Evolution of Medicare and Medicaid

Evolution of Medicare and Medicaid

BOON or BANE?

The concept of a national insurance was a preoccupation from 1900 to 1965 (Berkowitz 2005). State management of health care finance programs, consumer choice of health care plan and collaboration between the public and private sectors naturally followed. They also led to the passage of Medicare in 1965. The concept of merging Republican and Democratic concepts of health insurance led to the development of Medicare and Medicaid's 40-year history. U.S. President Lyndon B. Johnson signed the Social Security Amendment of 1965 into law in Missouri. It was an attempt at continuing and realizing the common concept relished by former President Harry S. Truman and previous Presidents. By then, it had undergone major transformations, particularly in the aspects of consumer choice and the basic program design (Berkowitz).

Eligibility for Medicaid coverage requires thorough documentation of income and assets and medical condition (Shumaker 2001). In essence, it is intended for the poorer members of society. It becomes an option to those who do not qualify for long-term care insurance. Eligibility also depends on the particular State's own Medicaid rules and regulations, but, in general, an applicant with a small income and few assets qualifies. Most of all long-term health care costs in the U.S. are paid by Medicaid. Eligibility for Medicare benefits, on the other hand, begins after age 62 or 65 (Shumaker).

Highlights

Changes during the Progressive Era

The preference among reformers at the beginning of the 20th century for a kind of sickness insurance led to a plan by the Social Insurance Committee of the American Association for Labor Legislation (Berkowitz 2005). This legislation provided for wage replacement and medical services, including physician visits, surgery, nurses, drugs and supplies. Rigid investigations of the need for sickness insurance were held in the major cities and found it to be relatively controversial. The American Medical Association perceived medical care as largely a private deal between a medical practitioner and a patient and that the State need not interfere with it (Berkowitz).

New Deal Era

In the mid-30s, the focus of interest changed from sickness insurance to health insurance and from the costs of medical care to the lost wages due to illness (Berkowitz 2001). Improvements in medical care placed the hospital at the center of it. A Committee then emphasized on the costs of medical care and the need to assure constant and adequate supply of it as well as the people's capacity to pay for it. The majority in the Committee also thought that health insurance should be a voluntary and private system. That majority also saw that it should be born on a group basis wherein a worker could pay the average, not the individual cost of care, and make health care affordable. When the value of money fell during the Great Depression, investment in health care paid lower dividends in the 30s than in the 20s. Reformers continued to press for a national health insurance in the 1935 Social Security Act and in a separate legislation when they failed (Berkowitz).

Second World War

At this time, the concept of a national insurance changed from the States to the federal government as the preferred administrator (Berkowitz 2001). Federal officials viewed the States as ineffective and unreliable partners who created chaos rather than unity and turned out inferior products. Legislations for national health insurance in 1943, 1945 and 1947 had Federal rather than State administration. National health insurance became an extension of social security or old-age insurance. However, it presented the major problems of covering only half of the workers of the labor force and the undercutting of political support for public health insurance (Berkowitz).

The 50s

As social security became popular and Congress passed bills raising social security benefits in that decade, reformers were inclined to extend health insurance to social security beneficiaries, mostly elderly persons (Berkowitz 2001). Most of them had stopped paying for their employer-based health insurance and had high morbidity rates. The federal government could then come in as a health provider through what came to be Medicare. The concept of limiting federally financed national health insurance for the elderly received congressional attention in 1957 (Berkowitz).

In 1961, President John F. Kennedy endorsed a Medicare bill, followed by a long campaign for its passage (Berkowitz 2001). The concept of national health insurance underwent another transformation or major change of sharing common grounds with private health providers. The inclination to accommodate private health providers soon gained ground. In 1964, the Senate passed a Medicare bill, which was carried over to the new Congress then to convene in 1965. The emphasis given to Medicare relegated Medicaid to the backseat. But in March of 1965, Wilbur Mills of the powerful Ways and Means Committee recommended the combining of the administration approach and that of John Byrnes of the same Committee. This created Medicaid, which incorporated elements of Eldercare, which would be a supplement to Medicare instead of as a substitute. Medicaid became a law as a supplement in 1965 and later greatly influenced health care finance (Berkowitz).

Health Care Spending Rises Steeply

Statistics showed a record-high level of healthcare spending and growth at $1.6 trillion in 2002, which topped the rest of the economy in the fourth straight year (Sherman 2004). Hospital and prescription drug expenses went up by 9.3% over the past year's level. Experts said that this continued increase burdened the healthcare systems and all the sectors. The Organization for Economic Cooperation and Development in 2001 said that the U.S. spent more per person on health than any other developed nation. Senator Edward Kennedy interpreted this as a call to prompt action in controlling health care costs. Overseers, however, did not immediately respond to the urgent call (Sherman).