Medicare is 61 Years Old and Still a Great Benefit
Last Thursday was the day, 61 years ago, that Medicare was signed into law. It was the culmination of a long trek that began in the Truman administration and finally became law as part of Lyndon Johnson’s great society agenda. Medicare has been a big part of America’s healthcare for these six decades and has provided a sense of security for everyone over 65 and for those planning their retirement. The process of developing a program for providing healthcare for older Americans was not an easy journey.
President Truman proposed national health insurance in 1945. It was immediately opposed by the American Medical Association (AMA) as “socialized medicine” and Congress killed the idea. The focus changed to older Americans as it had become evident that seniors needed some help with obtaining healthcare. Employer or private insurance was reluctant to offer insurance to older citizens. It would be expensive, and the premiums would be costly. In the late 50s and early 60s poverty among seniors was widespread, impacting nearly 1 in 3 older Americans lived, and medical bills were a major driver. Hospitals were absorbing huge amounts of unpaid care, they were treating uninsured seniors without compensation, creating financial strain across the healthcare system. The consensus in the nation was that federally regulated healthcare was the answer. Lyndon Johnson won in a landslide and the Democrats gained a super majority in Congress. This enabled President Johnson to introduce his “Great Society” agenda which included Medicare and the Older Americans Act (see last week’s blog).
It was not an easy battle, Ronald Reagan warned that Medicare would destroy American freedom. The AMA opposed it as did the hospitals. Out of the debate came a compromise that included a federally funded Part A – hospital insurance (public), Medicare Part B – optional doctor insurance (private carriers administered it), and Medicaid – coverage for low-income Americans. Every faction got something.
• Liberals got universal hospital coverage for seniors
• Moderates got a voluntary physician plan
• States got a program for the poor
• Hospitals got guaranteed payment
• Private insurers got a role in Part B
Medicare was to be funded by taxes paid while a person was employed, equal parts paid by the employee and the employer. Anyone 65 or older was grandfathered in so all seniors 65 and older were covered by Medicare when it was implemented on July 1st, 1966. The program had an immediate effect on poverty for older adults. In 1966 poverty in seniors was ~30%,1975 ~20%,1985 ~12% and today, ~10%. Poverty fell by 2/3rds! Medical bankruptcy by older adults plummeted. It did what lawmakers had hoped it would do.
Medicare has had some changes over the years, taxes have been raised to cover the increases in cost and the expansion of some benefits. President Reagan changed the way Medicare procedures were paid, adopting a Prospective Payment System (PPS) based on Diagnosis‑Related Groups (DRGs) which helped slow the growth of Medicare. He also raised the Federal Insurance Contributions Act (FICA) Medicare tax. In 2003 President George W. Bush signed the Medicare Modernization Act (MMA) which created the prescription drug program (Part D) and the Medicare Advantage option. Over the years lawmakers have found ways to continue to improve Medicare and to continue to finance it.
Medicare has had a big impact on virtually everyone’s lives. I was a junior in high school when it was implemented, and I don’t remember anything changing but I’m sure my parents did as they were caregivers for my grandparents. When Part D began, hospital visits dropped considerably. Americans felt more in control of their future and retirement knowing that Medicare will be there when they turn 65. They also feel like it’s a benefit that they earned through paying the FICA-Medicare tax year after year. The public/private partnership employed in Part D and the Medicare Advantage program have proven an efficient solution. Seniors are satisfied with Medicare; our yearly Medicare satisfaction survey has shown an over 90% satisfaction rate with both Medicare and Medicare Part D. It’s a program that our government got right!
As we look forward there continues to be changes to Medicare and especially Part D. I have written often about the good and bad changes that have been proposed and signed into law. It’s my opinion that we could have had more good and less bad changes if we could have had some semblance of bi-partisan participation and compromise. It’s interesting that even though President Johnson enjoyed a super majority when Medicare was proposed there was still room for compromise and there were Republicans in both Houses that voted for the bill. Unfortunately, that doesn’t seem to be the case today. It will be up to you and me as advocates for seniors to be vocal in letting our lawmakers know how we feel about each of the proposed changes to Medicare and how the changes that have already been signed into law should be implemented. Midterm elections are coming this fall, each of us need to understand where the candidates stand on healthcare issues and vote for those who support continued choice, access, and innovation in our healthcare.
When one of my sons got his first paycheck, he asked me who was this FICA-Medicare guy and why is he taking some of my money. I told him it was for Medicare, a great insurance program that will be there to support us when we retire. It’s up to us to make sure that Medicare remains a great program for our kids and grandkids.
Best, Thair