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Services Provided by Medicare

In the current essay I would like to consider services provided by Medicare and what is the financial state/health of the entire Medicare program. To begin with, it should be noted that Medicare – is one of the federal health insurance programs for the older population (more than 65 years) was established in 1965 in the United States. Since 1972, the program also serves people with disabilities. It consists of several main parts. Part A hospital insurance: the payment of hospital services, some forms of home care. Part B. Additional health insurance: the payment of physician visits, outpatient services and independent laboratories. In contrast to the compulsory hospital insurance, additional insurance is voluntary. Part D covers drug coverage insurance. Elderly people and people with disabilities do not have to pay for expensive drugs. Part D covers different kind of drugs, a person have an opportunity to choose what drug is suited to his/her needs. In 2008, 34.6 million elderly and 6 million disabled persons received assistance from the Part A program. Part B services, respectively, used 32.9 million and 5.2 million people in the same year. It should be noted that the average amount of recoveries on any single patient’s hospital insurance program was $ 3689, while on the program an additional insurance – $ 2915. As a fact, medical care in the United States one of the most expensive in the world, as a result, the Medicare program is not able to cover 100% of the cost of medical services. In particular, it is not fully paid for a long stay in hospital. Moreover, dental care, vision screening and other specific services are not covered by the program, according to Centers for Medicare and Medicaid Services (2010).

It can be said that Medicare’s payment to hospitals can be split into two main categories: prospective payment and physician payment. In turn, prospective payment includes following categories: operating payment, capital payment and outlier payment. Also, there are Medicare payment rates for 7.000 current procedural terminology codes. However, the specific values vary by states. It should be mentioned that the payment rates are the product of three relative values and geographic cost indexes and a conversion factor. The payment rates are the product of three relative values and geographic cost indexes and a conversion factor. Work RVU – represents physician time, skill level, stress and other related factors. Practice expense RVU – represents non-physician costs, excluding malpractice costs. Malpractice RVU – represents the cost of malpractice insurance, according to Fisher, C. R. (1992).

It should be noted that the state covers 80% of approved medical fee, and the patient covers the rest 20%. This is called limiting charge. As a fact, currently in the U.S. there are about 36 million of elderly people and about 6 million people with disabilities, according to Wilk, S., Phillips, R. Jr., (2008). Moreover, there is a strong tendency for further aging of the population, which will lead to the further increase of elderly population in the country. Consequently, financial burden to the Medicare program and state budget will significantly increase. Also, if we will take into account huge U.S. national debt – more than $ 14 trillion, it is clear that for several years Medicare program will be depleted. In my opinion, this program should be urgently reorganized.


Centers for Medicare and Medicaid Services (2010). Medicare Information resource. Retrieved on July 26, 2010 from http://www.cms.hhs.gov/
Fisher, C. R. (1992). Trends in total hospital financial performance under the prospective payment system. Health Care Financing Review, 13 (3), pg. 1. Retrieved on July 21, 2011 from Proquest.
Wilk, S., Phillips, R. Jr., (2008). Medicare’s (Un)sustainable Growth Rate. Family Practice Management, 15 (5); pg. 9. Retrieved on July 21, 2011 from Proquest.