For nearly 60 years, Medicare has helped pay for medical care for Americans over the age of 65, as well as younger Americans with certain medical needs. Medicare has many different programs, all named with different letters of the alphabet, so it can often feel confusing. With Medicare increasingly in the news, clarity around how it works and what types of health care it covers is important. We’re here to break it down and share the basics about the different parts of Medicare:
- Part A covers hospital, hospice and home health care. It also allows patients to access skilled nursing facilities. Part A was part of the original Medicare program created in 1965.
- Part B covers a wide range of health care services and coverage for physician office visits, hospital outpatient care and medical equipment. It also covers medicines that are usually administered by a physician, like many injections and infusions. Many of the medicines covered by Part B are for serious and complex conditions, such as cancer, rheumatoid arthritis and mental illness, among others. Like Part A, Part B was created as part of the original Medicare program.
- Part C, also known as Medicare Advantage, is a managed care option in Medicare. Medicare Advantage plans are Medicare-approved private health insurance plans for individuals enrolled in Part A and Part B. Most plans cover prescription medicines and may also offer supplemental coverage in terms of additional benefits or lower cost sharing and out-of-pocket costs.
- Part D provides coverage for prescription medicines patients pick up at retail pharmacies or ordered through mail order or specialty pharmacies. Part D, which was enacted in 2003 and went into effect in 2006, is run by Medicare-approved private plans. In its first 15 years, Part D contributed to decreased mortality rates for seniors, reduced hospitalizations and improved adherence to medicines for seniors and others enrolled in the program.
While Medicare’s coverage of medicines has worked well for seniors and people with disabilities, we know there are ways it could work better. That’s why we put forth a number of solutions that could lower out-of-pocket costs for Medicare beneficiaries. In Part D, for example, policymakers could cap annual out-of-pocket costs, lower cost sharing and make out-of-pocket costs more predictable. They could also make sure savings from rebates and discounts pharmaceutical manufacturers negotiate with Part D health insurance plans are shared with seniors and patients with disabilities at the pharmacy counter. In Part B, policymakers could take steps to ensure Medicare and Medicare beneficiaries benefit more from the lower prices negotiated by large commercial purchasers in the private insurance market.
There are ways to achieve savings for the government and beneficiaries while protecting access to medicines and provider reimbursement. Read more about our commonsense, patient-centered reforms here.
Gabby Migliara is a senior manager of public affairs at PhRMA focusing on the cost and value of medicines. She previously worked with the U.S. Census Bureau on marketing and communications for the 2020 Census campaign. Outside the office, Gabby enjoys trying new restaurants, hanging with her cat and exploring DC neighborhoods.