The U.S. health care system during the past three decades has been over two interrelated questions: first, who will control the manner in which medical care is paid for, and, second, how much will it cost? Many health care experts believe that Medicare's efforts at cost control, primarily in the form of the program's seminal transition to and continual modification of prospective payment of health care providers, has both triggered and repeatedly intensified the economic restructuring of the U.S. health care system. Medicare is an almost $600 billion public health insurance program for individuals sixty-five years of age and older; individuals under sixty-five with certain disabilities (with eligibility depenqent on the severity of the disability and the resultant consequences for a person's ability to work), and those with end-stage renal disease). With regard to how the program reimburses for care, "Medicare sets prospectively the payment amount (rates) providers will receive for most covered products and services, and providers agree to accept them as payment in fun," according to the Medicare Payment Advisory Commission. "Thus, in most instances, providers' payments are based on predetermined rates and are unaffected by their costs or posted charges."

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Copyright © 2014 CQ Press. This chapter first appeared in Guide to U.S. Health and Health Care Policy.

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