For nearly 60 years, Medicare has helped older adults and disabled people of all ages obtain the health care they need while protecting them from the financial burden of excessive medical bills. The Commonwealth Fund’s Advancing Medicare initiative identifies ways in which this crucial program can serve its beneficiaries more effectively, efficiently, and equitably.
Medicare has enormous capacity to leverage change in U.S. health care. More than 65 million older adults and disabled Americans access care through the program, with about half in private health plans that contract with Medicare to offer covered benefits. In all, the program accounts for a large and growing share of the federal budget. Through the Center for Medicare and Medicaid Innovation, Medicare has a key role in developing, implementing, evaluating, and disseminating innovative models that can change the way health care is organized, delivered, and covered. These models shape Medicare, as well as other federal and state health insurance programs and private payers.
Medicare faces some serious challenges. Chief among them are rising costs, both for beneficiaries and for the federal budget. The average beneficiary spends 15 percent of household income on health care, compared with just 7 percent for adults under age 65. The current rate of Medicare spending, which comprised 12 percent of the federal budget in 2022, may be unsustainable: within the next decade, the Hospital Insurance Trust Fund is projected to become insolvent, meaning it won’t have sufficient funds to fully cover the costs of hospital care, rehabilitative care, and hospice care.
In addition to budgetary pressures, Medicare faces other challenges: providing more-comprehensive benefits, including dental care; protecting beneficiaries with low or modest incomes from high out-of-pocket costs; and addressing the confusing patchwork of Medicare benefits. Strategies are also required to serve the expanding number of enrollees with complex care needs and multiple chronic conditions as well as to ensure people have the unbiased information to help them select the coverage option that best fits their needs.
The Commonwealth Fund is examining trends in Medicare and studying potential solutions to emerging issues. Fund-supported research is examining how Medicare can:
- Improve access to the benefits and care.
- Examine the role of private health plans in Medicare, including Medicare Advantage plans, Medigap plans, and Part D plans, to determine how they can better meet beneficiaries’ needs, lower costs, and improve health outcomes.
- Improve the effectiveness of care for people with both Medicare and Medicaid.
- Generate evidence and develop policy options to reduce inequities among Medicare beneficiaries.
Program Contact:
Gretchen Jacobson, Vice President, Advancing Medicare
2025 Program Funding Priorities
- Understanding how to make care more affordable for beneficiaries and the cost of the Medicare program more sustainable — and evaluating policy options for doing so
- Examining whether and how traditional Medicare and private plans, including Medicare Advantage, Part D, and Medigap, meet Medicare beneficiaries’ diverse health care needs
- Improving beneficiaries’ ability to review and make informed choices about their coverage
