Medicare, the nation's largest public health insurance program, faces formidable challenges in the years ahead. To ensure its stability, the program will have to come to grips with the combined impact of escalating health care spending, insufficient revenues, and a burgeoning elderly population. Proposals for changes in the program itself and its financing have been put on the table. As policymakers debate the merits of these various options, they must consider the effect on Medicare beneficiaries and protect vulnerable elderly and disabled people from overwhelming out-of-pocket costs.