The Basics of Medicare: Updated With the 2008 Board of Trustees Report

Source: EBRI Employee Benefit Research Institute Notes, Vol. 29 no. 5, May 2008

• In 1965, Title 18, “Health Insurance for the Aged,” of the Social Security Act created the Medicare program. Medicare currently consists of three parts: Hospital Insurance (HI), Part A, covers hospital services and some home health care and skilled nursing facility services, and Supplemental Medical Insurance (SMI), Part B, covers physician care, outpatient hospital services, and independent laboratory services; and Part D, covers outpatient prescription drugs.
• In 1972, the Medicare program was expanded to include disabled persons who qualified for benefits under the Disability Insurance (DI) program and certain individuals with end-stage renal (kidney) disease.
• In 1986, all state and local government employees hired after Mar. 31, 1986, and not covered under Social Security, were required to be covered by Medicare.
• In 1997, the Balanced Budget Act of 1997 expanded the delivery of health care under Medicare with the Medicare+Choice program. See below for more details in the section Medicare Advantage.
• In 1997, under the Balanced Budget Act of 1997, home health services not associated with a hospital or skilled nursing facility stay for individuals enrolled in both HI and SMI were transferred from the HI program to the SMI program, effective January 1998.
• In 2000, Congress enacted the Benefits Improvement and Protection Act (BIPA) to increase payments to plans in an effort to stop plans from withdrawing from the Medicare+Choice program.
• In 2003, Congress enacted the Medicare Prescription Drug Improvement and Modernization Act, which created Part D, prescription drug coverage, means-tested Part B premiums and increased the Part B deductible.

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