MEDICARE + MEDICAID - NOV13

Insurance: A financial arrangement that provides protection against financial loss or risk, wherein individuals pay premiums to receive benefits or coverage for specific services.
Deductible:
- Definition: The amount of money an individual must pay out of pocket for covered services before the insurance company starts to pay its share.
- Example: If the deductible is $1000$ , one must spend $1000$ before insurance benefits kick in.
- Clarification: Not all expenses count towards the deductible; only expenses on covered services do. For instance, cosmetic surgery does not count towards the deductible.
Co-pay:
- Definition: A fixed dollar amount that an insured person pays for a specific service or prescription.
Coinsurance:
- Definition: The percentage of costs of a covered health care service that the insured must pay after paying any deductible.
- Example: For a high-cost drug, coinsurance may apply, placing a higher burden on the patient due to the percentage model of payment.

Overview: Health insurance in the U.S. has its roots in private insurance, with public programs emerging in the 1960s.
Structure: Public insurance programs like Medicare and Medicaid were established to cover individuals not served by employer-sponsored insurance, namely the elderly and low-income individuals.
Key Events:
- 1965: Introduction of Medicare and Medicaid as part of President Johnson’s Great Society initiative.
- Center for Medicare & Medicaid Services (CMS) administers these programs.

Objective: Understand what Medicaid and Medicare are, what they cover, and who they serve.

Target Group: Primarily low-income individuals including children, pregnant individuals, caregivers, and people with disabilities.
Established: 1965 as part of the Social Security Act.
Children's Health Insurance Program (CHIP): Added in 1997 aimed at covering uninsured children in families with incomes too high to qualify for Medicaid but too low to afford private coverage.
Eligibility Criteria: Includes income thresholds defined relative to the Federal Poverty Level (FPL).
Coverage Distribution: Medicaid covers approximately $90$ million people in the U.S., with children as the largest group covered.
Application Process: Involves showing up for processing online, via phone, or in person. Different states may have different names for Medicaid (e.g., Massachusetts' MassHealth).

Covered: Hospitalization, outpatient care, preventive services, long-term care, and more.
Include adult humans with caregivers, pregnant women, and children.
Funding: Funded jointly by federal and state governments; states can opt out, but all currently participate in Medicaid.

Target Group: Primarily older adults (65+ years), people under 65 with disabilities, and those with specific conditions like ALS or end-stage renal disease.
Established: 1965 under the Social Security Act.
Parts of Medicare:
- Part A: Hospital Insurance
- Coverage: Inpatient hospital stays, skilled nursing care, home health, and hospice.
- Eligibility: Individuals over 65 who have contributed to Medicare or those under 65 who are permanently disabled or have specific conditions.
- Part B: Outpatient Medical Insurance
- Coverage: Physician services, outpatient hospital services, preventive care, and limited chiropractic services.
- Eligibility: Same as Medicare Part A.
- Co-pays/Deductibles: Individuals pay monthly premiums based on their income.
- Part C (Medicare Advantage): Combines Parts A and B into one plan, often including additional benefits like prescription drugs.
- Part D: Prescription Drug Coverage
- Added: 2006 for coverage of outpatient prescription drugs.
- Eligibility: Requires enrollment in Medicare Part A or B to sign up.
- Costs: Monthly premiums and co-pays may apply.
Medigap Insurance: Supplemental insurance designed to cover costs not reimbursed by Medicare (co-pays, deductibles). Not available for those enrolled in Medicare Advantage (Part C).

Medicare Funding:
- Part A funded through payroll taxes, the Hospital Insurance Trust Fund.
- Part B funded through general revenue and premiums.
- Part D funded through premiums and rebates.
Out-of-Pocket Healthcare Costs: In 2022, an average elderly person's out-of-pocket costs constituted approximately 40% of their Social Security income, illustrating the financial burden of healthcare on retired individuals.

Inflation Reduction Act: Cap on out-of-pocket costs for Medicare enrollees set to reach $2,000$ in 2025. This reform aims to ease the financial burden associated with prescription medications for seniors.