Medicare And Medicaid: Cnbc Explains
Medicare and Medicaid are often confused with each other, as both are government sponsored health programs. But there are major differences.
So who do they help? Do they cover all medical costs? How did they come about? CNBC explains.
What is Medicare?
Medicare is health insurance managed by the U.S. government for people age 65 or older and for some people under the age of 65 with certain disabilities.
The Medicare program also funds residency training programs for the vast majority of physicians in the United States.
Medicare is managed by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services.
Medicare provides assistance for some 45 million people, according to the latest statistics.
What is Medicaid?
Medicaid is health insurance available to certain people and families who have limited income and resources. It covers an estimated 58 million people.
Medicaid is overseen by the federal government, but each state establishes its own eligibility standards, and determines the scope of services. States also set the rate of payment for services, and administer their own Medicaid programs.
Like Medicare, Medicaid is overseen by the Centers for Medicare and Medicaid Services of the Department of HHS.
When did Medicaid and Medicare start?
Both were created when President Lyndon B. Johnson signed amendments to the Social Security Act on July 30, 1965.
How does Medicare work?
What are the two choices for Medicare Coverage?
Who Pays For Medicaid
Medicaid does not pay money to individuals but sends payments directly to healthcare providers.
States make these payments according to a fee-for-service agreement or through prepayment arrangements, such as health maintenance organizations . The federal government then reimburse each state for a percentage share of their Medicaid expenditures.
This Federal Medical Assistance Percentage changes each year and depends on the states average per capita income level.
The reimbursement rate begins at 50% and reaches 77% in 2020. Wealthier states receive a smaller share than states with less money.
In the states that chose to expand their coverage under the Affordable Care Act, more adults and families on low incomes are eligible with the new provision allowing enrolment at up to 138% of the FPL. In return, the federal government cover all expansion costs for the first 3 years and over 90% of the costs moving forward.
Medicare is a federal health insurance program that funds hospital and medical care for older people in the U.S. Some people with disabilities also benefit from Medicare.
The program consists of:
- Part A and Part B for hospital and medical insurance
- Part C and Part D that provide flexibility and prescription drugs
How Do The Programs Work
Medicare is a federal program that provides health insurance to individuals over age 65 and certain younger people with disabilities. The program is run by HEW but is funded through the Social Security Administration .
Medicaid is a federal program that provides health insurance to low-income individuals aged 0-64 and certain disabled adults. The program is run by each state but is mostly funded with federal money.
Both programs cover doctors’ visits, hospital stays, emergency services, drugs, diagnostic tests, and preventive services. In addition, Medicare covers home health care, long-term care, and rehabilitation therapy.
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How Is Medicare Part B Cheaper
The CMS recommended in May that any excess Supplementary Medical Insurance Trust Fund money be passed along to those with Medicare Part B coverage. This is to help decrease the costs of the premium and deductibles.
This year’s Part B premium was projected to cover spending for a new drug called Aduhelm, which is intended to treat Alzheimer’s disease. Since less money was spent on that drug and other Part B items, there were more reserves left over in the Part B account of the SMI fund, which will now be used to limit future Part B premium increases.
Medicare Part A enrollees will have to pay a little more in 2023.
C: Medicare Advantage Plans
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With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were formally given the option to receive their Original Medicare benefits through capitated health insurance Part C health plans, instead of through the Original fee for service Medicare payment system. Many had previously had that option via a series of demonstration projects that dated back to the early 1970s. These Part C plans were initially known in 1997 as Medicare+Choice. As of the Medicare Modernization Act of 2003, most Medicare+Choice plans were re-branded as Medicare Advantage plans . Other plan types, such as 1876 Cost plans, are also available in limited areas of the country. Cost plans are not Medicare Advantage plans and are not capitated. Instead, beneficiaries keep their Original Medicare benefits while their sponsor administers their Part A and Part B benefits. The sponsor of a Part C plan could be an integrated health delivery system or spin-out, a union, a religious organization, an insurance company or other type of organization.
The intention of both the 1997 and 2003 law was that the differences between fee for service and capitated fee beneficiaries would reach parity over time and that has mostly been achieved, given that it can never literally be achieved without a major reform of Medicare because the Part C capitated fee in one year is based on the fee for service spending the previous year.
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What Do Medicare Parts A And B Cover
Medicare Part A covers inpatient hospital, skilled nursing facility, hospice, inpatient rehabilitation and some home health care services.
Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment and certain other medical and health services not covered by Medicare Part A.
Medicare Part D helps cover prescription drug costs.
For more information, here’s when you can sign up for Affordable Care Act plans.
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Opinions On Canadian Health Care
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Polling data in the last few years have consistently cited Canadian Health Care as among the most important political issues in the minds of Canadian voters. Along with peacekeeping, Canadian Health Care was found, based on a CBC poll, to be among the foremost defining characteristics of Canada.
It has increasingly become a source of controversy in Canadian politics. As a recent report from the Health Council of Canada has notedHerein lies one of the puzzles of Canadian health care: Canadians increasingly view the health care system as unsustainable and under threat, even as their own experiences with the system are mostly positive.
As analysts have noted, the root of the concern may be traced to successful cost control efforts in the mid 1990s, where public health expenditure per capita, in inflation-adjusted dollars, actually fell. These efforts arose from efforts by the federal government to deal with its deficit through various austerity measures, which led to cuts in their transfers to the provinces, and in turn to squeezing hospital budgets and physician reimbursements. The number of physicians being trained was reduced. The result was seen in increased wait times, particularly for elective procedures. More recently, government has been reinvesting in health care, but public confidence has been slow to recover.
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D: Prescription Drug Plans
Medicare Part D went into effect on January 1, 2006. Anyone with Part A or B is eligible for Part D, which covers mostly self-administered drugs. It was made possible by the passage of the Medicare Modernization Act of 2003. To receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plan or public Part C health plan with integrated prescription drug coverage . These plans are approved and regulated by the Medicare program, but are actually designed and administered by various sponsors including charities, integrated health delivery systems, unions and health insurance companies almost all these sponsors in turn use pharmacy benefit managers in the same way as they are used by sponsors of health insurance for those not on Medicare. Unlike Original Medicare , Part D coverage is not standardized . Plans choose which drugs they wish to cover . The plans can also specify with CMS approval at what level they wish to cover it, and are encouraged to use step therapy. Some drugs are excluded from coverage altogether and Part D plans that cover excluded drugs are not allowed to pass those costs on to Medicare, and plans are required to repay CMS if they are found to have billed Medicare in these cases.
General Fund Revenue As A Share Of Total Medicare Spending
This measure, established under the Medicare Modernization Act , examines Medicare spending in the context of the federal budget. Each year, MMA requires the Medicare trustees to make a determination about whether general fund revenue is projected to exceed 45 percent of total program spending within a seven-year period. If the Medicare trustees make this determination in two consecutive years, a “funding warning” is issued. In response, the president must submit cost-saving legislation to Congress, which must consider this legislation on an expedited basis. This threshold was reached and a warning issued every year between 2006 and 2013 but it has not been reached since that time and is not expected to be reached in the 20162022 “window”. This is a reflection of the reduced spending growth mandated by the ACA according to the Trustees.
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How Did Medicare Begin
The idea of a national healthcare program originated more than 100 years ago as far back as former President Teddy Roosevelts 1912 campaign.
A serious push for a program took hold in 1945 under former President Harry Truman. He called for a national healthcare plan during his term and presented the idea to Congress. However, his proposals didnt make it through Congress at that time.
At the time, most Americans had no access to insurance after retiring. This left millions of people without coverage. In 1962, President Kennedy introduced a plan to create a healthcare program for older adults using their Social Security contributions, but it wasnt approved by Congress.
In 1964, former President Lyndon Johnson called on Congress to create the program that is now Medicare. The program was signed into law in 1965.
In recognition of his dedication to a national healthcare plan during his own term, former President Truman and his wife, Bess, were the first people to receive Medicare cards after it was signed it into law.
When first introduced, Medicare had only two parts: Medicare Part A and Medicare Part B. Thats why youll often see those two parts referred to as original Medicare today.
Parts A and B looked pretty similar to original Medicare as you may know it, although the costs have changed over time. Just like today, Medicare Part A was hospital insurance and Medicare Part B was medical insurance.
Some of major changes are discussed below.
Medicare As A Form Of National Health Insurance
By 1961, a Medicare bill had received the endorsement of President John F. Kennedy, and a long campaign for its congressional passage began. By now, the idea of national health insurance had undergone, if not another transformation, then at least a major change in an effort to find common ground with private health care providers. Wilbur Cohen, who coordinated the legislative activities related to Medicare for Presidents Kennedy and Johnson, expressed what the legislation would not do, rather than what it would do. Cohen said that the proposal would â⦠not provide a single medical serviceâ¦physicians’ services would not be covered or affected and the proposal provides that the government would exercise no supervision or control over the administration or operation of participating institutions or agencies.â Beyond the political expediency of restricting benefits to the elderly and concentrating on hospital, rather than physician care, the limits that Cohen set on Medicare reflected the increasing prominence of the hospital as a provider of medical care .
Important to Javits’ proposals and to other alternatives offered at the time was the notion of choice. Representative John Lindsay , proposed that consumers be given a fundamental choice. They could either accept government health insurance, to be run by the States, or a private health care plan. If they chose the private health plan, they would receive an increase in their social security benefits.
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Medigap Under Federal Regulation In 1980
Medigap, also known as Medicare supplement insurance, helps you pay the out-of-pocket costs of original Medicare, like copays and deductibles.
These plans are sold by private insurance companies. However. starting in 1980, the federal government began regulating them to ensure they meet certain standards.
How Much Will Medicare Part B Be In 2023
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You won’t see a hefty reduction in the amount you currently pay, but it will be less than what you’ve been paying. Here’s how payments break down for Medicare Part B in 2023.
Standard monthly premium: $164.90 in 2023, a decrease of $5.20 from $170.10 in 2022.
Annual deductible: $226 in 2023, a decrease of $7 from the annual deductible of $233 in 2022.
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A Lasting Drug Benefit
George W. Bush signs the Medicare Modernization Act, which establishes a prescription drug benefit available to all Medicare beneficiaries and replaces the Medicare+Choice program with the Medicare Advantage program, making additional types of private plans available and substantially increasing payments to those plans.
Which Legislation Created Medicare Risk Programs Allowing Federally Qualified Hmo
The HMO Act in 1973 included a voluntary program of “federal qualification”, which became popular, but over time this role was largely taken over by the National Committee for Quality Assurance , which began accrediting plans in 1991. Accreditation by the NCQA is often expected or require by employers.
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Who Started The Medicare Program
Lyndon B. Johnson President Lyndon B. Johnson signed legislation establishing the Medicare and Medicaid programs into law on July 30, 1965. The Social Security Act is a 1,094-page long statute that included 25 titles covering a wide range of social welfare issues including unemployment insurance, old-age pensions, disability benefits, child nutrition, health care for low-income families, and medical research.
The act was introduced in Congress by Senator Hubert H. Humphrey of Minnesota and Representative John E. Moss of California. It was based on proposals by University of Chicago economist Henry Aaron and Massachusetts Institute of Technology economist Arthur F. Burns. The government agency in charge of administering the program is called the Health Care Financing Administration or HCFA.
HCFA was created as part of Title XVIII of the Social Security Act and is within the Department of Health and Human Services. It is headed by a commissioner who is appointed by the president with the consent of the Senate. The current commissioner is Andy Slavitt.
Johnson said the program was needed to cover the rising cost of medical care and improved living standards. At first, the program would provide federal funding for states to set up their own Medicaid programs.
Avoid Late Enrollment Penalties
Its important to sign up for Medicare coverage during your Initial Enrollment Period, unless you have other coverage thats similar in value to Medicare . If you dont, you may have to pay an extra amount, called a late enrollment penalty.
Late enrollment penalties:
- Are added to your monthly premium.
- Are not a one-time late fee.
- Are usually charged for as long as you have that type of coverage . The Part A penalty is different.
- Go up the longer you wait to sign up theyre based on how long you go without coverage similar to Medicare. Find out when you should sign up to avoid penalties.
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President Johnson Signs Medicare Into Law
On July 30, 1965, President Lyndon B. Johnson signs Medicare, a health insurance program for elderly Americans, into law. At the bill-signing ceremony, which took place at the Truman Library in Independence, Missouri, former President Harry Truman was enrolled as Medicares first beneficiary and received the first Medicare card.
Johnson wanted to recognize Truman, who, in 1945, had become the first president to propose national health insurance, an initiative that was opposed at the time by Congress.
The Medicare program, providing hospital and medical insurance for Americans age 65 or older, was signed into law as an amendment to the Social Security Act of 1935. Some 19 million people enrolled in Medicare when it went into effect in 1966.
In 1972, eligibility for the program was extended to Americans under 65 with certain disabilities and people of all ages with permanent kidney disease requiring dialysis or transplant. In December 2003, President George W. Bush signed into law the Medicare Modernization Act, which added outpatient prescription drug benefits to Medicare.
Medicaid, a state and federally funded program that offers health coverage to certain low-income people, was also signed into law by President Johnson on July 30, 1965, as an amendment to the Social Security Act.
The Introduction Of Medigap Plan Standardization In 1990
There are currently 10 different Medigap plans available: A, B, C, D, F, G, K, L, M, and N. In 1980, coverage under each of these plans became standardized.
This means that no matter where you live or what company you purchase a plan from, youll be guaranteed the same basic coverage from each plan.
For example, Medigap Plan A in Boston offers the same basic coverage as Medigap Plan A in Seattle.
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