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Medicare enrollment.


The growth in the number of persons enrolled in the Medicare program is a significant factor in the rise in program payments. The enrollment statistics presented in this chapter are meant to assist in the monitoring and evaluation of program benefits, policy and legislative issues, and research initiatives related to the administration of the Medicare program. The statistics are presented by selected demographic and program characteristics.

Growth of the enrolled population

When the Medicare program went into effect on July 1, 1966, only persons 65 years of age or over were covered. Medicare coverage was extended to persons under 65 years of age when disabled persons and persons with end stage renal disease (ESRD) were made eligible by the 1972 Amendments to the Social Security Act (Public Law 92-603). Coverage of the latter groups began on July 1, 1973.

In 1990, the total enrollment in Medicare was 34.2 million. The total enrollment of the aged grew from 19.1 million in 1966 to almost 31 million in 1990, an average annual rate of growth of 2.0 percent. The enrollment of persons under 65 years of age has grown at a more rapid pace. The number of persons under age 65 enrolled for Medicare has almost doubled, from 1.7 million in 1973 to 3.2 million in 1990. This is an average growth rate of 3.8 percent per year.

In 1966, the estimated total resident population of the United States was 197 million. When Medicare was implemented on July 1, 1966, it provided health care services to 19.1 million enrollees, who represented about 9.7 percent of the total resident population. By 1990, the estimated resident population was 248.7 million. Of this total, Medicare provided health insurance to about 34.2 million enrollees, or almost 13.8 percent of the total resident population.

In 1966, about 10 percent of the United States population was age 65 or over; by 1990, the proportion rose to 12 percent. Actuarial projections indicate that the aged population will continue to expand and will represent 19 to 20 percent of the population by the year 2025. As shown in Figure 2.1, the number of the Social Security aged population is projected to increase to 59.8 million individuals in 2025 and 70.5 million in 2050.

Statistical examination of the aged population (65 years of age or over) within the Medicare program indicates increasing life expectancy for beneficiaries. The median age for this population rose from 72.8 years in 1966 to 73.5 years in 1987. Although the overall aged population of the program has been increasing at an average annual rate of 2.1 percent, the category of persons 85 years of age or over has been increasing at an average annual rate of 4.6 percent.

Basis of entitlement

There are three basic entitlement categories: persons 65 years of age or over who are eligible for retirement under Social Security or the railroad retirement system, persons under 65 years of age who have been entitled for at least 2 years to disability benefits under Social Security or the railroad retirement system, and persons with ESRD who do not otherwise meet the age or disability requirements. The latter two groups together are known as the "under 65" enrollees.

All persons 65 years of age or over who are entitled to monthly Social Security benefits or payments from the railroad retirement system are eligible for benefits under the Medicare hospital insurance (HI) program. Since July 1, 1973, disabled persons entitled to cash benefits under the Social Security or railroad retirement programs also have been eligible for HI benefits. A person must be disabled for 6 months before disability benefits begin and then be entitled to 24 months of cash benefits before becoming eligible for HI benefits. Thus, Medicare coverage begins the 30th month after the first full calendar month of disability.

HI coverage also extends to persons who have ESRD and require renal dialysis or a kidney transplant. In addition, they must be currently insured, entitled to monthly Social Security benefits, or be the spouses or dependent children of such insured persons. Eligibility for coverage begins the third month after renal dialysis treatments begin or before this qualifying dialysis period for ESRD enrollees who receive kidney transplants without starting or receiving dialysis in preparation for transplantation. Eligibility ends with the 36th month after a person receives a kidney transplant or after dialysis treatment has been terminated.

The 1972 Amendments to the Social Security Act, effective July 1973, permit most persons 65 years of age or over who are ineligible for HI coverage to enroll voluntarily by paying a monthly premium. This "premium-HI" was set at $175 a month for 1990 and represents the actuarial cost of HI.

About 98 percent of the Nation's aged population is enrolled in the HI program. Nearly everyone covered by HI voluntarily enrolls in the supplementary medical insurance (SMI) program. Under buy-in agreements, most State Medicaid programs pay those premiums for individuals who qualify for both Medicare and Medicaid benefits. Table 2.2 shows HI and SMI enrollment since the beginning of the Medicare program.


Type of coverage

Medicare beneficiaries also can be characterized by the type of insurance coverage for which they are enrolled, that is, either HI or SMI. Generally, persons who meet one of the three eligibility requirements do not have to pay a premium for HI coverage. However, as indicated previously, persons not eligible for automatic HI coverage may obtain coverage by paying a premium. Coverage under SMI always requires the payment of a monthly premium. Persons may elect to forgo SMI coverage and not pay a premium. For this reason, not every Medicare beneficiary covered by HI is covered by SMI. By the same token, not everyone who elects to buy SMI coverage would choose to buy HI coverage if not otherwise receiving automatic coverage.

In 1990, about 94 percent (32.1 million) of the persons enrolled for Medicare had coverage under both HI and SMI. About 1.6 million enrollees were covered only by HI, that is, had elected not to pay the premiums for SMI coverage (derived from Table 2.3). Less than one-half million aged enrollees had only SMI coverage; disabled enrollees are not permitted to enroll in SMI only. Many enrollees with only HI coverage, which is usually extended automatically, may have had supplementary coverage through employment-related plans and did not feel the need to purchase SMI coverage. Younger persons with ESRD may have had private employment-related insurance whereby Medicare was a secondary payer to the private insurance; therefore, purchase of SMI may not have been perceived as advantageous. Table 2.3 summarizes aged and disabled enrollment in the HI and SMI programs for 1990.
 Table 2.3
 Number of aged and disabled Medicare
 enrollees, by type of enrollment: July 1, 1990
Type of enrollment Total Aged Disabled
 Number in millions
Hospital insurance and/or
 supplementary medical
 insurance 34.2 31.0 3.3
Hospital insurance and
 supplementary medical
 insurance 32.1 29.2 2.9
Hospital insurance 33.7 30.5 3.3
Supplementary medical
 insurance 32.6 29.7 2.9
Supplementary medical
 insurance only 0.5 0.5 --
NOTE: Numbers may not add to totals because of rounding.
SOURCE: Health Care Financing Administration, Bureau of Data
Management and Strategy: Data from the Medicare Decision Support

Some types of employment are not covered by Social Security, and retirees from these occupations would not be automatically entitled to HI coverage. Although they may have employment-related coverage for services that are covered by HI, they may want extra protection against the costs of medical services covered by SMI. Federal retirees covered by the civil service retirement system probably constitute a large portion of the "SMI only" group.

Most Medicare enrollees paid their own SMI premiums. State Medicaid programs paid the premiums for about 3.6 million enrollees. Most of the latter beneficiaries were also covered by the State Medicaid program. If these persons lack coverage under either HI or SMI but otherwise meet the eligibility criteria, the State may buy coverage for them under either or both programs through payment of the applicable premiums on their behalf. This group of enrollees is considered as "dually enrolled." State Medicaid programs are required to purchase Medicare coverage for persons whose incomes do not exceed 100 percent of the Federal poverty level and whose assets are below specified limits. Whether Medicaid coverage is extended to those "qualified Medicare beneficiaries" who normally would not meet the State criteria for Medicaid eligibility is a State option. For both groups, however, Medicare becomes the primary payer for the services covered by HI and SMI, but the State Medicaid program pays the applicable deductibles and coinsurance. Medicare enrollees covered by either HI or SMI as a result of State premium payments on their behalf are referred to as "buy-ins."

Private health plan option

Medicare enrollees can also be differentiated by whether or not they have elected to enroll in and receive services from an organized medical service system. These organized delivery systems of health services are generally known as health maintenance organizations (HMOs). They are also referred to as health care prepayment plans (HCPPs) or competitive medical plans (CMPs). Although they vary significantly in the details of their operations, the distinctive feature of HCPPs is that Medicare pays them a monthly prospectively set capitation to provide covered services to Medicare-covered enrollees. This payment arrangement is in contrast to the fee-for-service arrangement that has been the historic pattern of the American health care system. In 1990, about 1.9 million Medicare beneficiaries or 5.5 percent were enrolled in HMOs. Less than 2 percent of the disabled were enrolled, compared with almost 6 percent of the aged (Table 2.4).


Enrollment by basis of eligibility

Of the 34.2 million persons enrolled in Medicare on July 1, 1990, 30.9 million qualified on the basis of being 65 years of age or over. There were 3.1 million beneficiaries who were disabled and about 44,000 of these had ESRD. About 65,000 were receiving Medicare benefits solely because of ESRD. About 52,000 aged persons had ESRD in 1990. However, when a beneficiary reaches 65 years of age, eligibility is on the basis of age regardless of the original reason for eligibility, such as ESRD. Thus, there was a total of 172,078 persons with ESRD (Table 2.4).

Medicaid buy-ins

Some part or all of Medicare coverage was purchased through premiums paid by a State or territorial Medicaid agency for about 10.5 percent (3.6 million) of the Medicare enrollees (Table 2.4). Almost 27 percent of the enrollees under age 65 were "buy-ins." Most of these were disabled persons unable to work and probably suffered long-standing disabilities that prevented them from engaging in sufficient gainful employment to acquire automatic HI coverage or the resources to pay for their SMI coverage. Almost 17 percent of the enrollees 85 years or over were buy-ins. Very likely, this was related to impoverishment attributable to the need for lengthy nursing home stays and other expensive health care services. One out of eight female enrollees was a Medicaid buy-in. This reflects the greater longevity of women, their greater risk of nursing home stays, and the fact that they often incur high health care expenditures that result in the depletion of their assets. Almost 28 percent of black enrollees were buy-ins.

Enrollment by demographic characteristics

Table 2.4 also shows the number of Medicare enrollees by selected demographic characteristics as of July 1, 1990. Enrollees under 65 years of age constituted about 3.2 million or 9.5 percent of the total Medicare enrollment (derived from table). This group consisted of persons who were disabled and persons with end stage renal disease who did not meet the criteria for disability either because they had not received Social Security disability payments for the requisite 2 years or they continued to work. About 42 percent were age 55 to 64 and almost 15 percent were under age 35.

The 30.9-million enrollees who were age 65 or over constituted the bulk of the Medicare enrollment. Persons age 75 or over are generally considered to be the high-cost group in terms of the health care expenditures they incur. This group constituted 43 percent of the aged enrollees and is expected to increase in size in the future. Efforts to contain growing Medicare expenditures will have to contend with this demographic trend.

Among the aged, females constituted 60 percent of the Medicare enrollees. This proportion has been growing and is expected to continue to grow because of their greater longevity. Females age 75 or over constituted 25 percent of the enrollment. Among males, only 14 percent were age 75 or over.

Among the disabled, almost 63 percent of the enrollees were males. Among persons with ESRD, excluding those age 65 or over, males constituted almost 57 percent of the enrollees. Among ESRD enrollees who were age 65 or over, the distribution by sex is roughly even. Among the aged, white persons constituted almost 87 percent of the enrollees. Enrollees of all races other than white represented about 11 percent (3.5 million) of the aged Medicare enrollment population. About 7.5 percent were black persons. "Other" minorities accounted for about 2.6 percent of the enrollment. For about 3 percent of the aged, race was not known.

Among enrollees under age 65 (including persons eligible by reason of ESRD only), 76 percent were white. About 16 percent were black. Among those under age 65 with ESRD, however, almost 29 percent were black.

About 73 percent of all Medicare enrollees living in the United States resided in urban areas. The difference between the aged and the disabled in this respect was not significant (Table 2.4). The South Atlantic States had the largest number of both aged and disabled enrollees in comparison to all other census divisions (Table 2.5). According to 1990 data, of the enrollees living in the United States, about 35 percent of the aged and 38 percent of those under age 65 lived in the South (derived from table).


Nearly three-fourths (25.3 million) of all Medicare HI and/or SMI enrollees were located in urban areas of the United States. Enrollees residing in urban areas of eight States--New Jersey, New York, Pennsylvania, Illinois, Ohio, Florida, Texas, and California--account for 56 percent (13.8 million) of all Medicare urban enrollees living in the United States (Table 2.6). Three States--California (3.3 million), New York (2.5 million), and Florida (2.3 million)--accounted for nearly one-fourth of all Medicare enrollees. The State with the lowest number of Medicare enrollees were Alaska (25,440), Wyoming (51,440), and Vermont (74,980).


Table 2.7 and Figure 2.8 show the States' Medicare enrollment as a percent of resident population.

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Title Annotation:Medicare and Medicaid Statistical Supplement
Author:Petrie, John T.; Silverman, Herbert A.
Publication:Health Care Financing Review
Date:Jan 1, 1992
Previous Article:Overview of the Medicare program.
Next Article:Medicare program expenditures.

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