Editing Medicare (United States) (section)

==Comparison with private insurance==
Medicare differs from private insurance available to working Americans in that it is a [[social insurance]] program. Social insurance programs provide statutorily guaranteed benefits to the entire population (under certain circumstances, such as old age or unemployment). These benefits are financed in significant part through universal taxes. In effect, Medicare is a mechanism by which the state takes a portion of its citizens' resources to provide health and financial security to its citizens in old age or in case of disability, helping them cope with the cost of health care. In its universality, Medicare differs substantially from private insurers, which decide whom to cover and what benefits to offer to manage their risk pools and ensure that their costs do not exceed premiums.{{citation needed|date=October 2014}}

Because the federal government is legally obligated to provide Medicare benefits to older and some disabled Americans, it cannot cut costs by restricting eligibility or benefits, except by going through a difficult legislative process, or by revising its interpretation of [[medical necessity]]. By statute, Medicare may only pay for items and services that are "reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member", unless there is another statutory authorization for payment.<ref>''See'' 42 U.S.C. § [http://www.ssa.gov/OP_Home/ssact/title18/1862.htm 1395y(a)(1)(A)].</ref> Cutting costs by cutting benefits is difficult, but the program can also achieve substantial economies of scale in the prices it pays for health care and administrative expenses—and, as a result, private insurers' costs have grown almost 60% more than Medicare's since 1970.{{citation needed|date=October 2014}}<ref>{{Cite web |last=Rosso |first=Ryan J. |date=March 20, 2024 |title=U.S. Health Care Coverage and Spending |url=https://crsreports.congress.gov/product/pdf/IF/IF10830 |access-date=June 4, 2024 |website=Congressional Research Service}}</ref>{{Original research inline|date=April 2020}}<ref name=NationalHealthExpendData>{{cite web |title=NHE Web Tables for Selected Calendar Years 1960–2010 |publisher=Center of Medicare and Medicaid Services |url=https://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf |access-date=February 16, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20120127170317/http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf |archive-date=January 27, 2012 |at=Table 16}}</ref> Medicare's cost growth is now the same as GDP growth and expected to stay well below private insurance's for the next decade.<ref>Center for Medicare and Medicaid Services, [https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads//proj2010.pdf "National Health Expenditure Projections 2010–2020"] {{webarchive|url=https://web.archive.org/web/20120501105801/http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/proj2010.pdf |date=May 1, 2012 }}, Table 17.</ref>

Because Medicare offers statutorily determined benefits, its coverage policies and payment rates are publicly known, and all enrollees are entitled to the same coverage. In the private insurance market, plans can be tailored to offer different benefits to different customers, enabling individuals to reduce coverage costs while assuming risks for care that is not covered. Insurers, however, have far fewer disclosure requirements than Medicare, and studies show that customers in the private sector can find it difficult to know what their policy covers,<ref>Karen Pollitz, et al. [http://www.naic.org/documents/committees_b_consumer_information_coverage_facts_paper.pdf "Coverage When It Counts: What Does Health Insurance In Massachusetts Cover and How Can Consumers Know?"] The Robert Wood Johnson Foundation and Georgetown University. May 2009. {{Webarchive|url=https://web.archive.org/web/20210307204620/http://www.naic.org/documents/committees_b_consumer_information_coverage_facts_paper.pdf|date=March 7, 2021}}.</ref> and at what cost.<ref>GAO, [http://www.gao.gov/new.items/d11791.pdf "Health Care Price Transparency: Meaningful price information is difficult for consumers to obtain prior to obtaining care"] {{Webarchive|url=https://web.archive.org/web/20120105160249/http://www.gao.gov/new.items/d11791.pdf|date=January 5, 2012}}. September 2011.</ref> Moreover, since Medicare collects data about utilization and costs for its enrollees—data that private insurers treat as trade secrets—it gives researchers key information about health care system performance.

Medicare also has an important role in driving changes in the entire health care system. Because Medicare pays for a huge share of health care in every region of the country, it has a great deal of power to set delivery and payment policies. For example, Medicare promoted the adaptation of prospective payments based on DRGs, which prevents unscrupulous providers from setting their own exorbitant prices.<ref>{{Cite web |last=Reinhardt|first=Uwe E.|date=2010-12-03|title=How Medicare Pays Physicians |url=https://archive.nytimes.com/economix.blogs.nytimes.com/2010/12/03/how-medicare-pays-physicians/|access-date=2023-01-06|website=Economix Blog |language=en}}</ref> Meanwhile, the [[Patient Protection and Affordable Care Act]] has given Medicare the mandate to promote cost-containment throughout the health care system, for example, by promoting the creation of accountable care organizations or by replacing fee-for-service payments with bundled payments.<ref name="ReferenceA">{{Cite web|date=2013-04-25|title=Summary of the Affordable Care Act |url=https://www.kff.org/health-reform/fact-sheet/summary-of-the-affordable-care-act/|access-date=2023-01-06|website=KFF|language=en-US}}</ref>