Medicare in Massachusetts: the impact of the 1997 Balanced Budget agreement.

Congress amended the Medicare program through The Balanced Budget Act of 1997, P.L. 105-33, to achieve two major goals. First, the amendments served to balance the federal budget. " (W)ithout the $116.4 billion in net spending reductions, a balanced budget would not have been achieved. " (fn. Urban Institute) Second, these changes were made to stem the rapid growth of Medicare expenditures, particularly in the Part A trust fund, which otherwise would have been exhausted by the year 2001. MEDICARE Enacted in 1965, the Medicare program operated exclusively on a fee-for-service basis for many years. In recent years, Medicare has followed private insurance trends and increased its use of managed care plans. Medicare coverage is administered by the Health Care Financing Administration (HCFA) and divided into two parts-Part A (Hospital Insurance) and Part B (Supplementary Medical Insurance). Part A covers inpatient hospital services, nursing facility services and hospice care. Prior to the BBA it also covered all home health services, some of which are now covered under Part B. There is a deductible for hospital coverage. For 1998, the hospital deductible is $760. Part B covers physician services, laboratory services , outpatient hospital services, durable medical equipment and similar outpatient medical services. An important outpatient service that Part B does not cover is prescription drugs. Beneficiaries pay a premium, currently $43.80/month, for Part B coverage and an annual deductible of $100. Overall, Medicare cost sharing relatively high, often exceeding the cost-sharing requirements in employer-based plans. Medicare eligible individuals include retirees and younger disabled individuals who have worked and paid payroll taxes or who become eligible based upon the record of a family member who has done so. In 1997, Massachusetts had 941,000 Medicare beneficiaries, ranking 11th in the U.S. for the number of enrollees. Medicare also pays for Graduate Medical Education (GME) for physicians. It covers both indirect medical education (IME) costs for resident training and involvement in treating patients with complex medical conditions and direct medical education costs such as resident and faculty salaries. served the dual purpose of balancing the federal budget and delaying the exhaustion of the Medicare Part A Trust Fund. It reduced the expected rate of growth in Medicare funding by a total of $116.4 billion over the next 5 years. The Balanced Budget Act (BBA) contained several overarching themes. First, it changed the nature of Medicare by expanding the range of plans available to …