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Medicare Program Milestones

1965

Medicare is authorized by Congress under title XVIII of the Social Security Act. Hospital Part A and optional Medical Part B coverage provided for eligible persons age 65+.

 

1966

Medicare is officially implemented covering 19 million beneficiaries.

 

1967

The first full year of Medicare expenditures totals $3.3 billion.

 

1970

Medicare enrollment reaches 20 million beneficiaries with expenditures more than doubling to $7.7 billion in the first three years of the program.

 

1972

Medicare is expanded to cover people of all ages who have severe kidney disease or who are totally disabled and eligible for Social Security Disability benefits.

 

1980

Medicare spending increases five-fold in 10 years to $37.4 billion with a 40% increase in beneficiaries to 28.4 million.

 

1982

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) authorizes HMO Medicare Risk program allowing HMOs to participate in Medicare via a direct capitation payment from the government. Medicare spending hits $50 billion.

 

1983

The prospective payment system (PPS) for hospitals is implemented to slow the growth of hospital spending and preserve the life of the Hospital Insurance Trust Fund. PPS replaces cost-based hospital payments with a pre-determined reimbursement rate known as a DRG (Diagnosis Related Group) based on the patients' diagnoses.

 

1985

Medicare Risk Program HMOs begin operations with 87 certified plans across the country. Medicare spending doubles from 1980 to 1985 to $71.4 billion.

 

1990

Medicare spending surpasses $100 billion mark with 34.3 million beneficiaries.

 

1992

Medicare implements the Resource Based Relative Value System (RBRVS) physician fee schedule to control expenses by reducing payment for physician services. HMO Medicare Risk enrollment growth cycle begins with 1.56 million HMO enrollees increasing to 5.21 million enrollees by 1997.

 

1997

Balanced Budget Act of 1997 establishes Medicare+Choice program, expanding Medicare product choices for beneficiaries and restructuring payments to HMOs. BBA97 includes mandated reductions in physician reimbursement, but authorizes physicians to form Provider Sponsored Organizations (PSOs). Medicare spending surpasses $200 billion.

 

1999

Medicare Risk/Medicare+Choice enrollees reach the high water mark of 6.35 million members, or 16% of the total Medicare population. Medicare spending at $213 billion is actually lower than in the prior year (1998) for the first and only time in Medicare's history.

 

2000

Medicare spending rises to $224.4 billion. Medicare+Choice enrollment falls by nearly 100,000 members following 15 years of growth.

 

2002

Medicare spending accelerates to $253.7 billion, covering more than 40 million beneficiaries. Medicare+Choice enrollees continue to decrease to 4.9 million members.

 

2003

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 is enacted in November. It is designed to expand Medicare benefits and to restructure M+C plans to encourage insurer and beneficiary participation at a cost of $400 million over 10 years. M+C improvements include higher per capita payments to plans for 2004 and 2005 and a revised payment methodology effective in 2006 that will factor in risk adjusters and growth of fee-for-service rates.

 

 

 

Future program milestones

 

2004

Medicare spending projected to top $300 billion. The 2004 Medicare+Choice AAPCCs (pre 2003 Medicare Act) average $556 per Medicare Beneficiary per month with the range from $535 pmpm for the lowest U.S. domestic county to $870 pmpm for the highest. 2003 Medicare Act increased AAPCCs due to take effect March 1, 2004.

 

2005

Medicare+Choice AAPCCs scheduled for increase over pre-2003 Medicare Act levels of a minimum of 2% or higher based on the growth of Medicare fee-for-service rates.

 

2006

The Medicare Part D Prescription Drug Benefit takes effect January 1. Medicare+Choice program is renamed “Medicare Advantage” and “regional” Medicare Advantage PPOs are introduced as a new option for beneficiaries to join the existing M+C “local” HMO plans.

 

2010

Proposed market competition among Medicare plans authorized in 2003 Medicare Drug Act is scheduled to take effect with a “comparative cost adjustment program” experiment in six MSAs around the country that will last until 2015. Medicare Beneficiaries projected to exceed 45 million with total expenditures estimated at $420 billion.

 

2015

Comparative cost adjustment program experiment ends opening the way for expected privatization of Medicare with nationwide market competition among the traditional Medicare fee-for-service plan, the Medicare+Choice local HMOs and the regional Medicare Advantage PPOs. Medicare enrollment projected to reach 54 million with costs estimated at $800 billion or less depending on the success of Medicare managed care, privatization and competition initiatives.

 

2020

Medicare enrollment projected to exceed 62 million beneficiaries. Medicare planned to function like the Federal Employees Health Benefits Program. Costs will exceed $1 trillion unless controlled through privatization initiatives.

 

2026

The Medicare Hospital Insurance Trust Fund is scheduled to be exhausted unless Medicare privatization reforms prove effective. Medicare beneficiaries projected to exceed 70 million due to growing Baby Boom generation enrollment.

 

2030

Medicare enrollment expected to approach 80 million, an increase of 10 million or 14% in just four years, as the last of the Baby Boomers reach age 65. Expenditures could approach $3.5 trillion if privatization or other initiatives fail.

 

 

 

 

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