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Medicare - Statistics & Facts

Medicare is a federal social insurance program and was introduced in 1965. It aims to provide health insurance to older and disabled people. Unlike Medicaid, Medicare is not bound to lower incomes or a certain state of poverty. There are, however, a significant number of people who meet the criteria to participate in both programs. Medicare is split into parts with Part A (Hospital Insurance) covering inpatient hospital stays, care in skilled nursing facility, hospice care and parts of home health care. Part B (Medical insurance) covers certain doctors' services, outpatient care, medical supplies, and preventive care. Medicare Part D is otherwise known as prescription drug coverage and also covers many recommended vaccines. While there is no standard premium for Part A, in 2021, Part B costs 149 U.S. dollars per month or more depending on income of previous year. The premium of Part D depends on the individual plan. Instead of Medicare Traditional, someone eligible for Medicare can choose instead to enroll in a Medicare Advantage (MA also called Part C) plan through approved private companies. MA includes Parts A & B and usually Part D, with some additional benefits, such as hearing or dental care or restrictions on out-of-pocket costs, but with more restrictions on providers such as HMO and PPO plans.

Medicare beneficiaries

In 2020, 62.6 million people were enrolled in the Medicare program, which equates to 18.4 percent of all people in the United States. Around 54 million of them were beneficiaries for reasons of age, while the rest were beneficiaries due to various disabilities. The U.S. states with the highest percentage of Medicare beneficiaries among their populations were Maine and West Virginia, where 24 and more percent of the population was enrolled. With over 6.2 million, California was the state with the highest number of Medicare beneficiaries.

Medicare's finances

Medicare's income was quite significant and amounted to some 900 billion U.S. dollars in 2020. It is estimated that almost 80 percent of this income was generated by general revenue and payroll taxes. Other sources of Medicare income are beneficiary premiums, state payments, social security benefit taxations, and interests. However, total Medicare spending was even larger. In 2020, the United States spent around 926 billion U.S. dollars on the Medicare program. Hospital inpatient services – as included in Part A - are the service type which makes up the largest single part of total Medicare spending. When spending exceeds income, solvency becomes a problem. Medicare has two trust funds: Hospital Insurance (HI) trust fund and the Supplementary Medical Insurance (SMI) trust fund. The HI trust fund which pays for Part A is being slowly depleted and predicted to be insolvent in 2026. The SMI fund, which pays for Part B and D, on the other hand are authorized by Congress to meet annual spending and include premiums and other sources. While the SMI trust fund does not face a similar shortfall, increasing spending means likely increasing premiums and higher percentages of the federal budget being spent on Medicare.


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