benefits and Cost-Sharing Requirements, 2010 ...............................................................21 Implementation Timeline for Key Medicare Provisions of the 2010 Health Care Reform Law, 2010-2015...................................................................................................................................22 Age and Income of Medicare Beneficiaries, by State, 2008 .............................................................23 Medicare Beneficiaries by Type of Coverage, by State .....................................................................24 WHAT IS MEDICARE?
Medicare is the nation's health insurance program for Americans age 65 and older, and for younger adults with permanent disabilities. Established in 1965 under Title XVIII of the Social Security Act, Medicare was initially established to provide health insurance to individuals age 65 and older, regardless of income or medical history. The program was expanded in 1972 to include individuals under age 65 with permanent disabilities receiving Social Security Disability Insurance payments and people suffering from end-stage renal disease (ESRD). In 2001, Medicare eligibility expanded further to cover people with amyotrophic lateral sclerosis (ALS, or Lou Gehrig's disease). As of 2010, 47 million people rely on Medicare for their health insurance coverage: 39 million people age 65 and over and 8 million people under age 65 with disabilities. Medicare consists of four parts, each covering different benefits. PART A, also known as the Hospital Insurance (HI) program, covers inpatient hospital services, skilled nursing facility, home health, and hospice care. Part A is funded by a tax of 2.9 percent of earnings paid by employers and workers (1.45 percent each). The health care reform law3 increases the Medicare HI payroll tax for higher-income taxpayers (more than $200,000/individual and $250,000/couple) by 0.9 percentage points, beginning in 2013. In 2009, Part A accounted for approximately 36 percent of total Medicare benefit spending.4 An estimated 45.6 million people were enrolled in Part A in 2009. PART B, the Supplementary Medical Insurance (SMI) program, helps pay for physician, outpatient, home health, and preventive services. Part B is funded by general revenues and beneficiary premiums ($110.50 per month in 2010; $96.40 per month for beneficiaries held harmless from the premium increase see page 5 for additional information). Beneficiaries who have higher annual incomes (over $85,000/individual, $170,000/couple) pay a higher, income-related monthly Part B premium; beginning in 2011, the health care reform law freezes the income thresholds at 2010 levels through 2019. In 2009, Part B accounted for 27 percent of total benefit spending.5 An estimated 42.4 million people were enrolled in Part B in 2009. PART C, also known as the Medicare Advantage program, allows beneficiaries to enroll in a private plan, such as a health maintenance organization, preferred provider organization, or private fee-for-service plan, as an alternative to the traditional fee-for-service program. These plans receive payments from Medicare to provide Medicare-covered benefits, including hospital and physician services, and in most cases, prescription drug benefits. Part C is not separately financed, and accounted for 24 percent of benefit spending in 2009. As of April 2010, 11.5 million beneficiaries are enrolled in Medicare Advantage plans.6 PART D, the outpatient prescription drug benefit, was established by the Medicare Modernization Act of 2003 (MMA) and launched in 2006. The benefit is delivered through private plans that contract with Medicare: either stand-alone prescription drug plans (PDPs) or Medicare Advantage prescription drug (MAPD) plans. Individuals who sign up for a Part D plan generally pay a monthly premium; those with modest income and assets are eligible for assistance with premiums and cost-sharing amounts. The health care reform law establishes a new income-related Part D premium similar to the Part B premium, beginning in 2011, and gradually phases in coverage in the Part D coverage gap. Part D is funded by general revenues, beneficiary premiums, and state payments, and accounted for 10 percent of benefit spending in 2009. As of April 2010, 27.6 million beneficiaries are enrolled in a Part D plan.7
3 4 PPACA (P.L. 111-148), as amended by HCERA (P.L. 111-152). Congressional Budget Office (CBO), Medicare Baseline, March 2009. 5 CBO, Medicare Baseline, March 2009. 6 Centers for Medicare & Medicaid Services (CMS), Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Organizations Monthly Summary Report, April 2010. 7 CMS, Monthly Summary Report, April 2010. MEDICARE: A PRIMER 1 WHO IS ELIGIBLE FOR MEDICARE?
Most people age 65 and older are automatically entitled to Part A if they or their spouse are eligible for Social Security payments and have made payroll tax contributions for 10 or more years (40 quarters). Individuals age 65 and over qualify for Medicare if they are U.S. citizens or permanent legal residents. Individuals qualify without regard to their medical history or preexisting conditions, and do not need to meet an income or asset test. Adults under age 65 with permanent disabilities are eligible for Medicare after receiving Social Security Disability Income (SSDI) payments for 24 months, even if they have not made payroll tax contributions for 40 quarters. People with end-stage renal disease (ESRD) or Lou Gehrig's disease are eligible for Medicare benefits as soon as they begin receiving SSDI payments, without having to wait 24 months. Individuals who are entitled to Part A do not pay premiums for covered services. Individuals age 65 and over who are not entitled to Part A, such as those who did not pay enough Medicare taxes during their working years, can pay a monthly premium to receive Part A benefits. Individuals entitled to Part A and others age 65 and older may elect to enroll in Part B. Part B is voluntary, but about 95 percent of beneficiaries with Part A are also enrolled in Part B. For most individuals who become entitled to Part A, enrollment in Part B is automatic unless the individual declines enrollment. Individuals age 65 and older who are not entitled to Part A may enroll in Part B. With the exception of the working aged (or their spouses) who may delay enrollment if they receive employmentbased coverage, those who do not sign up for Part B when they are first eligible typically pay a penalty for late enrollment, in addition to the regular monthly premium, for the duration of their enrollment in Part B. Individuals are eligible for Part C, or Medicare Advantage, if they are entitled to Part A and enrolled in Part B. Beneficiaries may generally elect to enroll in a Medicare Advantage (MA) plan on an annual basis between November 15 and December 31 of each year during the annual election period. Beneficiaries enrolled in a Medicare Advantage plan as of January 1 can switch Medicare Advantage plans or return to traditional Medicare for 90 days after the beginning of the calendar year. Beginning in 2011, the annual election period will run from October 15 to December 7 (a change included in the health care reform law8). Also beginning in 2011, beneficiaries enrolled in a Medicare Advantage plan as of January 1 will be allowed only 45 days to disenroll from the plan and return to traditional Medicare; they will not be allowed to switch from one Medicare Advantage plan to another during this period. Individuals are eligible for prescription drug coverage under a Part D plan if they are entitled to benefits under Part A and/or enrolled in Part B. To get Part D benefits, beneficiaries must enroll in a stand-alone prescription drug plan (PDP) or Medicare Advantage prescription drug (MA-PD) plan. The annual election period for Part D and Medicare Advantage benefits runs from November 15 to December 31 of each year, until 2011, when the election period will be changed to October 15 to December 7. Individuals who delay enrollment in Part D and are without "creditable" drug coverage (at least comparable to the Part D standard benefit) pay a permanent premium penalty for late enrollment. 8 PPACA (P.L. 111-148), as amended by HCERA (P.L. 111-152). 2 THE HENRY J. KAISER FAMILY FOUNDATION WHAT ARE THE CHARACTERISTICS OF PEOPLE WITH MEDICARE?
Medicare covers a population with diverse needs and circumstances. While many beneficiaries enjoy good health, nearly half live with three or more chronic conditions and more than a quarter have cognitive impairments. Nearly half of all beneficiaries have incomes below twice the poverty level. More than four in ten Medicare beneficiaries (44 percent) live with three or more chronic conditions. Among the most common conditions are hypertension and arthritis. More than a quarter (29 percent) of all beneficiaries have a cognitive or mental impairment that limits their ability to function independently. Approximately one in seven (15 percent) beneficiaries has multiple functional limitations, as defined as two or more limitations in activities of daily living (ADLs), such as eating or bathing. Medicare Covers a Population with Diverse Needs and Significant Vulnerabilities
Percent of total Medicare population:
Income <200% FPL ($21,660 in 2010)
47% 44% 29% 29% 16% 15% 12% 5% 3+ Chronic Conditions Cognitive/Mental Impairment Fair/Poor Health Under-65 Disabled 2+ ADL Limitations Age 85+ Long-term Care Facility Resident NOTE: ADL is activity of daily living. SOURCE: Income data for 2008 from U.S. Census Bureau, Current Population Survey, 2009 Annual Social and Economic Supplement. All other data from Kaiser Family Fo undation analysis of the Centers for Medicare & Medicaid Services Medicare Current Beneficiary Survey 2006 Cost and Use file and 2007 Access to Care file. Although the majority of the Medicare population is age 65 or over, 16 percent are under age 65 and permanently disabled. Nonelderly beneficiaries with disabilities tend to have lower incomes than other beneficiaries. About 40 percent are dually eligible for both Medicare and Medicaid. Because of their disabilities, they tend to have relatively high rates of health problems, including functional limitations and cognitive impairments. Most beneficiaries live at home, but five percent live in a long-term care setting. Five percent of Medicare beneficiaries (2.2 million) live in a long-term care setting, such as a nursing home or assisted living facility, but a larger share of beneficiaries who are age 85 or older do so (19 percent).9 Two-thirds of beneficiaries living in long-term care settings are women, and nearly 60 percent are dually eligible for Medicare and Medicaid. Poverty rates are especially high among those in racial/ethnic minority groups, women, people under age 65 with disabilities, and those ages 85 and older. Almost half of all Medicare beneficiaries (47 percent) have an income below 200 percent of poverty ($21,660/individual and $29,140/couple in 2010), and 16 percent have an income below 100 percent of the poverty level. Race/ethnicity: Two-thirds of all African American beneficiaries and seven in ten Hispanic beneficiaries live on incomes below twice the poverty level, compared to 41 percent of White beneficiaries.
7 Kaiser Family Foundation analysis of the Centers for Medicare & Medicaid Services (CMS) Medicare Current Beneficiary Survey Cost and Use file, 2006. MEDICARE: A PRIMER 3 Approximately one-third of African-American and Hispanic beneficiaries have incomes below the poverty level, more than three times the share of White beneficiaries (11 percent). Age: Two-thirds of all Medicare beneficiaries with disabilities under age 65 live on incomes below twice the poverty level, and more than one-third live in poverty. Among people on Medicare age 65 and older, poverty rates increase with age. Nearly six in ten beneficiaries age 85 and older have annual incomes below twice the poverty level. Sex: Poverty rates are substantially higher among women on Medicare than men. More than half of all female Medicare beneficiaries live on an annual income below twice the poverty level, substantially higher than the rate for men. Share of Medicare Beneficiaries Below 200% of Poverty, 2008
150%-199% of Poverty 67%
11% 100%-149% of Poverty <100% of Poverty 67%
12% 58% 48% 36%
16% 15% 24% 18% 15% 16%
85+ 52% 47%
13% 15% 21% 18% 41%
12% 21% 23% 19% 17% 13% 16%
Total 19% 35% 19%
Female <65 12% 11%
65-74 34% 35% 27% 13%
Non-Hispanic Non-Hispanic White, Black, Hispanic Asian Sex Age in Years Race/Ethnicity Total = 43.0 Million Covered by Medicare, 2008
NOTE: In 2008, the federal poverty level was $10,400 for an individual and $14,000 for a couple. SOURCE: Kaiser Family Foundation and Urban Institute analysis of the U.S. Census Bureau, Current Population Survey, 2009 Annual Social and Economic Supplement. 4 THE HENRY J. KAISER FAMILY FOUNDATION WHAT DOES MEDICARE COVER AND HOW MUCH DO BENEFICIARIES PAY FOR BENEFITS?
Medicare provides coverage of basic medical services including care in hospitals and other settings, physician services, diagnostic tests, preventive services, and an outpatient prescription drug benefit. Beneficiaries generally pay varying deductibles and coinsurance amounts that are indexed to rise annually to keep pace with increases in program costs. (See page 21 for more detail about Medicare benefits and cost-sharing requirements for 2010.) PART A helps pay for inpatient care provided to beneficiaries in hospitals and short-term stays in skilled nursing facilities, and also covers hospice care, post-acute home health care, and pints of blood received at a hospital or skilled nursing facility. Most beneficiaries do not pay a monthly premium for Part A services, but are subject to a deductible before Medicare coverage begins. In 2010, the Part A deductible for each "spell of illness" is $1,100 for an inpatient hospital stay. Beneficiaries are generally subject to a coinsurance for benefits covered under Part A, including extended inpatient stays in a hospital ($275 per day for days 61-90 in 2010) or skilled nursing facility ($137.50 per day for days 21-100 in 2010). There is no copayment for home health visits. PART B helps pay for outpatient services, such as outpatient hospital care, physician visits, and other medical services, including preventive services such as mammography and colorectal screening. Part B also covers ambulance services, clinical laboratory services, durable medical equipment (such as wheelchairs and oxygen), kidney supplies and services, outpatient mental health care, and diagnostic tests, such as x-rays and magnetic resonance imaging. The health care reform law10 added a free annual comprehensive wellness visit and personalized prevention plan to the list of Medicare-covered benefits, beginning in 2011. The law also gives the Secretary of HHS the authority to modify coverage of Medicare-covered preventive services to conform to the recommendations of the U.S. Preventive Services Task Force (USPSTF). Beneficiaries enrolled in Part B are generally required to pay a monthly premium ($110.50 in 2010). However, in 2010 a majority of beneficiaries (73 percent) are not required to pay the higher Part B monthly premium because there was no cost-of-living increase in Social Security benefits; the 2010 Part B monthly premium for these beneficiaries is $96.40, the same as in 2009.11 New enrollees, higherincome beneficiaries, and low-income beneficiaries (who are not required to pay the monthly Part B premium themselves) are not held harmless from the Part B premium increase. (See page 12 for additional information on additional assistance for low-income beneficiaries through the Medicare Savings Programs [MSPs]). Beneficiaries with annual incomes greater than $85,000 for an individual or $170,000 for a couple in 2010 pay a higher, income-related monthly Part B premium, ranging from $154.70 to $353.60. The health care reform law freezes these thresholds at 2010 levels through 2019, beginning in 2011. Previously the income thresholds were indexed annually to rise with the rate of inflation, which limited the number of beneficiaries who would otherwise have been subject to the higher premium over time. Approximately 5 percent of all Medicare beneficiaries pay the income-related Part B premium in 2010. PPACA (P.L. 111-148), as amended by HCERA (P.L. 111-152). Henry J. Kaiser Family Foundation, "The Social Security COLA and Medicare Part B Premium: Questions, Answers, and Issues", October 2009, http://www.kff.org/medicare/7912.cfm.
11 10 MEDICARE: A PRIMER 5 Part B benefits are subject to an annual deductible ($155 in 2010), and most Part B services are subject to a coinsurance of 20 percent. Beginning in 2011, no coinsurance and deductibles will be charged for preventive services that are rated A or B by the USPSTF. PART C (Medicare Advantage) private health plans pay for all benefits covered under Medicare Part A, Part B, and Part D. Medicare Advantage enrollees generally pay the monthly Part B premium and often pay an additional premium directly to their plan. (See pages 9-10 for additional information about Medicare Advantage.) PART D helps pay for outpatient prescription drug coverage through private health plans. Plans are required to provide a "standard" benefit or one that is actuarially equivalent, and may offer more generous benefits. In general, individuals who sign up for a Part D plan pay a monthly premium, along with costsharing amounts for each prescription. The health care reform law gradually phases in coverage in the Part D coverage gap, and establishes a new income-related Part D premium with income thresholds similar to the Part B premium ($85,000/individual, $170,000/couple), beginning in 2011. As with the Part B incomerelated premiums, these income thresholds will not be indexed but instead fixed at these levels through 2019. (See pages 7-8 for additional information about Part D.) Despite the important protections provided by Medicare, there are significant gaps in Medicare's benefit package. Medicare does not pay for many relatively expensive services and supplies that are often needed by the elderly and younger beneficiaries with disabilities. Most notably, Medicare does not pay for custodial longterm care services either at home or in an institution, such as a nursing home or assisted living facility. Medicare also does not pay for routine dental care and dentures, routine vision care or eyeglasses, or hearing exams and hearing aids. Medicare has fairly high deductibles and cost-sharing requirements for covered benefits. Unlike typical large employer plans, Medicare does not have a stop-loss benefit that limits annual out-of-pocket spending. While many beneficiaries have supplemental insurance to help cover their Medicare-related expenses, they often pay premiums for supplemental coverage (including Medigap, Medicare Financial Burden of Health Spending Among Advantage plans, and employerMedicare Beneficiaries, 1997-2006 sponsored retiree health benefits). As a Median Out-of-Pocket Health result, many beneficiaries face Spending as % of Income significant out-of-pocket costs for both 18% 16.2% premiums and non-premium expenses 15.5% 15.6% 15.6% 16% 14.9% to meet their medical and long-term 14.0% 14% 12.8% care needs. (See pages 11-12 for 12.0% 11.9% additional information about supplemental insurance.) 12% 10% 8% 11.8% With health costs rising faster than income for Medicare beneficiaries, median out-of-pocket health spending as a share of income increased from 11.9 percent in 1997 to 16.2 percent in 2006.12 6% 4% 2% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 NOTE: Difference between 1997 and 2006 is statistically significant at .05 level. SOURCE: Kaiser Family Foundation analysis of Medicare Current Beneficiary Survey Cost and Use files, 1997-2006. 12 Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Cost and Use file, 1997-2006. 6 THE HENRY J. KAISER FAMILY FOUNDATION WHAT IS THE MEDICARE PRESCRIPTION DRUG BENEFIT?
Medicare beneficiaries have access to an outpatient prescription drug benefit (Part D) offered through private health plans: either stand-alone prescription drug plans (PDPs) or Medicare Advantage prescription drug (MA-PD) plans, such as HMOs or PPOs. In 2010, 1,576 stand-alone prescription drug plans (PDPs) are available nationwide, up from 1,429 in 2006 (excluding the territories). Beneficiaries in most states could choose from at least 45 stand-alone PDPs and multiple MA-PD plans. Medicare Part D drug plans are required to offer either the standard benefit that is defined in law, or an alternative equal in value ("actuarially equivalent"); plans can also offer enhanced benefits. Most Part D plans have a coverage gap (the so-called "doughnut hole"). The standard benefit in 2010 has a $310 deductible and 25 percent coinsurance up to an initial coverage limit of $2,830 in total drug costs, followed by a coverage gap, in which enrollees with at least $2,830 in total costs pay 100 percent of their drug costs until they have spent $4,550 out of pocket (excluding premiums). At that point, the individual pays 5 percent of the drug cost or a copayment ($2.50/generic or $6.30/brand for each prescription) for the rest of the year. The standard benefit amounts are set to increase annually by the rate of per capita Part D spending growth. Standard Medicare Prescription Drug Benefit, 2010
Enrollee pays 5%
Plan pays 15%; Medicare pays 80% ($4,550 out of pocket) $6,440 in Total Drug Costs Enrollee pays 100% minus $250 rebate $3,610 Coverage Gap ("Doughnut Hole") Enrollee pays 25% ($940 out of pocket) $2,830 in Total Drug Costs Plan pays 75% $310 Deductible SOURCE: Kaiser Family Foundation illustration of stan dard Medicare drug benefit for 2010 (standard benefit The health care reform law13 provides a parameter update from Centers for Medicare & Medicaid Services, April 2009). $250 rebate to Part D enrollees with any spending in the coverage gap in 2010, and gradually phases in coverage in the gap between 2011 and 2020. In 2010, only 11 percent of PDPs offer the standard benefit, most charge copayments instead of 25 percent coinsurance, and 60 percent charge a deductible, with 36 percent charging the full $310 deductible amount.14 The majority (80 percent) of PDPs offer no gap coverage, while for the 20 percent of PDPs offering gap coverage; this coverage is limited primarily to generic drugs only. Plans vary widely in terms of formularies (the list of covered drugs), the placement of drugs on formulary tiers, cost-sharing requirements, and utilization management tools (such as prior authorization requirements). Monthly Part D premiums and cost-sharing amounts are not uniform nationwide, but vary across plans and regions, and have increased significantly on average since 2006. In 2010, the national average monthly Part D premium for all plans (including PDPs and MA-PD plans) is $31.94 (unweighted by enrollment). Actual PDP premiums vary across plans and regions, ranging from a low of $8.80 in Oregon and Washington to a high of $120.20 in Delaware, Maryland, and Washington, D.C.
PPACA (P.L. 111-148), as amended by HCERA (P.L. 111-152). Hoadley J, Cubanski J, Hargrave E, Summer L, and Neuman T, "Medicare Part D Spotlight: Part D Plan Availability in 2010 and Key Changes Since 2006," Kaiser Family Foundation, November 2009, http://www.kff.org/medicare/7986.cfm.
14 13 MEDICARE: A PRIMER 7 Individuals with modest incomes and assets are eligible for additional assistance with Part D premiums and cost-sharing requirements. Beneficiaries with income below 150 percent of poverty ($16,245 for an individual; $21,855 for a couple in 2010) and limited assets ($12,510/individual; $25,010/couple in 2010) are eligible for the low-income subsidy (LIS), or "extra help", which helps pay for all or some of the Part D monthly premium, the annual Part D deductible, and prescription drug co-payments. The Centers for Medicare & Medicaid Services (CMS) estimates that of the 12.5 million beneficiaries potentially eligible for low-income subsidies as of February 2009, 2.3 million beneficiaries (18 percent) were not yet receiving them.15 Approximately 90 percent of all Medicare beneficiaries have "creditable" prescription drug coverage, while approximately 4.7 million beneficiaries (10 percent) lack a known source of creditable drug coverage. More than 27 million Medicare beneficiaries are enrolled in a Part D plan, as of April 2010. Of this total, nearly two-thirds (64 percent) are enrolled in stand-alone prescription drug plans. This includes nearly 8 million low-income subsidy recipients, many of whom were automatically enrolled in stand-alone drug plans. Nearly 20 percent of all Medicare beneficiaries (8.3 million) receive prescription drug coverage from an employer or union plan. This includes 6.4 million beneficiaries whose employers receive subsidies equal to 28 percent of drug expenses between $310 and $6,300 per retiree in 2010 through the Medicare Retiree Drug Subsidy (RDS) program.16 Prescription Drug Coverage Among Medicare Beneficiaries, 2010
No Drug Coverage 4.7 million 10% 17.7 million 38% Other Drug Coverage1 5.9 million 13% 8.3 million 18% Stand-Alone Prescription Drug Plan (PDP) Retiree Drug Coverage2 9.9 million 21% Medicare Advantage Drug Plan Total in Part D Plans: 27.7 Million (60%) Total Number of Medicare Beneficiaries = 46.5 Million
NOTE: Percentages do not sum to 100% due to rounding. 1Includes Veterans Affairs, retiree coverage without RDS, Indian Health Service, state pharmacy assistance programs employer plans for active workers, Medigap, multiple , sources, and other sources. 2Includes Retiree Drug Subsidy (RDS) and FEHBP and TRICARE retiree coverage. SOURCE: Centers for Medicare & Medicaid Services, 2010 Enrollment Information (as of February 16, 2010). The health reform law reduces the amount that Medicare Part D enrollees are required to pay for their prescriptions when they reach the coverage gap, gradually phasing in different levels of subsidies for brand-name and generic drugs in the gap beginning in 2011. In 2010, Part D enrollees with any out-of-pocket spending in the coverage gap will receive a $250 rebate. Beginning in 2011, Part D enrollees will receive a 50 percent discount on the total cost of brand-name drugs in the coverage gap, as agreed to by pharmaceutical manufacturers. Over time, Medicare will gradually phase in additional subsidies in the coverage gap for brand-name drugs (beginning in 2013) and generic drugs (beginning in 2011), reducing the beneficiary coinsurance rate from 100 percent in 2010 to 25 percent by 2020. In addition, between 2014 and 2019, the law reduces the out-of-pocket amount that qualifies an enrollee for catastrophic coverage, further reducing out-of-pocket costs for those with relatively high prescription drug expenses. In 2020, the catastrophic coverage level will revert to that which it would have been absent these reductions.17 U.S. Department of Health and Human Services (DHHS), February 1, 2009. Beginning in 2013, the health care reform law eliminates the tax deductibility of the 28 percent federal subsidy payment that employers who accept the retiree drug subsidy have been able to claim. 17 For more on the changes to the coverage gap, see Kaiser Family Foundation, "Explaining Health Care Reform: Key Changes to the Medicare Part D Drug Benefit Coverage Gap," http://www.kff.org/healthreform/8059.cfm.
16 15 8 THE HENRY J. KAISER FAMILY FOUNDATION WHAT IS MEDICARE ADVANTAGE?
Medicare Advantage (MA), also known as Medicare Part C, is a program that allows beneficiaries to enroll in private health plans to receive Medicare-covered benefits. Private plans such as health maintenance organizations (HMOs) have been an option under Medicare since the 1970s. Medicare now contracts with other types of private plans, including preferred provider organizations (PPOs), provider-sponsored organizations (PSOs), private fee-for-service (PFFS) plans, high deductible plans linked to medical savings accounts (MSAs), and special needs plans (SNPs) for individuals dually eligible for Medicare and Medicaid, the institutionalized, or those with certain chronic conditions. In 2010, Medicare beneficiaries were able to choose from 33 Medicare Advantage plans offered in their area, on average. As of April 2010, 75 percent of Medicare Advantage enrollees are in local HMOs or PPOs, 14 percent in PFFS plans, 7 percent in Regional PPOs, and the remainder in Total Medicare Private Health Plan Enrollment, other plan types.18 2000-2010 Since 2004, the number of Medicare Advantage plans and enrollees has steadily increased. Private plans are playing a larger role in Medicare through a revitalization of the Medicare Advantage program, largely due to increased payments. After a decline in the number of plans and enrollees between 1999 and 2003, the program has seen a rapid increase in more recent years. The number of Medicare enrollees in private plans has more than doubled from 5.3 million in 2003 to 11.4 million in early 2010.
Enrollment in millions:
8.3 6.8 6.2 6.1 5.3 5.3 5.3 10.8 9.6 11.4 5.6 2000 % of Medicare beneficiaries 17% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
15% 14% 13% 13% 12% 14% 19% 22% 24% 24% NOTE: Includes local HMOs, PSOs, PPOs; regional PPOs; PFFS plans; 1876 cost plans; demos; HCPP; and PACE plans. SOURCE: Mathematica Policy Research, "Tracking Medicare Health and Prescription Drug Plans Monthly Report," February 2000-2010. Medicare Advantage plans provide all benefits covered under traditional Medicare, and many plans offer additional benefits. The majority of plans also provide Part D prescription drug coverage. Medicare Advantage plans receive payments from the federal government to provide all Medicare-covered benefits to enrollees. Plan sponsors are generally required to offer at least one plan with basic drug coverage. Nearly 8 in 10 of Medicare Advantage plans (79 percent) offer drug coverage in 2010, and about half of these plans offer some coverage in the coverage gap, mainly for generic drugs only. Plans are required to use any extra payments (rebates) to provide additional benefits to enrollees in the form of lower premiums, lower cost sharing, or extra benefits and services. Examples of extra benefits include vision, hearing, preventive dental care, podiatry, chiropractic services, and gym memberships. Medicare Advantage plan premiums and cost-sharing requirements vary widely, and have increased in recent years. Medicare Advantage enrollees generally pay the monthly Part B premium and often pay an additional premium directly to their plan. In 2010, the unweighted average premium for MA-PD plans is $56 per month, but varies by plan type and is lower for HMOs ($40) than for private fee-for-service plans ($74).19 The weighted average monthly premium for MA-PD plans in 2010 is $48, a 32 percent increase
18 Kaiser Family Foundation analysis of enrollment data from CMS, Monthly Summary Report, April 2010. MEDICARE: A PRIMER 9 from 2009.20 Most Medicare Advantage plans limit beneficiaries' total out-of-pocket expenses, but costsharing requirements vary widely across plans in 2010. Moreover, average cost sharing for some Medicarecovered services increased significantly between 2008 and 2010 among Medicare Advantage plans.21 Enrollment in Medicare Advantage plans varies widely across states. In 2010, less than 5 percent of beneficiaries in 3 states (Alaska, Delaware, and Vermont) are enrolled in Medicare Advantage plans while more than 30 percent of beneficiaries in 10 states (Arizona, California, Colorado, Hawaii, Minnesota, Ohio, Oregon, Pennsylvania, Rhode Island, and Utah) are in such plans. Nationwide, nearly half of all Medicare Advantage enrollees live in 6 states (California, Florida, New York, Ohio, Pennsylvania, and Texas).22 Medicare Advantage Enrollees as a Percent of Medicare Beneficiaries, by State, 2010
National Average, 2010 = 24%
23% 17% 40% 28% 6% 11% 31% 35% 33% 12% 9% 14% 20% 13% 13% 23% 7% 7% 38% 38% 28% 14% 31% 21% 13% 15% 23% 8% 20% 18% 16% 14% 19% 29% 36% 3% 11% 6% 18% 34% 17% 12% 3% 7% DC 9% 30% 10% 35% 1% 24% 14% 29% 40% Medicare pays private plans more per enrollee, on average, than it pays for beneficiaries in the traditional Medicare fee-for-service program. NOTE: Share of Medicare Advantage enrollees includes beneficiaries in g Medicare HMOs, PPOs, PSOs, MSAs, PFFS, demonstrations, PACE, employer direct PFFS, and cost plans. SOURCE: Kaiser Family Foundation analysis of data from the Centers for Medicare & Medicaid Services, Medicare Advantage State/County Penetration Data, February 2010. <10% (10 states and DC) 10-19% (18 states) 20-30% (12 states) >30% (10 states) Since 2006, Medicare has paid private plans under a bidding process: plans submit bids that estimate their costs per enrollee for services covered under Medicare Parts A and B. If plans bid higher than the countylevel benchmark, enrollees pay the difference in the form of monthly premiums. If plans bid lower than the benchmark, plans receives 75 percent of the difference; Medicare keeps the other 25 percent. According to the Medicare Payment Advisory Commission (MedPAC), Medicare payments to private plans in 2010 are higher, on average, than Medicare fee-for-service costs. Medicare payments to plans in 2010 would have averaged 113 percent of Medicare fee-for-services costs if Congress had not acted to prevent the scheduled 21 percent reduction in physician fees under Medicare, as of January 2010. If Congress enacts legislation to prevent the physician fee reduction for all of 2010, MedPAC estimates payments to plans would average 109 percent of Medicare fee-for-service costs in 2010.23 The 2010 health care reform law24 reduces Medicare payments to private plans and rewards highquality plans. Over time, Medicare payments to Medicare Advantage plans will be reduced to levels closer to county-level Medicare fee-for-service (FFS) costs. Plans in counties with relatively high Medicare FFS costs will be paid 95 percent of FFS costs per enrollee, while plans in counties with relatively low Medicare FFS costs will be paid 115 percent of FFS costs per enrollee. Medicare payments will also be reduced to adjust for the health status of plan enrollees, and high-quality plans will receive bonus payments, with high-quality plans in certain counties receiving double bonuses. Gold M, Phelps D, Neuman T, Jacobson G, Medicare Advantage 2010 Data Spotlight: Plan Availability and Premiums, Kaiser Family Foundation, November 2009, http://www.kff.org/medicare/8007.cfm. 20 Weighted by 2009 enrollment; Gold M, et al, Medicare Advantage 2010 Data Spotlight: Plan Availability and Premiums, November 2009. 21 Gold M, Hudson M, Jacobson G, Neuman T, Medicare Advantage 2010 Data Spotlight: Benefits and Cost Sharing, Kaiser Family Foundation, February 2010, http://www.kff.org/medicare/8047.cfm. 22 Kaiser Family Foundation analysis of CMS Medicare Advantage State/County Penetration file, February 2010. 23 Medicare Payment Advisory Commission (MedPAC), "Report to the Congress: Medicare Payment Policy," March 2010. 24 PPACA (P.L. 111-148), as amended by HCERA (P.L. 111-152). 19 10 THE HENRY J. KAISER FAMILY FOUNDATION WHAT TYPES OF SUPPLEMENTAL INSURANCE DO BENEFICIARIES HAVE?
Many Medicare beneficiaries have some type of supplemental insurance coverage to help fill the gaps in Medicare's benefit package and help with Medicare's cost-sharing requirements. Employer and union-sponsored plans are a leading source of supplemental coverage, providing health benefits to about one in three Medicare beneficiaries. In 2007, 34 percent of Medicare beneficiaries had coverage from an employer-sponsored health plan.25 The vast majority of these beneficiaries received supplemental coverage as part of a retiree health benefits plan. Employer plans also often provide additional benefits, including prescription drug coverage and limits on retirees' out-of-pocket health expenses. For an estimated 1.3 million Medicare beneficiaries who are working (or have working spouses), employer plans are their primary source of health insurance coverage.26 For these individuals, Medicare is the secondary payer. Sources of Supplemental Coverage Among Medicare Beneficiaries, 2007
None Medicare fee-for-service only Other public/private (1%) 11%
Employersponsored Medicaid 15% 34% 17%
Self-purchased only 22% Medicare Advantage Total Number of Beneficiaries = 40.8 Million
NOTE: Percents rounded to the nearest whole number. SOURCE: Kaiser Family Foundation analysis of the CMS 2007 Medicare Current Beneficiary Survey Access to Care File. Access to retiree health benefits is on the decline, however. The share of large firms offering retiree health benefits has dropped by more than half over the past two decades, from 66 percent in 1988 to 29 percent in 2009.27 Medicare Advantage plans are a source of supplemental coverage for people on Medicare. Enrollment in private Medicare Advantage health plans has increased in recent years. Medicare beneficiaries who enroll in private Medicare Advantage health plans often receive supplemental benefits that are not covered under traditional Medicare, such as vision and dental benefits. The Congressional Budget Office (CBO) estimates that the average value of these extra benefits was $87 per month in 2009, but projects that the average value of extra benefits will decline as a result of payment reductions enacted as part of the health care reform law.28 (See pages 9-10 for additional information about Medicare
Advantage.) 25 Kaiser Family Foundation analysis of the CMS 2007 Medicare Current Beneficiary Survey Access to Care File. The hierarchy for assigning sources of supplemental coverage is: 1) Medicare Advantage, 2) Medicaid, 3) Employer, 4) Self-purchased only, 5) Other public/private coverage, and 6) No supplemental coverage (Medicare fee-for-service only). Beneficiaries with multiple sources of coverage were assigned to the source of coverage that is higher up in the hierarchy. 26 DHHS, February 2009. 27 Kaiser Family Foundation/HRET Employer Health Benefits 2009 Annual Survey, http://ehbs.kff.org/. 28 Congressional Budget Office, Comparison of Projected Enrollment in Medicare Advantage Plans and Subsidies for Extra Benefits Not Covered by Medicare Under Current Law and Under Reconciliation Legislation Combined with H.R. 3590 as Passed by the Senate, March 19, 2010. MEDICARE: A PRIMER 11 Medigap policies also called Medicare Supplement Insurance are sold by private insurance companies and help cover Medicare's cost-sharing requirements and fill gaps in the benefit package. Medigap policies assist beneficiaries with their coinsurance, copayments, and deductibles for Medicarecovered services. In 2007, about one in five Medicare beneficiaries had an individually-purchased Medicare supplement insurance policy.29 Currently there are 12 different standard Medigap plans (labeled Plan A-L), each offering coverage of a different set of benefits. As of June 2010, two new plans (Plans M and N) will be offered, while Plans E, H, I, and J will no longer be available for sale.30 Premiums vary by plan type and may vary by insurer, age of the enrollee, and state of residence. Medicaid, the federal-state program that provides health and long-term care coverage to lowincome Americans, is a source of supplemental coverage for 8 million Medicare beneficiaries with low incomes and modest assets in 2010. These beneficiaries are known as dual eligibles because they are dually eligible for Medicare and Medicaid. Medicaid helps to make Medicare affordable for low-income beneficiaries, given gaps in the benefit package, premiums, deductibles, and other costsharing requirements. Most dual eligibles--6.3 million in 2009--qualify for full Medicaid benefits, including longterm care and dental services.31 Dual eligibles also get help with Medicare's premiums and cost-sharing requirements, and receive subsidies that help pay for drug coverage under Medicare Part D plans. Medicaid and Medicare Savings Programs Eligibility Pathways and Benefits for Medicare Beneficiaries
Pathway Income Eligibility Levels1
(individual/couple) Asset Limit2
(individual/ couple) Covered Costs and Services
Medicaid benefits, Medicare Part A and Part B premiums and cost-sharing Medicare Part B premiums and cost-sharing Medicare Part B premiums Medicare Part B premiums Full Medicaid Qualified Medicare Beneficiary (QMB) Specified Low-Income Medicare Beneficiary (SLMB) Qualified Individual (QI) Qualified Disabled <74% of poverty (SSI income eligibility; varies by state) <100% of poverty ($10,830/$14,570) 100%-120% of poverty ($12,996/$17,484) 120%-135% of poverty ($14,621/$19,670) $2,000/ $3,000 (varies by state) $8,100/ $12,910 $8,100/ $12,910 $8,100/ $12,910 <200% of poverty $5,500/ Medicare Part A Some dual eligibles--1.8 million in and Working $9,000 premiums ($21,660/$29,140) Individual (QDWI) 2009--do not qualify for full Medicaid benefits, but get help with Medicare NOTE: Applicants are allowed a $20 disregard from any income before their income is measured against the poverty levels. Asset limits for QMB, SLMB, QI, and QDWI include $1,500 per person for burial expenses. SSI is premiums and some cost-sharing Supplemental Security Income. requirements through the Medicare Savings Programs (MSP), administered under Medicaid.32 Eligibility for this assistance is based on a beneficiary's income and resources (generally less than $8,100 for an individual and $12,910 for a couple).
1 2 Another 1.6 million beneficiaries receive supplemental assistance (including prescription drug benefits) through the Veterans Administration and other government programs.33 29 30 31 32 33 Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Access to Care file, 2007. Centers for Medicare & Medicaid Services, Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare, March 2010. DHHS, February 2009. DHHS, February 2009. DHHS, February 2009. 12 THE HENRY J. KAISER FAMILY FOUNDATION HOW DO MEDICARE BENEFICIARIES FARE WITH RESPECT TO ACCESS TO CARE?
The enactment of Medicare dramatically improved access to care for millions of elderly Americans. Prior to the enactment of Medicare in 1965, less than half of all elderly people had insurance to help pay for hospital and other medical services.34 Many were unable to get health insurance either because they could not afford the premiums or because they were denied coverage based on their age or pre-existing health conditions. Medicare significantly improved access to care for elderly Americans and is now a vital source of health and financial security for nearly all elderly Americans, as well as millions of people with permanent disabilities. Beneficiaries generally enjoy broad access to physicians, hospitals, and other providers, and report relatively low rates of problems across a number of access measures. Yet there is some evidence of access problems among certain demographic subgroups. Access to care: A relatively small share of Medicare beneficiaries report experiencing problems accessing needed medical care, with modest decreases reported in some measures of access difficulties over the past several years. For example, only 5 percent of all beneficiaries reported trouble getting health care in 2007 (the most recent year for which data are available), while 8 percent said they delayed seeking medical care due to cost, and 8 percent said they had a serious medical problem for about which they should have seen a doctor but did not.35 Measures of Access to Care Among Medicare Beneficiaries, 2002 and 2007
8.7% 7.7%* 2007
9.1% 8.0%* 4.5% 4.9% Rates of access problems are higher NOTE: *indicates statistically significant difference from reference group (ref) at p<.05 level. SOURCE: Kaiser Family Foundation analysis of the CMS 2007 Medicare Current Beneficiary Survey Access to Care File. among certain subgroups of the Medicare population, including Black and Hispanic beneficiaries, the nonelderly disabled, those with low incomes, and those living in rural areas.36 A larger share of beneficiaries without supplemental coverage than those with supplemental coverage report access problems, which suggests that Medicare's costsharing requirements pose financial barriers to care for some individuals. In the last year, have you had any trouble getting health care that you wanted or needed? In the last year, have you delayed seeking medical care because you were worried about the cost? Did you have any health problem or condition about which you think you should have seen a doctor or other medical person, but did not? Finding a physician: Medicare beneficiaries are about as likely as privately insured individuals to report problems finding a primary care doctor or specialist who would see them. Among the small share of Medicare beneficiaries (6 percent) who reported looking for a new primary care physician in 2008, 28 percent reported a problem finding one.37 A 2006 survey found 97 percent of physicians reported accepting new Medicare patients, but a smaller share (80 percent) reported accepting all or most new Medicare patients.38
34 M. Gornick, et al, "Twenty Years of Medicare and Medicaid: Covered Populations, Use of Benefits, and Program Expenditures," Health Care Financing Review, 1985 Annual Supplement. 35 Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Access to Care file, 2007. 36 Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Access to Care file, 2007. 37 MedPAC, "Report to the Congress: Medicare Payment Policy," March 2009. 38 MedPAC, "Report to the Congress: Medicare Payment Policy," March 2009. MEDICARE: A PRIMER 13 HOW IS MEDICARE FINANCED?
Funding for Medicare comes primarily from general revenues, payroll tax revenues, and premiums paid by beneficiaries. Other sources include taxation of Social Security benefits, payments from states, and interest. Medicare is funded as follows: Part A, the Hospital Insurance (HI) Trust Fund, is financed largely through a dedicated tax of 2.9 percent of earnings paid by employers and their employees (1.45 percent each). In 2010, these taxes are estimated to account for 84 percent of the $234 billion in revenue to the Part A Trust Fund. The health care reform law39 increases the Medicare Hospital Insurance payroll tax for higher-income taxpayers (more than $200,000/individual and $250,000/couple) by 0.9 percentage points (from 1.45 percent to 2.35 percent), beginning in 2013, with additional revenues deposited into the HI Trust Fund. Part B, the Supplementary Medical Insurance (SMI) Trust Fund, is financed through a combination of general revenues and premiums paid by beneficiaries. Premiums are automatically set to cover 25 percent of spending in the aggregate, while general revenues subsidize the remaining 75 percent. Higher-income beneficiaries pay a larger share of spending, ranging from 35 percent to 80 percent. In 2010, Part B revenue is estimated to be $212 billion. Part C, the Medicare Advantage program, provides benefits under Parts A, B, and D, and thus is not separately financed. Estimated Sources of Medicare Revenue, 2010
General Revenue 40% Payroll Taxes 73% 84% 77% Beneficiary Premiums Payments from States Taxation of Social Security Benefits 38% 12% 3%
2% 4% 1% 7%
7% PART A $234 Billion 25%
2% 11% 12%
PART D $68 Billion Interest and Other TOTAL $513 Billion PART B $212 Billion SOURCE: 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds; fiscal year estimates. Part D is financed through general revenues, beneficiary premiums, and state payments for dual eligibles (who received drug coverage under state Medicaid programs prior to 2006). The monthly premium paid by enrollees is set to cover 25.5 percent of the cost of standard drug coverage, and Medicare subsidizes the remaining 74.5 percent. Similar to Part B, higher-income beneficiaries will pay a larger share of the cost of standard drug coverage and receive a smaller premium subsidy, beginning in 2011. In 2010, Part D revenue is projected to be $68 billion, 77 percent of which will be from general revenues, 11 percent from premiums, and 12 percent from state payments. 39 PPACA (P.L. 111-148), as amended by HCERA (P.L. 111-152). 14 THE HENRY J. KAISER FAMILY FOUNDATION HOW MUCH DOES MEDICARE COST AND HOW IS THE MONEY SPENT?
Spending on Medicare is estimated to account for 12 percent of total federal spending in 2010. Federal spending for fiscal year 2010 is expected to total $3.6 trillion, with spending on Medicare comprising 12 percent of that amount.40 Of the three main entitlement programs--Social Security, Medicare, and Medicaid-- Medicare is second largest in terms of the share of federal spending on each program. Social Security is largest, at 19 percent of federal spending in 2010. Spending on Medicaid and CHIP (the Children's Health Insurance Program) represents 8 percent of federal spending. Medicare benefit payments are estimated to total $504 billion in 2010. Inpatient hospital services comprise the largest share of Medicare benefit payments (27 percent), followed by payments to Medicare Advantage plans (24 percent), and physician and other suppliers (18 percent). Spending on the Part D prescription drug benefit accounts for 11 percent of total benefit payments in 2010. Prior to enactment of the 2010 health reform law, CBO projected that Medicare Advantage payments would account for 22 percent of Medicare benefit payments and prescription drugs another 15 percent of Medicare benefit payments in 2019.41 Medicare Spending as a Share of Total Federal Spending in 2010
Defense Discretionary Social Security 23% 19% 12%
Nondefense Discretionary Medicare 15% 8% 5% 17%
Other* Federal Medicaid and CHIP Net Interest 2010 Total Federal Outlays = $3.6 trillion
NOTE: Amount for Medicare includes offsetting premium receipts. *Other category includes disaster costs and negative outlays for Troubled Asset Relief Program. SOURCE: Office of Management and Budget, FY2011 Budget, Summary Tables; February 2010. Medicare Benefit Payments By Type of Service, 2010
Outpatient Prescription Drugs Hospital Outpatient/ Other Part B Hospital Inpatient Part A Part B Part A and B
27% 11% 9% Part D Physicians and Other Suppliers 18% 5% Skilled Nursing Facilities Hospice 3% 4%
Home Health 24%
Medicare Advantage Total Benefit Payments = $504 billion
NOTE: Does not include administrative expenses such as spending to administer the Medicare drug benefit and the Medicare Advantage program. SOURCE: CBO Medicare Baseline, March 2009. 40 41 OMB, Budget of the U.S. Government, Fiscal Year 2011, February 2010. CBO, Medicare Baseline, March 2009. MEDICARE: A PRIMER 15 Medicare spending is concentrated among a small share of beneficiaries and varies geographically. A small share of Medicare beneficiaries accounts for a majority of Medicare spending. Ten percent of beneficiaries in the fee-for-service program accounted for nearly 60 percent of Medicare spending in 2006 (the most recent year for which data are available).42 At the other end of the spectrum, 22 percent of all fee-forservice beneficiaries had total spending of less than $1,000, accounting for just 1 percent of total expenditures. Twelve percent of beneficiaries incurred no expenditures at all. Ten Percent of FFS Medicare Beneficiaries Account for Nearly Sixty Percent of Medicare Spending, 2006
Average per capita Medicare spending (FFS only): $8,344 58%
Average per capita Medicare spending among top 10% (FFS only): $48,211 90% 42% Average per capita Medicare FFS 35.9 million $299 billion payments for elderly beneficiaries NOTE: FFS is fee-for-service. Includes noninstitutionalized and institutionalized Medicare fee-for-service beneficiaries, excluding Medicare managed care enrollees. (including Part A and B reimbursement, SOURCE: Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey 2006 Cost & Use file. direct and indirect medical education, and disproportionate share hospital payments) vary by geographic area. Most counties have average per capita Medicare FFS payments between $4,000 and $6,000. However, 6 counties have average per capita payments of less than $2,000, while 8 counties have FFS payments of $8,000 or more per capita.43 Medicare spending accounted for more than one-fifth of the $1.9 trillion in personal health care expenditures in the U.S in 2008. Medicare's share of national personal health care expenditures varies by type of service, reflecting benefits covered and services used by the Medicare population. For example, in 2008, Medicare accounted for 42 percent of home health care spending and 29 percent of all hospital spending. Medicare accounted for 22 percent of total national prescription drug spending in 2008 a significant increase from 2 percent in 2005, the year before the Part D drug benefit went into effect. Total Number of Beneficiaries: Total Medicare Spending: Medicare's Share of National Personal Health Expenditures, by Type of Service, 2008
42% 29% 23% 22% 21% 19% Total Home Health Services* Care Hospital Services Prescription Drugs Physician Services Nursing Home Care Expenditures in Billion s Medicare $444 Total $1,952 $27 $65 $211 $718 $52 $234 $103 $496 $26 $138 NOTE: *Total also includes dental care, durable medical equipment, other professional services, and other personal health care/products. SOURCE: CM S, Office of the Actuary, National Health Statistics Group, January 2010. 42 43 Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Cost and Use file, 2006. Kaiser Family Foundation analysis of CMS Medicare Fee-for-Service Data, 2008. 16 THE HENRY J. KAISER FAMILY FOUNDATION HOW IS THE HEALTH CARE REFORM LAW EXPECTED TO AFFECT FUTURE MEDICARE SPENDING?
The 2010 health care reform law44 includes a number of changes that are expected to reduce the growth in Medicare spending over the next decade and beyond. The Medicare provisions of the health care reform law are estimated to result in a net reduction of $428 billion in Medicare spending between 2010 and 2019, taking into account $533 billion in Medicare savings and $105 billion in new Medicare spending over the 10year period, according to analysis of CBO estimates.45 The law is expected to reduce the average annual growth rate in Medicare spending between 2010 and 2019 from 6.8 percent to 5.5 percent. Effect of 2010 Health Reform Law on Medicare Spending, 2010-2019
(in $ billions) $1,000
Medicare Baseline Spending Average Annual Growth Rate: Before Health Reform = 6.8% After Health Reform = 5.5%
$854 $819 $943 $900 $800 BEFORE Health Reform
$696 $635 $725 $787 $771 $845 $700
$580 $571 $732 $675 $748 $600
$521 $570 $570 $652 $617 AFTER Health Reform $500 $523 $400 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
NOTE: Estimates do not take into account additional spending to offset the physician payment reductions that are required under current law according to the Sustainable Growth Rate formula. SOURCE: Medicare spending before reform from CBO, March 2009 Medicare Baseline; after reform from Kaiser Family Foundation analysis of CBO cost estimates of health reform legislation, March 20, 2010. Medicare spending reductions are achieved through a number of provisions, including: Payments to Medicare Advantage Plans. The law reduces federal payments to plans so that, on average, Medicare does not continue to pay substantially more for beneficiaries who enroll in Medicare Advantage plans than it pays for beneficiaries in the traditional fee-for-service program. Payments to providers. The law reduces annual updates in Medicare payments to hospitals, skilled nursing facilities, home health agencies, and various other providers (other than physicians), and adjusts payments to account for productivity improvements. Delivery system reforms. The law includes several new policies and programs designed to reduce costs and improve quality of patient care, including reducing payments associated with unnecessary hospital readmissions and hospital-acquired infections, pilot programs related to the delivery of postacute care, value-based purchasing for providers, and the establishment of accountable care organizations. In addition, the law creates a new Center for Medicare and Medicaid Innovation within CMS, with the authority to test payment and service delivery models and implement effective models nationwide. In addition, the law establishes a new Independent Payment Advisory Board to recommend policies to reduce Medicare spending, if projected spending exceeds target growth rates. The Board's initial proposal is due in 2014, and the savings recommendations will take effect automatically unless Congress adopts alternative proposals that achieve equivalent Medicare savings. The establishment of the Board represents the first time that the Medicare program will be subject to annual spending limits with requirements for automatic enactment of the Board's recommendations. CBO projects the Board will achieve savings in each year after it begins making recommendations (2015-2019) and will continue to reduce Medicare spending beyond the ten-year budget window.46
PPACA (P.L. 111-148) as amended by HCERA (P.L. 111-152). CB0, Cost Estimate for the Amendment in the Nature of a Substitute for H.R. 4872, Incorporating a Proposed Manager's Amendment Made Public on March 20, 2010; March 20, 2010. These estimates do not take into account additional spending to offset the physician payment reductions that are required under current law according to the Sustainable Growth Rate formula. 46 CBO, Cost Estimate for the Amendment in the Nature of a Substitute for H.R. 4872; March 20, 2010.
45 44 MEDICARE: A PRIMER 17 MEDICARE SAVINGS AND SPENDING IN THE PATIENT PROTECTION AND AFFORDABLE CARE ACT (P.L. 111-148), AS AMENDED BY THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (P.L. 111-152)
MEDICARE SAVINGS PROVISIONS Annual provider payment updates Medicare Advantage payment reforms Home health payments Part B premiums for higher-income enrollees Disproportionate Share Hospital (DSH) payments Medicare Improvement Fund Independent Payment Advisory Board Part D premiums for higher-income enrollees Fraud, waste, and abuse Reducing hospital readmissions Part D enrollment and other consumer protections Delivery system pilot programs Other provisions Interactions* TOTAL 10-YEAR MEDICARE SAVINGS MEDICARE SPENDING PROVISIONS Part D coverage gap discount program and new federal subsidies Premium interactions Physician payment reforms Preventive services Other provider payments Medicare Savings Programs and Part D low-income subsidies Disproportionate Share Hospital (DSH) payments Part D enrollment and other consumer protections Medicare Advantage reforms Other provisions Interactions* TOTAL 10-YEAR MEDICARE SPENDING NET 10-YEAR MEDICARE SAVINGS COST ESTIMATE $157 $136 $40 $25 $22 $21 $16 $11 $7 $7 $6 $5 $7 $75 $533 $43 $38 $7 $5 $1 $1 $1 $1 $1 $4 $3 $105 $428 (in $ billions) OTHER RELATED REVENUE PROVISIONS Raise Medicare payroll tax on high earnings (Deposited in HI Trust Fund) Fee on drug manufacturers (Deposited in SMI trust fund) Eliminate Part D employer deduction $87 $27 $5 NOTE: *Savings interactions include interactions with Medicare Advantage and TRICARE; spending interactions include implementation of Medicare changes, Part D interactions with Medicare Advantage provisions, Part B interactions with Part D provisions, and Medicaid interactions with Medicare Part D provisions. SOURCE: Kaiser Family Foundation analysis of Congressional Budget Office (CBO) cost estimates as provided on March 20, 2010; Revenue estimates based on Joint Committee on Taxation estimates as provided on March 20, 2010. 18 THE HENRY J. KAISER FAMILY FOUNDATION WHAT ARE MEDICARE'S FUTURE FINANCING CHALLENGES?
Looking to the future, Medicare is expected to face significant financing challenges due to increasing health care costs, the aging of the U.S. population, the declining ratio of workers to beneficiaries, and various economic factors. In light of the recent economic downturn and pressures to reduce the federal budget deficit, policymakers are likely to continue focusing on ways to reduce federal spending on entitlement programs, including Medicare, Medicaid, and Social Security. In February 2010, President Obama established a bipartisan National Commission on Fiscal Responsibility and Reform to recommend policies to reduce the nation's rising debt and the federal budget deficit including, but not limited to, curbing the growth in entitlement spending with a report due by December 2010. Over the long term, several factors including rising health care costs, an aging population, a decline in the number of workers per beneficiary, and increasing life expectancy will present fiscal challenges for Medicare. From 2010 to 2030, the number of people on Medicare is projected to rise from 47 million to 79 million, while the ratio of workers per beneficiary is expected to decline from 3.7 to 2.4.47 Total Medicare spending is projected to nearly double from $528 billion in 2010 to $1,038 billion in 2020, according to CBO.48 These projections do not take into account Medicare spending reductions that are scheduled to occur over the next decade as part of the 2010 health care reform law. Sustained increases in health care costs are placing upward fiscal pressure on Medicare, as for other payers. The annual growth in Medicare spending is influenced by factors that affect health spending generally, including increasing volume and utilization of services, higher prices for health care services, and new technologies. Although Medicare spending increases each year, the average per capita spending growth rate between 1970 and 2008 was slightly lower for Medicare (8.3 percent) than for private health insurance (9.3 percent) for common benefits (excluding prescription drugs).49 Moving forward, system-wide efforts to curtail overall health care costs, including several provisions of the 2010 health reform law, are expected to improve Medicare's financial outlook. A number of measures are used to assess the long-term financial status of Medicare. Medicare Spending as a Percent of Gross Domestic Product (GDP), 2000-2030
(Not adjusted for the effects of the 2010 health care reform law)
Part D Part B Part A Medicare spending as a share of gross domestic product (GDP) is one of several measures reported by the Medicare Trustees in their annual report to the Congress. This measure looks at expenditures over all parts of the Medicare program in the context of the U.S. economy as a whole. With the aging population and expected increases in overall health care costs, Medicare spending is projected to grow at a faster rate than the overall economy. Medicare expenditures as a share of GDP are projected to rise from 3.5 percent of GDP in 2010 to 6.4 percent of GDP in 2030. 6.4% 5.5% 4.5%
0.9% 2.6% 2.2% 1.8% 1.1% 3.5% 2.3%
0.5% 1.4% 0.7% 2.7%
1.2% 0.4% 1.4% 1.3% 1.5% 1.7% 1.8% 2.0% 2.4% 2.7% 2000 2005 2010 2015 2020 2025 2030 NOTE: Numbers may not sum to total due to rounding. SOURCE: 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 47 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, May 2009. 48 These estimates exclude offsetting receipts (primarily premiums paid by beneficiaries). These estimates also do not take into account additional spending to offset the physician payment reductions that are required under current law according to the Sustainable Growth Rate formula. 49 CMS, OACT, National Health Statistics Group, 2010. MEDICARE: A PRIMER 19 However, these projections do not take into account Medicare spending reductions that are scheduled to occur over the next decade as part of the 2010 health care reform law. Solvency of the Part A (HI) Trust Fund is another measure that has been used to present a picture of Medicare's financial health. This indicator looks exclusively at Part A, and does not take into account spending or financing for other parts of the Medicare program. According to the Medicare Trustees, Part A spending has exceeded income since 2008. In May 2009, the Medicare Trustees projected that the HI Trust Fund reserves would be depleted in 2017.50 However, the reductions in Medicare spending that were enacted as part of the 2010 health care reform law, coupled with additional revenue raised by the increase in the payroll tax on taxpayers with relatively high earnings, are projected to extend the solvency of the Medicare Hospital Insurance Trust Fund from 2017 to 2029, according to CMS.51 The Medicare per capita spending growth rate relative to the growth rate of inflation and the growth rate of GDP plus 1 percentage point will be used by the new Independent Payment Advisory Board to determine whether the Board is required to recommend Medicare savings proposals to Congress, beginning in 2014, as well as the magnitude of savings to be achieved. Prior to 2018, the Board is required to recommend savings proposals if the projected five-year average percentage increase in per capita Medicare spending exceeds the projected five-year average percentage increase in the consumer price index (CPI) and the CPI for medical care (CPI-M). In 2018 and beyond, the Medicare spending target growth rate is the projected five-year average percentage increase in nominal per capita GDP plus 1 percentage point. If Medicare spending exceeds the target growth rate, the Board is required to recommend savings to achieve the lesser of either (1) the amount by which projected Medicare costs exceeds the spending target or (2) a specified percentage multiplied by total projected Medicare spending for the year. The Secretary of HHS is required to implement the Board's recommendations by August 15 of the year the proposal is submitted, unless Congress has already passed legislation that achieves the same level of savings. If the Board fails to act, the Secretary is required to submit a proposal to achieve an equivalent level of savings. If Congress does not enact a legislative package that achieves the required level of Medicare savings, the Board's (or Secretary's) original proposal will take effect immediately. The amount of general revenues as a share of total Medicare spending is another way to measure Medicare's fiscal health, established under the Medicare Modernization Act of 2003. Each year, the Medicare Trustees are required to examine general revenues as a share of total Medicare spending, and make a determination as to whether general revenues are projected to exceed 45 percent of total outlays within a seven-year timeframe. If the Trustees make this determination two years in row, a "Medicare funding warning" is issued, indicating that general revenues are becoming a substantial share of total financing for Medicare. In response, the President is required to submit proposed legislation to Congress, which must consider this legislation on an expedited basis. In 2009, for the fourth year in a row, the Medicare Trustees projected that general revenues would exceed 45 percent of total Medicare spending within seven years (by 2014). However, in January 2009, the U.S. House of Representatives passed a resolution to suspend congressional consideration of funding warning legislation for the 111th Congress.52 Ensuring Medicare's financial stability over the long term is a pressing challenge for policymakers. Medicare provides essential coverage for 47 million beneficiaries, many of whom have multiple chronic conditions and significant health needs. Securing access to affordable health care for seniors and people with disabilities while addressing Medicare's fiscal pressures is a high priority for the future. 50 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, May 2009. 51 CMS, Office of the Actuary, Estimated Effects of the Patient Protection and Affordable Care Act, as Amended, on the Year of Exhaustion for the Part A Trust Fund, Part B Premiums, and Part A and Part B Coinsurance Amounts, April 22, 2010. 52 H. Res. 5, January 6, 2009. 20 THE HENRY J. KAISER FAMILY FOUNDATION MEDICARE BENEFITS* AND COST-SHARING REQUIREMENTS, 2010
Deductible Inpatient hospital
Days 1-60 Days 61-90 Days 91-150 $1,100 per benefit period
No coinsurance $275 per day $550 per day (for up to 60 lifetime reserve days) After 150 Days Skilled nursing facility
Days 1-20 Days 21-100 After 100 Days Not covered
No coinsurance $137.50 per day Not covered Home Health Hospice Inpatient psychiatric hospital Deductible Premium No coinsurance; no limit on number of visits No coinsurance for hospice care; copayment of up to $5 for outpatient drugs and 5% coinsurance for inpatient respite care Up to 190 days in a lifetime PART B
$155 $110.50/month; higher for those with incomes above $85,000/single or $170,000/couple; $96.40/month for those held harmless from the premium increase
20% coinsurance 20% coinsurance, plus up to 15% above the Medicare-approved fee Physician and other medical services
MD accepts assignment MD does not accept assignment Outpatient hospital care Ambulatory surgical services Diagnostic tests, X-rays, and lab services Durable medical equipment Physical, occupational, and speech therapy Clinical laboratory services Home health care Outpatient mental health services One-time "Welcome to Medicare" physical exam Preventive services*
Flu shot, Pneumococcal shot Hepatitis B shot, colorectal and prostate cancer screening, pap smear, mammogram, cardiovascular screening, abdominal aortic aneurysm (AAA) screening, bone mass measurement, diabetes screening and monitoring, glaucoma screening, smoking cessation 20% coinsurance 20% coinsurance 20% coinsurance 20% coinsurance 20% coinsurance; certain limits may apply No coinsurance No coinsurance; no limit on number of visits 45% coinsurance (gradually decreasing to 20% in 2014) 20% coinsurance; covered within first 12 months of Part B enrollment; Part B deductible does not apply
No coinsurance; limit of one flu shot per flu season 20% coinsurance after annual Part B deductible is met; however, Part B deductible and coinsurance are waived for some preventive services PART D
Information below applies to the standard Part D benefit; benefits and cost-sharing requirements typically vary across plans. Beneficiaries receiving low-income subsidies pay reduced cost-sharing amounts. Deductible $310 Premium $31.94 national average monthly premium
(unweighted PDP and MA-PD plan average) Initial coverage (up to $2,830 in total drug costs) Coverage gap (between $2,830 and $6,440 in total drug
costs) spending) 25% coinsurance 100% coinsurance (not covered) minus $250 rebate Minimum of $2.50/generic, $6.30/brand; or 5% coinsurance Catastrophic coverage (above $4,550 in out-of-pocket NOTE: *This table does not include all Medicare-covered benefits or preventive services; for a complete listing, see http://www.medicare.gov/Coverage/Home.asp and http://www.medicare.gov/Health/Overview.asp. SOURCE: CMS, www.medicare.gov, Medicare & You 2010, Your Guide to Medicare's Preventive Services. MEDICARE: A PRIMER 21 IMPLEMENTATION TIMELINE FOR KEY MEDICARE PROVISIONS OF THE 2010 HEALTH CARE REFORM LAW, 2010-2015
Cost containment Reduce annual market basket updates for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers, and adjust payments for productivity Ban new physician-owned hospitals in Medicare Establish a new office within the Centers for Medicare & Medicaid Services (CMS), the Federal Coordinated Health Care Office, to improve care coordination for dual eligibles Provide a $250 rebate for beneficiaries who reach the Part D coverage gap Establish a new Center for Medicare and Medicaid Innovation within CMS Freeze the income threshold for income-related Medicare Part B premiums for 2011 through 2019 at 2010 levels ($85,000/individual and $170,000/couple), and reduce the Medicare Part D premium subsidy for those with incomes above $85,000/individual and $170,000/couple Provide Medicare payments to qualifying hospitals in counties with the lowest quartile Medicare spending for 2011 and 2012 Prohibit Medicare Advantage plans from imposing higher cost sharing for some Medicare-covered benefits than is required under the traditional fee-for-service program Restructure payments to Medicare Advantage (MA) plans by phasing payments to different percentages of Medicare fee-for-service rates; freezes payments for 2011 and 2010 levels Provide a 10% Medicare bonus payment to primary care physicians and general surgeons practicing in health professional shortage areas Begin phasing in federal subsidies for generic drugs in the Medicare Part D coverage gap (reducing coinsurance from 100% in 2010 to 25% by 2020) Require pharmaceutical manufacturers to provide a 50% discount on brand-name prescriptions filled in the coverage gap (reducing coinsurance from 100% in 2010 to 50% in 2011) Eliminate Medicare cost sharing for some preventive services Provide Medicare beneficiaries access to a comprehensive health risk assessment and creation of a personalized prevention plan Allow providers organized as accountable care organizations (ACOs) that voluntarily meet quality thresholds to share in the savings they achieve for the Medicare program Reduce Medicare payments that would otherwise be made to hospitals by specified percentages to account for excess (preventable) hospital readmissions Create the Medicare Independence at Home demonstration program Establish a hospital value-based purchasing program and develop plans to implement value-based purchasing for skilled nursing facilities, home health agencies, and ambulatory surgical centers Reduce rebates for Medicare Advantage plans High-quality Medicare Advantage plans begin receiving bonus payments Make Part D cost sharing for dual eligible beneficiaries receiving home and community-based care services equal to the cost sharing for those who receive institutional care Establish a national Medicare pilot program to develop and evaluate paying a bundled payment for acute, inpatient hospital services, physician services, outpatient hospital services, and post-acute care services for an episode of care Begin phasing in federal subsidies for brand-name drugs in the Part D coverage gap (reducing coinsurance from 100% in 2010 to 25% in 2020, in addition to the 50% manufacturer brand discount) Increase the Medicare Part A (hospital insurance) tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly Eliminate the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments Independent Payment Advisory Board comprised of 15 members begins submitting legislative proposals containing recommendations to reduce Medicare spending if spending exceeds a target growth rate Reduce Disproportionate Share Hospital (DSH) payments initially by 75% and subsequently increase payments based on the percent of the population uninsured and the amount of uncompensated care Require Medicare Advantage plans to have medical loss ratios no lower than 85% Reduce the out-of-pocket amount that qualifies for Part D catastrophic coverage (through 2019) Reduce Medicare payments to certain hospitals for hospital-acquired conditions by 1% Improving quality and health system performance Prescription drug benefit 2011
Cost containment Medicare Advantage Physician payment Prescription drug benefit Preventive services 2012
Cost containment Improving quality and health system performance Medicare Advantage Prescription drug benefit 2013
Improving quality and health system performance Prescription drug benefit Tax changes 2014
Cost containment Medicare Advantage Prescription drug benefit 2015
Cost containment SOURCE: Kaiser Family Foundation analysis of the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152). 22 THE HENRY J. KAISER FAMILY FOUNDATION AGE AND INCOME OF MEDICARE BENEFICIARIES, BY STATE, 2008
Total Number of Beneficiaries 45,830,913
832,913 63,974 909,557 524,907 4,669,125 609,849 560,340 145,842 77,028 3,314,477 1,211,860 202,750 224,133 1,818,883 991,222 513,404 428,471 748,151 677,365 260,686 771,790 1,045,371 1,625,605 774,433 489,980 991,772 166,315 276,731 347,112 213,449 1,310,966 307,056 2,954,341 1,460,593 107,765 1,876,347 596,181 608,330 2,259,681 180,984 755,843 135,136 1,038,035 2,938,054 277,162 109,156 1,122,504 950,097 378,108 898,374 78,705 Income as Percent of Federal Poverty Level (FPL)2
85 and older 4,185,781
55,106 4,334 81,633 40,293 516,476 47,876 75,960 12,334 8,329 328,549 65,193 26,651 15,799 169,612 101,474 56,577 40,370 53,728 58,152 25,646 95,407 115,192 124,209 89,172 28,283 71,984 17,134 23,062 26,590 10,936 139,113 29,734 287,758 140,792 9,016 120,526 56,835 60,577 212,648 21,417 49,021 15,176 80,117 240,692 32,114 11,444 90,739 76,739 31,008 86,086 8,168 STATE U.S. Total
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 19-64 6,809,144
183,103 12,238 140,316 104,851 504,921 79,734 66,801 20,788 15,244 458,063 253,071 22,297 21,101 292,572 135,113 61,982 50,160 177,663 135,051 41,806 90,162 147,743 258,493 88,373 105,032 195,299 26,140 30,826 44,403 24,194 176,886 40,857 417,109 256,894 6,793 246,778 91,251 61,430 289,075 30,829 146,961 12,775 175,617 498,970 37,412 13,633 186,776 118,021 80,551 124,286 8,699 65-74 18,682,883
335,585 28,384 369,558 193,557 1,941,947 257,430 220,342 59,626 28,852 1,462,260 497,303 75,362 106,997 639,312 377,747 197,627 163,887 310,827 272,810 104,065 313,190 380,056 628,471 311,606 194,779 423,223 61,929 94,772 162,155 83,718 519,333 123,244 1,219,092 610,982 41,427 746,755 233,612 255,269 854,735 63,150 361,571 62,218 447,739 1,351,779 107,670 43,803 461,395 370,932 141,800 332,319 36,682 75-84 12,522,255
229,492 11,962 210,086 107,969 1,221,581 153,152 142,409 39,129 19,444 1,040,904 266,494 70,009 69,634 494,171 287,356 122,435 112,448 171,419 184,714 72,058 201,716 301,590 497,753 209,772 118,785 270,894 53,378 77,567 80,723 54,106 368,052 73,451 871,182 366,278 27,500 528,404 175,019 154,838 719,230 45,804 187,679 37,925 287,989 759,316 69,528 28,924 302,621 255,760 94,140 254,541 20,928 <100% FPL 6,965,217
148,015 7,024 115,150 82,085 684,811 72,775 62,236 20,335 17,340 531,236 228,625 40,908 22,569 245,328 116,306 48,885 48,630 129,635 146,859 31,633 118,269 155,377 192,170 78,427 109,450 142,855 20,717 24,887 41,005 20,892 215,515 57,599 565,849 234,975 10,916 257,952 87,437 68,721 289,590 24,291 138,177 17,704 180,502 624,498 22,958 14,793 174,313 104,754 51,938 107,915 10,385 100-150% FPL 7,375,012
143,876 9,743 140,237 101,589 867,183 81,741 75,245 23,999 13,135 507,064 201,656 30,468 31,296 262,890 155,511 73,976 65,583 135,228 158,690 45,741 93,911 172,864 225,065 82,260 84,963 173,693 27,019 31,729 38,891 22,144 174,799 43,017 484,981 274,864 17,032 297,261 93,129 78,536 371,958 26,902 138,204 19,261 196,933 546,920 43,329 18,415 124,682 108,283 67,769 157,345 14,001 150-200% FPL 6,294,135
109,956 8,361 94,737 59,207 541,787 67,501 71,806 18,607 8,646 504,141 186,662 24,102 30,179 233,024 140,304 81,857 51,947 115,970 115,131 36,180 91,017 155,245 243,964 102,192 56,765 155,332 32,047 34,148 49,480 26,496 185,259 38,392 365,187 203,308 12,187 256,569 85,501 85,675 383,094 25,871 121,999 13,706 172,785 390,992 40,586 13,890 149,346 106,721 61,661 122,657 11,957 200%+ FPL 21,565,699
401,437 31,790 451,468 203,789 2,091,144 316,175 296,225 68,937 32,749 1,747,336 465,117 98,839 129,487 854,425 489,571 233,904 200,705 332,805 230,045 130,021 397,278 461,094 847,728 436,044 195,701 489,521 78,798 135,463 184,494 103,422 627,811 128,278 1,379,124 661,799 44,601 830,681 290,650 299,180 1,031,046 84,136 346,851 77,422 441,243 1,288,348 139,850 50,706 593,189 501,693 166,130 409,315 38,134 NOTE: NSD is not sufficient data. 1 Excludes beneficiaries living in the territories and beneficiaries who were pending assignment to a particular state of residence. 2 In 2008, the federal poverty level was $10,400 for an individual and $14,000 for a couple. SOURCE: Total Number of Beneficiaries from CMS Management Information Integrated Repository (MIIR), as of February 16, 2010. Age and income estimates from the U.S. Census Bureau, Current Population Survey, 2008 and 2009 Annual Social and Economic Supplements (pooled data from 2007 and 2008). MEDICARE: A PRIMER 23 MEDICARE BENEFICIARIES BY TYPE OF COVERAGE, BY STATE
Total Number of Beneficiaries (2010)
832,913 63,974 909,557 524,907 4,669,125 609,849 560,340 145,842 77,028 3,314,477 1,211,860 202,750 224,133 1,818,883 991,222 513,404 428,471 748,151 677,365 260,686 771,790 1,045,371 1,625,605 774,433 489,980 991,772 166,315 276,731 347,112 213,449 1,310,966 307,056 2,954,341 1,460,593 107,765 1,876,347 596,181 608,330 2,259,681 180,984 755,843 135,136 1,038,035 2,938,054 277,162 109,156 1,122,504 950,097 378,108 898,374 78,705 STATE
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Medicare Advantage Enrollees (2010)
177,482 405 334,719 78,519 1,673,692 212,938 101,257 5,290 7,622 1,059,119 253,260 87,118 65,836 178,010 158,098 67,389 46,701 120,791 161,831 31,657 61,800 201,088 256,035 321,979 46,024 210,046 29,882 33,057 111,709 14,739 166,660 77,572 903,435 284,420 8,474 624,359 90,725 256,076 869,414 63,212 119,388 10,705 253,790 577,085 93,383 4,504 161,733 238,781 85,646 262,697 5,295 Part D Plan Enrollees (2010)
475,744 24,635 555,707 318,639 3,236,180 357,983 309,028 73,268 36,492 2,001,495 736,142 134,050 131,275 1,005,949 558,686 342,323 264,745 453,378 420,171 162,644 338,396 603,824 766,928 529,153 318,349 619,451 94,713 178,704 193,420 101,154 689,991 189,727 1,755,806 865,919 74,520 1,023,939 355,166 394,181 1,419,049 122,450 409,792 87,776 666,643 1,671,980 155,423 60,927 587,546 506,734 229,524 482,063 42,536 Part D Low-Income Subsidy Recipients (Including Dual Eligibles) (2010)
228,051 14,587 165,389 137,900 1,224,748 98,339 108,077 25,698 23,007 648,925 304,514 37,291 37,487 360,547 180,547 85,325 71,986 199,760 197,977 89,833 129,647 256,575 285,176 134,119 165,257 203,910 26,752 44,763 50,565 34,174 227,777 71,368 763,653 353,663 17,291 339,513 127,353 102,680 424,190 42,279 175,736 22,116 292,015 724,014 37,068 27,106 209,012 164,967 89,816 146,938 11,236 Dual Eligibles (2008)
184,211 12,504 130,084 105,263 1,138,715 75,966 73,681 21,047 16,875 503,397 229,307 27,354 27,866 239,472 131,071 70,002 52,479 145,468 151,610 79,192 93,400 199,472 199,926 88,956 139,511 122,564 16,518 28,514 35,561 18,144 173,418 58,314 506,234 278,263 8,448 252,472 87,322 81,102 283,766 28,914 132,427 16,058 239,479 519,245 26,861 22,243 150,918 130,413 63,849 93,229 8,562 NOTE: 1Excludes beneficiaries living in the territories and beneficiaries who were pending assignment to a particular state of residence. SOURCE: Number of Total Beneficiaries, Medicare Advantage, Part D, and Low-Income Subsidy Enrollees from Centers for Medicare & Medicaid Services (CMS) Management Information Integrated Repository (MIIR), as of February 16, 2010; Number of Dual Eligibles from CMS 2009 Medicare & Medicaid Statistical Supplement, as of July 1, 2008. 24 THE HENRY J. KAISER FAMILY FOUNDATION The Henry J. Kaiser Family Foundation
Headquarters 2400 Sand Hill Road Menlo Park, CA 94025 Phone 650-854-9400 Fax 650-854-4800
Washington Offices and Barbara Jordan Conference Center 1330 G Street, NW Washington, DC 20005 Phone 202-347-5270 Fax 202-347-5274 www.kff.org This report (#7615-03) is available on the Kaiser Family Foundation's website at www.kff.org. The Kaiser Family Foundation is a non-profit private operating foundation, based in Menlo Park, California, dedicated to producing and communicating the best possible analysis and information on health issues. ...
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- Fall '11