Medicare past present future

More coursework: 1 - A | B | C | D | E | F | G | H | I - J | K - L | M | N - O | P - S | T | U - Y

Medicare Past Present Future

The political climate of America has evolved over the past century from one that emulates other countries to one that attempts to set policy that others emulate. Initiated by Bismarck in 1883 in Germany, a social insurance model provided insurance to workers. This type of insurance expanded to cover whole populations in European countries. In 1911, the idea spread to the United States. However, at this time in history, social welfare was considered a state government function instead of a federal government function. The need to introduce the concept of social welfare insurance separately in each individual state extended debate beyond the onset of World War I. This extension of debate allowed the political climate to change from one of support of European ideas to one that was opposed to anything that originated in Germany

With the end of the war, the following period of economic prosperity made social reform initiatives a low priority for the majority of the population. However, health issues were still a matter that required attention. In 1927, the Committee on the Costs of Medical Care (CCMC) was formed to conduct the first comprehensive study of medical economics. This study made recommendations to reorganize the medical profession. The first recommendation would eliminate solo practice by confining physicians to hospital practice. The second recommendation proposed financing medical care through either taxation, private insurance, or a combination of both. The third recommendation proposed planning a way to extend health services to the public outside the hospital. The fourth recommendation proposed changes in the education of all medical practitioners.
The developments envisioned by the majority of the CCMC members, which would have tended to institutionalize medical care, represented a radical departure form the existing philosophy and practice. For this reason, the prospect was alarming to some doctors. When the majority report was published, it drew adverse reactions from within the medical profession. The AMA leadership denounced it and immediately undertook to refute it. The ultimate effect of the report (and the dissent), therefore, was to sharpen the cleavage between physicians and those outside the profession (as well as the minority of doctors) who advocated changes in the health care system. Any subsequent attempt to enact Government health insurance would take place within the context of this unresolved and fundamental conflict. (Corning, 1995, chap. 2, p. 2)

he publication of this report, in 1932, coincided with the period of the Great Depression. The economic climate had changed from prosperity to poverty. Social welfare initiatives were vital in the effort to help the people of this country survive. Under the direction of President Franklin D. Roosevelt, the federal government initiated many social welfare programs to reduce unemployment and in 1935, the Social Security Act was signed into law. "With this measure, the Roosevelt administration supplemented (and eventually replaced) its clutch of temporary relief programs with a structure of permanent social welfare institutions" (Corning, chap. 2, p. 7). However, a universal health plan was strongly opposed by the American Medical Association (AMA) and it had no strong supporters.

Even though there was no strong political group that promoted universal health care, the American public was advocating for health insurance. After the government completed the first National Health Study, which determined that a large portion of the population could not afford medical care, debate on this issue increased. Government interest in a national health program resumed with Congress introducing legislation, but, in 1939, World War II intervened

Health issues did not stagnate during this war. The Social Security Board produced annual reports, starting in 1939 that explored ways to expand health benefits. Congress kept the issue alive by formulating legislation that would expand the Social Security Act to include health benefits. However, other special interest groups joined the AMA in opposition and succeeded in defeating the legislation. President Roosevelt in his speeches to the public, along with the revolutionary fireside chats, showed increasing support to expanding the health care benefits of the population with government initiatives. However, with his death in 1945, the political support for these initiatives faded. President Truman was in favor, but he was in the minority. The switch to a conservative Republican Congress, along with post-war inflation and opposition to the labor unions who supported the legislation, contributed to defeat of health care initiatives.

In 1948, with the election of President Truman, control of Congress returned to the Democrats. Health care legislation was reintroduced, but there were still enough conservative members to defeat the bill. In addition, unemployment was on the rise predicting a poor economic future. Labor groups began promoting employer insurance coverage plans. The political climate was changing and anti-Communist sentiment was increasing. Social welfare initiatives that would compel the country to have only one choice of insurance were equated to communism. In 1950, the Korean War started. In 1952, Dwight D. Eisenhower, a Republican, was elected and the national health insurance issue was eliminated from the agenda of Congress with the support of the AMA. The Catholic Church, who had reversed their position in 1948, along with the majority of other social and political organizations, totaling 1,829 in all, also supported this action.

Four events in the 1956, session of congress presaged a revival of the debate over health insurance under social security. One was the enactment of a permanent program of Government health protection for dependents of servicemen—the so-called military "medicare" program....The second was an expansion of payments to medical vendors for the provision of health care to welfare clients. And the third (and least noted) event was the approval by Congress of a $30,000study of the problems of the aged....By far the most significant portent of a renewal of the health insurance debate, though, was the struggle to add to the social security program cash benefits for totally and permanently disabled persons aged 50 and over. (Corning, 1995, chap. 4, p. 2)

This time, health care insurance legislation had the support of the labor unions, along with the American Hospital Association (AHA), the American Nurses Association, and the National Social Workers Association. The opposition included the AMA, the National Chamber of Commerce, the National Association of Manufacturers, the Health Insurance Association of America, the Pharmaceutical Manufacturers Association, and the American Farm Bureau Federation. By 1960, with Democratic candidates endorsing legislation, Republican leaders began to look for a way to compromise. With the election of President Kennedy by the American people, health care legislation was once more at the forefront of the political agenda for the new administration. However, it was decided to delay initiation until 1962, due to not having a Democratic majority in Congress. During this waiting period, the White House and the Democrats mobilized the senior citizens to form a coalition to support legislation, now called Medicare that would offer health care coverage to seniors over age 65. Between 1960 and 1965, public support for the Medicare program increased. This was shown by the overwhelming majority of Democrats elected in 1964, along with President Johnson’s return to office in a landslide victory. On June 24, 1965, Medicare was passed into law.

In 1965, before the establishment of Medicare, only about half of those in the United States who were 65 or older had health insurance....In 1965, elderly persons spent an average of about 19 percent of their income on health care. That share fell to about 11 percent in 1968; today it is more than 20 percent....Without Medicare, however, most people would pay even more for health care or go without it. (Lee & Estes, 2003, p. 402)

Political factions have continued to create debate over issues concerning the administration of Medicare. Each ten-year period had its own particular political agenda in relation to Medicare. Between 1966 and 1971, the original administrators did not want to alienate the AMA any further, so reimbursement of claims was based upon reasonable costs. "In the first five years of operation, total expenditures rose over 70%, from $4.5 billion in 1967 to $7.9 billion in 1971"(Marmor, 200, p, 7).

In the 1970’s, the cost of health care increased. The Medicare program was expanded to include the disabled and the person with chronic kidney disease. In addition, role of Medicare in insuring quality standards of hospitals was expanded with the passing of the Civil Rights Act. Medicare required participating hospitals to demonstrate that they did not discriminate due to race in order to receive reimbursement. It became a vehicle for social change.

In the 1980’s, the reimbursement system changed to a set per services charge for physicians and a diagnosis related set payment for hospitals. "When Medicare finally adopted the diagnosis-related group (DRG) system, it was an important advance for all who reimbursed for hospital care, and it has made lengths-of-stay in U.S. hospitals the shortest in the world" (Ball, 1995, p. 2).

During the 1990’s, political maneuvering by both the Democratic and Republican parties caused confusion. There were predictions by economists that Medicare would be financially insolvent by 2002. In response to those predictions, Congress with the support of the AMA, the AHA, the National Right to Life organization, the American Association of Retired People (AARP), and the United Seniors Association, passed the Balance Budget Act of 1997 that allowed managed care options, revised payment systems, and expanded preventive benefits.

The primary problem with expanding Medicare’s managed care options is the potential for risk selection—healthier persons will enroll in managed care plans, while less healthy persons will elect the fee-for-service option. Given the extreme variability in health care spending among Medicare beneficiaries, there is great leeway for plans to select healthier beneficiaries for whom capitated rates exceed true costs. If managed care plans succeed in attracting and retaining relatively healthier Medicare beneficiaries, Medicare will overpay for those who enroll in managed care plans, while continuing to pay the full cost of the sickest Medicare beneficiaries who are unattractive to managed care plans. (Moon & Davis, 1995, p. 3)

In the present decade, managed care options have not been an effective program for Medicare reform.
The managed care initiative was sagging, in part, because of declining health plan interest. In 1999, for example, 45 plans left the Medicare market while 54 others reduced their service areas....But while the health plans cite inadequate reimbursement as the main explanation for their exit, several studies also suggest that federal officials are actually losing money on the managed care initiative. The problem is that Medicare capitation rates are set based on the health care experience of the average client in a particular community, while the typical enrollee is healthier and less costly than average. (Kovner & Jonas, 2002, p.323)

It seems that managed care programs are not the answer to medicare reform. President George W. Bush is advocating adding prescription drug benefits to Medicare. The Democrats agree and they have proposed their own prescription drug benefit plan. As in prior political conflicts over health care, it will take committee revision in Congress over a period of time that could last for years to prepare a final bill that is acceptable to both political parties. Stakeholders that could oppose this legislation are the pharmaceutical companies due to the possibilities of government control of costs and the supplemental insurance companies that offer prescription benefits at costs to the consumer that ensure profits for the company.

Private supplemental (Medigap) plans --- which serve about on fourth of beneficiaries --- are becoming unaffordable for those with an average income....Medications are a critical part of a comprehensive health care system. Medicare beneficiaries are finding it increasingly difficult to pay for prescription drugs, particularly because they also have other health care expenses. (Lee & Estes, 2003, p. 406)

Stakeholders that would support adding drug benefits to Medicare are the elderly and their families, who are represented by AARP and other senior advocate special interest groups. Other stakeholders in support of this legislation could include the AMA, the AHA, the American Nurses Association, and other health care organizations. Organization of special interest groups in a unified coalition is essential to success of any legislation. "If all plans had to offer a basic drug benefit and if payments from Medicare to these plans were increased to reflect the new benefit, competition might improve" (Lee & Estes, p. 406). Equalizing Medicare with private insurance plans by adding benefits would only improve the present system of health care.

Medicare has not kept pace with medical advances, new care strategies, and accompanying coverage needs, including interventions for sensory impairment and psychiatric care. Optimal management of chronic illness requires close coordination with long-term services....Supplemental insurance cannot adequately bridge these gaps, particularly for lower-to-middle income populations. (Cassel, Besdine, & Siegel, 1999, p. 1)

Managed care plans have kept pace with medical advances. The addition of a managed care choice should have been a solution to updating Medicare. However, it was found that Medicare was more cost effective for the healthier individual than managed care and that, due to adverse risk selection, managed care companies did not accept the sicker individuals that would benefit from the advantages of managed care plans. Republicans still have hopes that using a voucher system to allow individuals to go out of Medicare to access managed care plans. However, the voucher system would not solve the problem that managed care companies do not want the sicker individual due to the higher costs of service for these individuals.

However, cost containment is also an issue that concerns policy makers. "By 2030, the program is expected to serve 77 million people ---- more than one of every five Americans ---- and to account for about 4.4 percent of the gross domestic product" (Lee & Estes, 2003, p. 401). Expansion of benefits to equalize Medicare with managed care would also increase costs. Medicare reform that adds one benefit at time, such as the proposal to add prescription benefits, increases legislative costs due the years it may take for Congress to come to an agreement that is acceptable to all stakeholders. It might be more beneficial to initiate Medicare reform that can encompass all the needed additions to make Medicare benefits equal to managed care. However, comprehensive reform would alienate some of the major stakeholders, such as the insurance companies, who might persuade other major interest groups to oppose the bill.

The political system in America is multilayered with many special interest groups that form coalitions to oppose or support legislature. It is essential in the proposal of legislation to be aware of which particular special interest groups that would benefit, be neutral, or would be inclined to oppose or support the proposed legislation. Prior to proposing legislation, many politicians send out surveys to their constituents to garner information regarding the proposed issues. Special interest groups also speak to legislators or give literature that show support or opposition to certain issues. Compared to the era when Medicare was initiated, special interest groups are more vocal, more cohesive, and better funded. The view of ordinary people is still important. However, special interest groups have more access to politicians and more political power. Grassroots campaigns, public meetings, rallies, and petitions to support, to oppose, or to initiate certain issues are still effective. However, it may take a longer time for the issue to be addressed by politicians in government than it would for the special interest groups, depending upon the issue.

A prescription drug benefit for the elderly is an issue that was discussed during the failed health care reform initiative that was proposed by President Clinton, who was a Democrat. While he was in office, the Republicans opposed health care reform. However, a prescription drug benefit is an issue that is a top priority with many special interest groups.

Up until now, however, the GOP commitment to a prescription – drug benefit could remain theoretical. With the control of the government divided first between a Democratic president and a Republican Congress and then between a Republican House and a Democratic Senate, there was little possibility that a benefit would become law....The issue was simply too valuable to them as a weapon of political war ever to be compromised away. Now, though, everything has changed. (Frum, 2002, p.1)

There is a Republican President and a Republican Congress. It is likely that the prescription drug benefit, along with some sort of Medicare reform, will become law. A compromise bill will attempt to make all special interest groups happy. In order, to have the pharmaceutical and insurance groups comply, their input on limiting coverage will be considered. However, the bill will not be so limited as to be useless. Compromise is an essential tool in the political process. All sides need to be considered. However, in many cases, the bill will only be passed if it is politically beneficial to either the Democrats or the Republicans. REFERENCES
Ball, R. M. (1995, Winter). What medicare’s architects had in mind. Health Affairs, 14(4), 1-3. Retrieved August 1, 2003, from

Cassel, C. K., Besdine, R. W., & Siegel, L. C. (1999, January/February). Restructuring medicare for the next century: What will beneficiaries really need? Health Affairs, 18(1), 1-4. Retrieved August 1, 2003, from

Corning, P. (1995). History of medicare. Retrieved July 26, 2003, from

Frum, D. (2002, December 9). A risk and an opportunity. National Review, 54(23), 1-4. Retrieved July, 28, 2003, from

Fuchs, V. R. (2000, Spring). Medicare reform: The larger picture. Journal of Economic Perspectives, 14(2), 1-13. Retrieved July 28, 2003, from

Kovner, A. R., & Jonas, S. (Eds.). (2002). Jonas and Kovner’s health care delivery in the United States (7th ed.). New York: Springer Publishing Company, Inc.

Lee, P. R., & Estes, C. L. (Eds.). (2003). The nation’s health. Sudbury, MA: Jones and Bartlett Publishers.

Marmor, T. R. (2000, Summer/Fall). Medicare’s future: Fact, fiction and folly. American Journal of Law & Medicine. Retrieved August 1, 2003, from

Medicare reform a twentieth century fund guide to the issues. (n. d.). Retrieved August 1, 2003, from

Moon, M., & Davis, K. (1995, Winter). Preserving and strengthening medicare. Health Affairs, 14(4), 1-4. Retrieved August 1, 2003, from

Reese, E. C. (2003, March). Political insight: Contemplating medicare reform. Healthcare Financial Management. Retrieved July 28, 2003, from

Source: Essay UK -

About this resource

This coursework was submitted to us by a student in order to help you with your studies.

Search our content:

  • Download this page
  • Print this page
  • Search again

  • Word count:

    This page has approximately words.



    If you use part of this page in your own work, you need to provide a citation, as follows:

    Essay UK, Medicare Past Present Future. Available from: <> [30-05-20].

    More information:

    If you are the original author of this content and no longer wish to have it published on our website then please click on the link below to request removal: