Almost 63 million Americans rely on Medicare to help them afford the care they need to get well or stay well. That's an expensive burden. If the program was a person, he'd have a giant wallet almost leaking money.
In 2021, Medicare will spend more than $300 billion on hospital visits, doctor care and more. If you include Part D prescription drug spending, the number approaches $800 billion!
So we've established that the Medicare program is very expensive ... but exactly where does all that money go?
Note: The spending figures in this article do not include the costs of Medicare Part C (Medicare Advantage). They receive $267 billion to provide hospital and medical care to their enrollees.
America's 6,000 hospitals are the single largest Medicare customer. Today, inpatient hospital care costs the program a whopping $150 billion.
Much of this money goes to pay for people who have a heart attack, stroke or a serious injury; for example, a car accident or a fall that breaks a hip.
When those patients are admitted to the hospital, they accumulate charges for not just their room and board but also x-rays and CT scans, nursing care, IV medications and more. It's not unusual for Medicare to be billed more than $10,000 for a hospital visit that lasts only a few days.
Medicare enrollees only pay a small portion of that bill. Most of their care is covered by Medicare Part A, for which they pay no monthly premium.
If Original Medicare is their only form of coverage, they'll be on the hook for a $1,500 deductible. That sounds like a lot of money until you consider that the Medicare program paid a whole lot more on your behalf.
In 2019, 6.3 million people with Medicare were admitted to the hospital at least once during the year; on average, they stayed five nights.
Medicare pays doctors, nurses and related caregivers just shy of $100 billion a year. Yes, that's a lot of money, but the care was provided by 1.3 million providers.
This money is distributed roughly along the lines of the kind of providers getting the money.
One in every three of providers accepting Medicare assignment are primary care doctors and related vocations like physician assistants and nurse practitioners. You find them in physician offices, urgent care centers, emergency rooms and even some skilled nursing facilities.
Another 400,000 practice specialized medicine. They see patients with diabetes, heart disease, cancer, lupus and more. This group of doctors also includes surgeons and psychiatrists.
The single largest group of caregivers are what Medicare calls "non-physician practitioners". This is a catch all that includes not only nurses but also physical therapists, speech pathologists and dozens of other more obscure roles.
When your hip is replaced or you make it through a stroke, there's a good chance you'll be sent to a special kind of nursing home. There, you'll receive skilled care to build back your strength and hopefully be well enough to go home.
These skilled nursing facilities cost Medicare about $27 billion each year. Another $17 billion is spent on skilled home health care that's common in the weeks after you leave the nursing home.
Those $44 billion look intimidating but they tend to be good for Uncle Sam's pocket book.
Studies consistently find that lots of important care happens in the hospital when it could have been delivered somewhere else - like a skilled nursing home. In many cases, these services also help patients avoid going back to the hospital for another round of very expensive care.
Living to age 80 or 90 is an impressive feat. If you make it that long, you will have seen a countless number of health care providers.
Sounds expensive, right?
No matter your age, your final year of life is likely the most expensive. Think of the friend you lost to cancer or mother who fought so hard but couldn't back from her stroke.
Those final weeks of life are important but they're also very expensive.
Hospice is a program for people with a serious illness and who aren't expected to survive more than six months. Common conditions include advanced heart disease, cancer, kidney failure and sometimes even late stage Alzheimer's disease.
Hospice care focuses on helping the patient remain as comfortable as possible until their death. Pain management is a frequent type of care but so is emotional counseling for not just the patient but also his or her family.
In hospice, Medicare pays for almost all the care needed during these final months, including personal care items like adult diapers and grooming.
This end of life care costs Medicare about $12 billion each year.
Although the number seems high, hospice is important for two reasons. First, it allows a patient to pass as comfortably as possible. Second, it avoids even more expensive care that might be given but is unlikely to add many (if any) extra days of life.
Most prescription drugs are covered under Medicare Part D and that's not the focus of this article.
But while we're on the subject, Medicare spends well over $100 billion a year for the prescriptions you have filled at the pharmacy.
The majority (59%) of money is spent paying for the hundreds of generic medicines we take to control blood pressure, cholesterol, diabetes, arthritis and depression.
The other 40% is spent on brand name drugs. Just ten medicines account for the majority of that spending, including Eliquis and Xarelto (blood clots), Januvia and Trulicity (type 2 diabetes), and the Humira pen (rheumatoid arthritis).