Medicare at Age 50: Building on Its Success
by Nancy Altman
Medicare -- signed into law fifty years ago, on July 30, 1965 -- was supposed to be just the first step.
For the fifty years before Medicare's enactment, progressives had fought unsuccessfully for universal, government-provided health insurance. In 1912, President Theodore Roosevelt's Progressive Party platform advocated universal, government-sponsored, health insurance, but he was defeated in his quest for another term as president. In 1917, the California legislature approved universal health insurance, and the governor supported it, but a 1918 ballot resolution defeated the measure after a massive, well-financed business and physician-fueled campaign against it. President Franklin Roosevelt seriously considered including national health insurance in his 1935 Social Security legislation, but decided against it out of fear that it would bring down the entire legislative package. President Harry Truman made universal health insurance a top priority, but got nowhere.
The five-decade long history of defeat convinced activists to shift to an incremental approach. They decided to start with a sympathetic group and debated which one that should be. The top candidates were seniors and children. On the one hand, covering children was relatively inexpensive and could lead to a lifetime of better health. On the other hand, seniors were most in need of health insurance and were already used to and supportive of Social Security's government-sponsored wage insurance. And they voted.
So the decision was made to start with them. The expectation was that, after Medicare was enacted, children and others would be quickly added. And, indeed, just seven years later, in 1972, President Richard Nixon signed into law legislation which extended Medicare to people with serious and permanent disabilities.
But then came Watergate, distrust of government, and President Ronald Reagan's famous declaration, "Government is not the solution to our problem; government is the problem." Expansion of Medicare to children or other demographic groups disappeared from the public agenda. But the need for universal high-quality health care, efficiently provided, did not.
Conservatives and centrist Democrats, increasingly in control, looked for alternative approaches. Inclined toward private sector solutions but recognizing that some limited government role was essential, they favored private sector health insurance and savings supported by favorable tax treatment. For those who fell through the cracks and who were deemed worthy, they favored means-tested health insurance provided at the state level, with federal support.
Those are the solutions that have dominated since 1972, despite the obvious advantages of simply expanding Medicare. Means-tested Medicaid, included in the same 1965 legislation that enacted Medicare, was expanded every few years, most recently as part of the Affordable Care Act in 2010. The means-tested State Children's Health Insurance Program (CHIP) was enacted in 1997. And, the Affordable Care Act authorized state exchanges offering private health insurance subsidized with income-tested, government subsidies. During these decades, the tax expenditure on health care insurance grew from the fourth largest tax expenditure in 1986 to the largest today -- at a loss of revenue of over $200 billion a year. And during this same period, conservatives amended Medicare to include private health insurance and means-tested elements.
But these methods of providing health insurance are vastly inferior to universal, government-sponsored health insurance -- essentially, Medicare for All. Universal, government-sponsored insurance is the most effective and efficient way to cover everyone. Insurance is least expensive when it covers the most people; the large size of government-sponsored health insurance provides economies of scale and the greatest ability to negotiate over prices and control costs. Moreover, unlike private health insurance, a government plan has no marketing costs and no high CEO salaries. It can provide health care less expensively and more efficiently for everyone. For these reasons, every other industrialized country provides universal coverage, spends less as a percentage of GDP, and produces better health outcomes.
But we don't have to look to other countries to see the advantages. Medicare covers seniors and people with disabilities, people who, on average, have the worst health and the most expensive medical conditions, requiring the largest numbers of doctor and hospital visits with the concomitant largest number of health care claims. Yet, Medicare's administrative costs are the lowest around. Medicaid, whose administrative costs vary from state to state, is less efficient than Medicare, because its coverage is statewide, not national, and it must impose complicated and expensive means testing, Even with that, both Medicare and Medicaid are significantly more efficient than private health insurance. Compared to Medicare's administrative costs of just 1.4 percent, the administrative costs of private health insurance sponsored by very small firms or purchased by individuals can run as high as 30 percent. Even the administrative costs of health insurance sponsored by large companies typically run around 7 percent.
As a stark illustration of the greater efficiency and effectiveness of Medicare, a proposal floated a few years ago to raise Medicare's initial age of eligibility from 65 to 67 -- requiring people to wait two additional years before they could enroll in Medicare -- would have resulted in increased health care costs for the nation as a whole of $5.7 billion a year and increased premium costs for both Medicare and all other health insurance of about 3 percent. Just as shrinking Medicare's coverage increases costs, expanding coverage would reduce overall health care costs
Imagine if President Bill Clinton in 1993 and President Barack Obama in 2009 had followed the direction of the architects of Medicare, a half century ago. Imagine if they had proposed incremental expansions of Medicare, including lowering the Medicare age to 62 or 55, creating a counterpart universal, government-sponsored Medikids program, covering under Medicare people with pre-existing conditions, and providing all Americans the option of buying into Medicare. We likely would be on our way to Medicare for All, with all of its advantages. We likely would be forecasting long-term surpluses in our federal budget, with all that would mean for greater spending on other pressing needs. Our businesses would be much more competitive. And we would join other nations in recognizing health care as a human right.
But it is not too late.
This upcoming presidential election could be a powerful defining moment. It could get us back on track to realizing the vision of the architects of Medicare a half century ago. Presidential candidate and Senator Bernie Sanders (I-VT) believes in Medicare for All, as well as expansion of Social Security. In contrast, Governor Jeb Bush is calling for the phasing out of Medicare and wants to cut Social Security. If each Party's platform reflects these views, the American people will have a clear choice.
I see no better way to celebrate Medicare reaching its fiftieth anniversary than to expand Medicare. If we follow the lead of those visionary architects fifty years ago, those who come after us will inherit a nation where affordable, first class health insurance -- Medicare for All -- is a birthright.
A Health Care Safety Net the Public Loves
Don’t Blame Medicaid for Rise in Health Care Spending
Austin Frakt
Health care spending growth has moderated in recent years, but it’s still putting tremendous strain on state and local governments. A recent analysis by The Pew Charitable Trusts revealed that it consumed 31 percent of state and local government revenue in 2013, nearly doubling from 1987.
But Medicaid — the state-based health care program for low-income Americans — is not the chief culprit.
Health care benefits for public employees and retirees, not Medicaid, account for a majority of the growth in state and local health care spending. Adjusted for inflation, spending for those health care benefits rose 447 percent between 1987 and 2013. Medicaid spending rose a great deal as well, but not as much, 386 percent.
Analysis by Donald Boyd of The Brookings Institution suggests that Medicaid will not be the main driver of state and local health care spending growth, despite expansion of the program under the Affordable Care Act. That’s because a large proportion of Medicaid costs is paid by the federal government, including 100 percent of the costs of the Medicaid expansion through 2016, trending down to 90 percent by 2020 and holding at that level thereafter. (And, despite what you may have heard, the findings of a recent report from government actuaries do not change this story.)
Medicare and Medicaid have worked wonders, but we need true national health insurance for everyone
By Walter Tsou, M.D.
Philadelphia Inquirer, July 30, 2015
By the early '60s, America was in the throes of the civil rights movement led by its charismatic leader, Rev. Martin Luther King. Discrimination and Jim Crow laws applied not only to bus rides and dining rooms but also to hospital wings and doctors’ waiting rooms, which often had separate curtains for blacks and whites. As it turned out, separate but equal was a failure not only in education, but in health care, too. Well before we started to measure health disparities, it was well known that minorities suffered far worse health outcomes.
But nothing shook the nation quite like the assassination of John F. Kennedy in 1963. With the overwhelming mandate of completing Kennedy’s unfinished agenda, President Johnson signed the Civil Rights Act in 1964 and the laws creating Medicare and Medicaid in 1965. Led by Wilbur Cohen, who had been the Assistant Secretary of Legislation in the Department of Health, Education and Welfare (HEW) under Kennedy and later Secretary of that department under Johnson, the architects of these laws saw them as a first step toward true national health insurance. To those who created Medicare and Medicaid, national health insurance would not only be a way to end separate but equal in waiting rooms, but also to establish health care as a right of all Americans.
But there was strong opposition by southern legislators as well as many physicians and private insurers. As a result, Congress settled for health insurance only for the elderly (Medicare) and for the very poor who were aged, blind, or disabled (Medicaid). Because Medicare was designed as a companion program to Social Security, 20 million seniors were auto-enrolled in 1965 in one year. (Compare that to the disastrous enrollment problems in October 2014 with the ACA with its complex eligibility rules.)
Fifty years later, Medicare and Medicaid have proven themselves as the most successful health programs in American history. They have given hundreds of millions of Americans access to care and have allowed tens of millions of them to avoid bankruptcy due to medical debt. Equally important, Medicare ended physical separation by race in doctors’ waiting rooms in most of the South, although much provider racial discrimination still persists.
Unfortunately, the failure to enact true national health insurance for everyone has led to our current patchwork health care financing system that is unimaginably complex, bureaucratic, and inefficient. The system continues to base access to health care on employment, income, and disease category, which indirectly reflect race. Even today, the black infant mortality rate in the United States overall, as well as in Philadelphia, is more than twice the rate for whites.
Money wasted determining eligibility for coverage could be used to cover everyone. The amount of money wasted on administration in the United States is more than 40% higher per capita than in any other country in the world. It is more than enough to fully fund our schools, build bridges, and address other public priorities.
Wilbur Cohen, while defeated in his goal of achieving national health insurance for everyone, said that he believed in the “salami” approach -- getting one slice at a time until there were enough of the pieces together to cover everyone. Fifty years later, it is time to make his dream a reality.
Dr. Walter Tsou is former Commissioner of the Department of Public Health for the City of Philadelphia and past president of the American Public Health Association. He is currently Adjunct Professor of Family and Community Health at the University of Pennsylvania.
http://www.philly.com/philly/blogs/fieldclinic/Medicare-turns-50--top-health-officials-reflect-on-its-past-and-future.html#J1pIkBQVfijbsYaX.99
Philadelphia Inquirer, July 30, 2015
By the early '60s, America was in the throes of the civil rights movement led by its charismatic leader, Rev. Martin Luther King. Discrimination and Jim Crow laws applied not only to bus rides and dining rooms but also to hospital wings and doctors’ waiting rooms, which often had separate curtains for blacks and whites. As it turned out, separate but equal was a failure not only in education, but in health care, too. Well before we started to measure health disparities, it was well known that minorities suffered far worse health outcomes.
But nothing shook the nation quite like the assassination of John F. Kennedy in 1963. With the overwhelming mandate of completing Kennedy’s unfinished agenda, President Johnson signed the Civil Rights Act in 1964 and the laws creating Medicare and Medicaid in 1965. Led by Wilbur Cohen, who had been the Assistant Secretary of Legislation in the Department of Health, Education and Welfare (HEW) under Kennedy and later Secretary of that department under Johnson, the architects of these laws saw them as a first step toward true national health insurance. To those who created Medicare and Medicaid, national health insurance would not only be a way to end separate but equal in waiting rooms, but also to establish health care as a right of all Americans.
But there was strong opposition by southern legislators as well as many physicians and private insurers. As a result, Congress settled for health insurance only for the elderly (Medicare) and for the very poor who were aged, blind, or disabled (Medicaid). Because Medicare was designed as a companion program to Social Security, 20 million seniors were auto-enrolled in 1965 in one year. (Compare that to the disastrous enrollment problems in October 2014 with the ACA with its complex eligibility rules.)
Fifty years later, Medicare and Medicaid have proven themselves as the most successful health programs in American history. They have given hundreds of millions of Americans access to care and have allowed tens of millions of them to avoid bankruptcy due to medical debt. Equally important, Medicare ended physical separation by race in doctors’ waiting rooms in most of the South, although much provider racial discrimination still persists.
Unfortunately, the failure to enact true national health insurance for everyone has led to our current patchwork health care financing system that is unimaginably complex, bureaucratic, and inefficient. The system continues to base access to health care on employment, income, and disease category, which indirectly reflect race. Even today, the black infant mortality rate in the United States overall, as well as in Philadelphia, is more than twice the rate for whites.
Money wasted determining eligibility for coverage could be used to cover everyone. The amount of money wasted on administration in the United States is more than 40% higher per capita than in any other country in the world. It is more than enough to fully fund our schools, build bridges, and address other public priorities.
Wilbur Cohen, while defeated in his goal of achieving national health insurance for everyone, said that he believed in the “salami” approach -- getting one slice at a time until there were enough of the pieces together to cover everyone. Fifty years later, it is time to make his dream a reality.
Dr. Walter Tsou is former Commissioner of the Department of Public Health for the City of Philadelphia and past president of the American Public Health Association. He is currently Adjunct Professor of Family and Community Health at the University of Pennsylvania.
http://www.philly.com/philly/blogs/fieldclinic/Medicare-turns-50--top-health-officials-reflect-on-its-past-and-future.html#J1pIkBQVfijbsYaX.99
Feds: Maine's Health Care Co-op Only One Profitable Out of 23
By Ricardo Alonso-Zaldivar, The Associated Press
WASHINGTON — Democrats fed up with the health insurance industry used President Barack Obama's overhaul to create nonprofit co-ops that would compete against entrenched corporations. Taxpayers put up $2.4 billion in loans to get the co-ops going.
But a government audit out Thursday finds that co-ops are awash in red ink and many have fallen short of sign-up goals.
The inspector general of the Health and Human Services Department finds that only one out of 23 co-ops — the one in Maine — made money last year.
The IG also says that more than half the co-ops — 13 out of 23 — lag far behind their 2014 enrollment projections. A copy of the audit was provided to The Associated Press.
The IG is concerned that federal loans may not be repaid.
WASHINGTON — Democrats fed up with the health insurance industry used President Barack Obama's overhaul to create nonprofit co-ops that would compete against entrenched corporations. Taxpayers put up $2.4 billion in loans to get the co-ops going.
But a government audit out Thursday finds that co-ops are awash in red ink and many have fallen short of sign-up goals.
The inspector general of the Health and Human Services Department finds that only one out of 23 co-ops — the one in Maine — made money last year.
The IG also says that more than half the co-ops — 13 out of 23 — lag far behind their 2014 enrollment projections. A copy of the audit was provided to The Associated Press.
The IG is concerned that federal loans may not be repaid.
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