The House We Live In
Medicare is like one of those old colonial houses where succeeding generations added onto the original core as the family grew, their needs grew, and the world changed. Now many, many years later the house has several wings and many, many rooms…but the original core remains.
And, that takes me to where I would be after 20 pages. Medicare is like this old house. The house has become such a maze of rooms that you now need a guide… and Medicare is so complex that it helps to have an expert to show you the way.
Let’s Start at the Beginning
The foundation for the Medicare house was laid in 1935 when FDR signed Social Security into law. The Medicare wing was added in 1965 when LBJ signed the Medicare Bill. That was 58 years ago. And, as we all know, a lot can happen in 58 years.
Because Medicare is a government program it was created by politicians and, therefore, it has been molded by politics. Well-meaning politics I should say, but politics just the same. To understand Medicare’s evolution over the last 58 years, consider these two telling quotes:
A grizzled old politician once said, “Voters rarely remember who gave them a program, but they never forget who took it away.”
At a Town Hall, an angry voter shouted at his Congressman, “Get your Government out of my life. But, don’t you touch my Medicare!”
Keeping those truisms in mind, and considering the political sensitivity of Medicare, it’s no wonder that the original “house” remains; but there has been a lot of building, renovation and tinkering around the edges. It is also no wonder that expansion and benefit increases have generally occurred in even (election) years while amendments and adjustments took place in odd (non-election) years. So, here is Medicare’s growth chart from bouncing baby to mature and complex middle age 58 years later.
Why We Needed It
At Medicare’s birth in 1965 barely half of all Americans over 65 were able to get, or afford, hospital insurance, which was a serious issue. For many Americans, old age meant that they were one health catastrophe away from potential disaster.
To address this healthcare crisis while providing political cover, Medicare and Medicaid were conceived as an extension of the widely popular Social Security program. While many other factors came into play, the identification with Social Security allowed members of both parties to embrace what was America’s first government health insurance program. This was a big deal.
It was also a big deal because it enshrined access to health care as a universal right for older Americans. And, if you want to know why we are living so much longer these days, this is a good place to start.
Upon its birth, Medicare was divided into two programs: Medicare Part A, primarily covering hospitalization, and Medicare Part B, primarily covering physician services. This division was born of political circumstances. Part A was funded by payroll taxes which was the Social Security model and understood by the public. Part B was funded by general revenues (the taxes you pay) and beneficiary premiums. This reflected Congress bowing to political realities so they could extend Medicare benefits without further increasing payroll taxes.
The first big change occurred in 1972 when Medicare was expanded to individuals under 65 with long-term disabilities or end-stage renal (kidney) disease. “Renal Disease”, you say. Weren’t there other important health issues? You are right, and they were addressed later; for this opened the door for dozens of incremental changes over the years that were necessary to meet changing healthcare needs.
As the World Changed So Did Medicare
Over time, Medicare added another component, Part C, which enabled beneficiaries to enroll in insurance plans sponsored by private companies rather than “traditional” Medicare. When originally conceived, Medicare was a government insurance program. However, Medicare Part C – now known as Medicare Advantage Programs – brought private insurers into the mix and they are now a major player.
The Medicare Modernization Act of 2003 added the prescription drug benefit, which is Medicare Part D. This reflects the enormous role that prescription medicines (and pharmaceutical companies) play in today’s healthcare – exponentially greater than in 1965.
Starting in the 1980’s the government allowed consumers to purchase additional plans to cover gaps in their Medicare coverage. One of these is the donut hole that we have all heard about. Today, these plans are known as Medigap coverage, and they have grown to be included in Medicare Plans F, G, K, L, M, and N. Yes, these plans do exist.
Finally, the Affordable Care Act of 2010 was a vast overhaul of the healthcare system far too complex, and controversial, to be covered here. Without debating the fine points of the ACA, it was groundbreaking (like the Medicare Bill of 55 years ago), in that it enshrined access to healthcare for all Americans and made it illegal to disallow insurance based upon pre-existing conditions. And, just as in 1965, this was a big deal. For better or for worse this is a program where Voters will, “… never forget who took it away”.
The original Medicare Bill of 1965 was not designed to be the final answer, but rather a strong beginning with incremental changes expected over time. And, although substantial changes and additions have occurred, Medicare still primarily covers older Americans, it remains a social insurance program, much of its original benefit package is intact, its major financing mechanisms still exist, and the separation between Medicare hospital and physician insurance endures.
The original house has become a very, very big house – but the core of this old house remains.
So, let me end by returning to the beginning. Because I don’t want to take a wrong turn or miss a room I use a Tour Guide, or an insurance professional, to show me the way – and I recommend that you do too.
