Medicare at 60: A Lifeline for Older Americans
Sixty years ago, Medicare was born when President Johnson signed it into law. At the ceremony, he gave a great deal of the credit to former President Truman, who had fought hard for this program and even honored him by presenting him with the first Medicare card. In his speech, President Johnson detailed the promises that this new program made to older Americans.
“No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings they have so carefully put away over a lifetime so that they might enjoy dignity in their later years.”
Those were bold promises. I was a junior in high school, and I had bigger things to worry about, like who would accept my invitation to the prom or who would win the big game, than being concerned with who would pay for my healthcare when I got old. I remember my parents worrying about how they would take care of my grandparents and a few years later they would become caregivers of my grandpa when he contracted Parkinson’s disease and my grandma as she developed congestive heart failure. I don’t know how the finances worked out, but I do know it did have an impact on my parents, and I don’t know how they would have made it without Medicare. I do know my parents talked about people they knew who had to go to the “old folks’ home,” a less than favorable place, where people went that didn’t have the financial ability to go anywhere else. I do know that Medicare lightened their burden of worrying about who would provide their healthcare as they grew old.
When you’re young and healthy you don’t picture yourself as getting old. Getting old doesn’t come with an instruction manual and there just isn’t any way you can prepare yourself for the maladies of aging. It is my generation that paid into Medicare our whole lives and it’s us boomers who are now taking advantage of the program. It would be difficult to imagine life without the safety net of Medicare.
It may surprise you that there have been some significant changes to Medicare over the years. In 1972, people with disabilities and those with end-stage renal disease (ESRD) requiring dialysis or kidney transplant became eligible for Medicare. In 1988, programs were introduced to help low-income beneficiaries with out-of-pocket expenses. In 1997, Medicare Part C (Medicare Advantage) was offered as an alternative to the fee for service approach of traditional Medicare. I’m not sure anyone would have predicted that now more than half of those over 65 have chosen the Medicare Advantage option.
Maybe the most impactful change to Medicare happened in 2003 when Medicare Part D, the prescription drug program, was signed into law. What seemed to have escaped the historical memory of that time was the significant drop in hospital visits when Part D was implemented. According to an Illinois and Johns Hopkins Universities study, when Part D was implemented, there was an 8% drop in hospital visits overall with a 7% decrease in Medicare payments per person for inpatient services and a 12% reduction in inpatient charges per person. As a reaction to the success of Part D, Medicare later began covering preventative services like screenings and wellness visits. In 2010 they closed the “donut hole” to reduce out-of-pocket costs and began testing value-based care models to improve quality and reduce costs. I feel that one of the most significant improvements to Medicare Part D was the $2,000 yearly cap on prescription drug costs that was part of the 2022 Inflation Reduction Act (IRA) - which became operational this year. It was not only a significant change to the finances of those seniors who had historically experienced large out-of-pocket costs, but it was important to younger Americans as they planned their finances for their retirement. All of these changes to Medicare have been positive but there have been some changes that I feel have been negative.
The Part A portion of Medicare is predicted to become insolvent in 2036 which means the benefit will only be able to pay 89% of the hospital costs. While this is certainly a concern it is better than the 2031 insolvency prediction of a few years ago. The extension to 2036 was due to stronger wage growth and lower-than-expected hospital spending. The drug price fixing part of the IRA was another negative change to Medicare. While forcing a lower price on selected drugs would seem to reduce costs, what it actually does is limit innovation, and in time that will limit the discovery of more life-changing and lifesaving medications, the very things that proved to lower hospital costs 20 years ago when Part D was implemented. We need to look for long range, fiscally responsible solutions.
I’m encouraged by the current Administration’s focus on preventive measures that will improve our overall health. I’m also encouraged by their interest in preventing waste, fraud, and abuse. If we work toward both of these goals with care, planning, and a focus on the long-term effects of the policies we put in place, I think Medicare can be improved and kept from insolvency.
Medicare has been a huge part in improving the health of older Americans for its first 60 years. Its promise to make us feel supported, respected, and cared for has certainly been kept. My hope is that we can care for it like it has cared for us and do everything in our power to improve and sustain it for our posterity.
Best, Thair