As the nation’s provider of health coverage for the elderly and people with disabilities, Medicare now covers 46 million American with total expenditures of $455 billion in fiscal year 2008, accounting for 15 percent of the federal budget, exceeded only by defense spending and Social Security.

This primer provides an overview of Medicare’s financing and examines several methods of assessing the program’s long-term financial outlook.  It also discusses the factors that drive the growth in Medicare spending, which is primarily due to rising health care costs that affect all public and private payers nationwide.  The primer also examines geographic variation in health care spending and its impact on the Medicare program, and how rising Medicare costs affect beneficiaries’ out-of-pocket spending burden.

The primer also discusses the outlook for the future of Medicare financing and the potential for various policy proposals under discussion to change the current upward trajectory of costs, both for Medicare and for the health care system overall.

Primer (.pdf)

Previous Version:

 Issue Brief (.pdf)