Medicare & Medicaid: Keeping Us Healthy For 50 Years

Lyndon Johnson signing Civil Rights Act
Lyndon Johnson signing Civil Rights Act

On July 30, 1965, President Lyndon B. Johnson signed into law a legislation that established the Medicare and Medicaid programs. For the past 50 years, these 2 programs have been protecting the health and well-being of millions of American families, saving lives, and improving the economic security of our nation.

Many Americans have never known a world without Medicare. Through the last half a century,  it has been a reliable guarantor of the health and welfare of older and disabled Americans by paying their medical bills, ensuring their access to needed health care services, and protecting them from potentially crushing health expenses. However, as popular as Medicare has become, Congress created the program only after a long and deeply ideological struggle that still reverberates in continuing debates about its future.

Medicare was born out of frustration, desperate need, and political opportunity. The intellectual and political architects of the program did not set out to create a health care system for the elderly, for persons 65 years of age or older. Starting in the early 1930s, during President Franklin D. Roosevelt’s New Deal, they sought a much grander prize: the enactment of universal national health insurance for all Americans. However, opposition from Republicans, conservative Democrats, and organized medicine frustrated those ambitions. Even after Harry Truman became the first president to unreservedly advocate national health insurance in 1948, his proposal stalled on Capitol Hill. Supporters reluctantly concluded they would have to pursue more modest goals, so they targeted health insurance for elderly Americans.

The logic for this new focus was compelling. The health care situation of retirees was desperate. Bills for health care in this population were roughly triple those of younger Americans, but retirees did not have access to employer-sponsored coverage and they were unattractive to private insurers in the individual health insurance market. In the early 1960s, only about half of Americans who were 65 years of age or older had any health insurance, and many of their policies did not offer meaningful health care coverage. Politically, the elderly were also an attractive constituency. They showed up at the polls, and even in the mid-20th century, demographic trends showed that their numbers would surge.

These circumstances led to several congressional efforts during the 1950s to pass legislation providing health coverage to retired Americans. As he prepared to run for president, John F. Kennedy became a forceful Senate advocate of what came to be called Medicare. He campaigned on the issue in 1960, and though he lost a Senate Medicare vote by a 52-to-48 margin in 1962, his staff was meeting in Washington, D.C., at the very moment of his 1963 assassination in Dallas to discuss how to revive the legislation.

Medicare thus became part of the Kennedy legacy to which his successor committed himself. Johnson also saw in Medicare a huge political opportunity to mobilize elderly voters for his 1964 presidential campaign. Johnson’s landslide victory, which gave him large Democratic congressional majorities, made the passage of Medicare much more likely. This package included hospital coverage under Part A of Medicare, physician coverage under Part B, and a new addition, Medicaid. Having lived through the long effort to pass first national health insurance and then Medicare, Johnson understood the latter’s link to the former.

After years of fruitless struggle, Medicare advocates tried to minimize opposition by designing a comparatively modest insurance package. To limit costs, the program required substantial deductibles, copays, and premium contributions from beneficiaries and did not include coverage for long-term care, prescription-drug benefits, or limits on out-of-pocket costs.

In separating hospital coverage (Part A) from outpatient coverage (Part B), the program also imitated the prevailing structure of private insurance, such as the then-independent Blue Cross and Blue Shield plans, which in the 1960s often sold separate plans for hospital and outpatient care. Medicare has had a major effect on the lives of its beneficiaries. First and foremost, it has improved protection against financial hardship from medical bills, which was a major concern for older Americans and their adult children before enactment. Today, only 2% of the elderly lack health insurance, as compared with 48% in 1962.  Between 1965 and 1984, life expectancy at the age of 65 years increased by 15%.

One of the indirect positive effects of the implementation of Medicare occurred because the program stopped providing reimbursement to racially segregated health care facilities, in compliance with the Civil Rights Act of 1964. The result was the immediate desegregation of hospitals throughout the United States.

In 2013, Medicare covered 52.3 million Americans, almost one sixth of the U.S. population, at an annual cost of $583 billion, making it the nation’s largest insurer, public or private (though Medicaid will likely soon be larger). As insurance, Medicare is very popular among its users. Its beneficiaries are less likely to report not being able to get needed care or having burdensome medical bills or a negative insurance experience than are those under the age of 65 years who have employer-sponsored or individual plans

The Social Security Amendments of 1972 extend Medicare eligibility to people under age 65 with long-term disabilities and those with end-stage renal disease. Barack Obama signed the Affordable Care Act (ACA), which strengthens Medicare coverage of preventive care, reduces beneficiary liability for prescription drug costs, institutes reforms of many payment and delivery systems, and creates the Center for Medicare and Medicaid Innovation. The ACA also adds many new health insurance protections, such as bans on preexisting condition exclusions; establishes health insurance marketplaces for small businesses and individuals to purchase affordable health insurance; and requires that states expand eligibility for Medicaid.

Though Medicare and Medicaid started as basic insurance programs for Americans who didn’t have health insurance, the programs have changed over the years to provide more and more Americans with access to the quality and affordable health care they need.

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