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Medicare is a national health insurance program in the United States, begun in 1966 under the Social Security Administration (SSA) and now administered by the Centers for Medicare and Medicaid Services (CMS).

It primarily provides health insurance for Americans aged 65 and older, but also for some younger people with disability status as determined by the Social Security Administration, as well as people with end stage renal disease and amyotrophic lateral sclerosis (ALS or Lou Gehrig's disease).

Contracted processes include claims and payment processing, call center services, clinician enrollment, and fraud investigation.

Beginning in 19, respectively, these Part A and B administrators (whose contracts are bid out periodically), along with other insurance companies and other companies or organizations (such as integrated health delivery systems, unions and pharmacies), also began administering Part C and Part D plans.

The Specialty Society Relative Value Scale Update Committee (or Relative Value Update Committee; RUC), composed of physicians associated with the American Medical Association, advises the government about pay standards for Medicare patient procedures performed by doctors and other professionals under Medicare Part B.

A similar but different CMS process determines the rates paid for acute care and other hospitals—including skilled nursing facilities—under Medicare Part A.

As the years progressed, Congress expanded Medicare eligibility to younger people with permanent disabilities who receive Social Security Disability Insurance (SSDI) payments and to those with end-stage renal disease (ESRD).

The association with HMOs that began in the 1970s was formalized and expanded under President Bill Clinton in 1997 as Medicare Part C (although not all Part C health plans sponsors have to be HMOs, about 75% are). Bush, a Medicare program for covering almost all self-administered prescription drugs was passed (and went into effect in 2006) as Medicare Part D.

In 2018, Medicare provided health insurance for over 59.9 million individuals—more than 52 million people aged 65 and older and about 8 million younger people.

According to annual Medicare Trustees reports and research by the government's Med PAC group, Medicare covers about half of healthcare expenses of those enrolled.

In Part D, the Part D Trust Fund helps beneficiaries purchase drug insurance.

For Part B drugs, the trust funds reimburses the professional that administers the drugs and allows a mark up for that service. Part A's inpatient admitted hospital and skilled nursing coverage is largely funded by revenue from a 2.9% payroll tax levied on employers and workers (each pay 1.45%).

These additional so-called out of pocket (OOP) costs can include deductibles and co-pays; the costs of uncovered services—such as for long-term custodial, dental, hearing, and vision care; the cost of annual physical exams for those not on health plans that include physicals; and the costs related to basic Medicare's lifetime and per-incident limits. Part B covers outpatient services including some providers' services while inpatient at a hospital, outpatient hospital charges, most provider office visits even if the office is "in a hospital", and most professionally administered prescription drugs.