Medicare and Medicaid's development from Progressive Era to 1965

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).

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).

In response to the resurgent growth of hospital spending, States began imposing limits on the Medicaid program for the poor to contain costs (Sherman 2004). Private insurance, out-of-pocket spending and public funds accounted for the resurgence. But the biggest contributor was a small increase in older and disabled Medicaid recipients in their share of the spending (Sherman).

Conclusion

The findings of a study published in the January-February issue of Health Affairs said that the rate of growth of Medicare and Medicaid costs had decelerated in 2003 as compared with those of previous years (Edwards 2005). The ominous growth was said to have been contained for nursing home services. According to the study, Medicare spending in 2003 was only 1.3% as compared to 11.4% in 2002. This was viewed as the consequence of the expiration of funding. Increases in Medicaid spending for nursing home were also reported to have slowed down from 8.1% in 2002 to only 1% in 2003 as the States began to reduce Medicaid costs (Edwards).