In September 1986 we reported that spending for personal health care for the elderly almost tripled between 1977 and 1984, increasing from $43 billion to a projected $120 billion. By 1984, persons age 65 and over accounted for one-third of all personal health care expenditures nationally. Public sources--Medicare, Medicaid, and the Veterans Administration (VA)--financed about two-thirds of the 1984 personal health care expenditures of the elderly. The program provides two basic forms of protection: Part A, Hospital Insurance, which is financed primarily by Social Security payroll taxes, covers inpatient hospital services, posthospital care in skilled nursing facilities (SNFs), hospice care, and care provided in patients' homes. Part B, Supplementary Medical Insurance, which is a voluntary program financed by enrollee premiums and federal general revenues, covers physician services and a variety of other health care services, such as laboratory and outpatient hospital services. In fiscal year 1985, Medicare part B covered 30 million enrollees, and benefits totaled about $21.9 billion. Although the scope and coverage of medical services under Medicare is broad, it requires considerable beneficiary cost sharing, and there is no catastrophic limit on medical expenses paid by the beneficiary. Additionally, some health care expenses are not covered at all, such as outpatient drugs; vision, hearing, and dental care; and care provided in intermediate or custodial care facilities.