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Medicare Nearing 50

July 30, 2015, will mark the 50th anniversary of the day that President Lyndon Johnson signed HR 6675, otherwise known as the Mills Act, providing health insurance coverage for the elderly.  The bill was signed into law in Independence, Missouri, the home of Harry S. Truman, who had fought vigorously for a National Health Insurance program during his presidency in the 1940s.

While this date is significant, the push for a National Health Insurance Program actually dates back to the days of President Theodore Roosevelt, who supported health insurance because he believed that no country could be strong whose people were sick and poor.  However, Roosevelt’s successors were mostly conservative leaders, who postponed for about twenty years the kind of presidential leadership that might have involved the national government more extensively in the management of social welfare.

While there were attempts over the years to implement some form of National Health Care, including an “economic Bill of Rights” introduced by Franklin Roosevelt, and his successor, President Truman pushing for the passage of the Wagner-Murray-Dingell Bill, nothing was really accomplished until President Johnson was able to get the Mills Act passed and signed into law.

In 1965, the initial Part A deductible for Medicare was $40, and the Part B premium was $3/month.

On July 30, 1966, the Medicare program began.  All persons age 65 and over were automatically covered under Part A.  Coverage began for seniors who signed up for the voluntary medical insurance program (Part B).  More than 19 million individuals ages 65 and older were enrolled in Medicare.

In 1970, the Medicare Part A deductible was $52, and the Medicare Part B premium was $4/month.  The total number of Medicare beneficiaries was 20.4 million.

On October 30, 1972, President Nixon signed the Social Security Amendments of 1972 (PL 92-603), the first major adjustment to Medicare after its enactment.  Eligibility for Medicare benefits was extended to individuals under age 65, with long-term disabilities (those receiving SSDI payments for two years) and to individuals with end-stage renal disease (ENRD).

Also, Medicare benefits were expanded to include some chiropractic services, speech therapy, and physical therapy.

In 1977, the Health Care Financing Administration (HCFA) was created to administer both the Medicare and Medicaid programs.  About 1500 employees were transferred to HCFA from the Social Security Administration.

In 1980, the Medicare Part A deductible was $180, and the Medicare Part B deductible was $50.  The Part B premium was $8/70/month.  There were 28.4 million beneficiaries.

In 1980, The Omnibus Reconciliation Act of 1980 expanded home health services, and required the Secretary to develop a list of surgical procedures that could be done on an outpatient basis.

The “Baucus Amendments” brought Medicare supplemental insurance, also called “Medigap” under federal oversight and established a voluntary certification program for Medigap policies.

In 1981, the Omnibus Reconciliation Act of 1981 (OBRA 1981) included provisions to slow the growth in Medicare spending, including a change that resulted in an increase in the inpatient hospital deductible.

In 1983, the hospital prospective payment system (PPS) was established.  The PPS is based on diagnosis-related groups (DRGs), a pre-determined payment for treating a specific condition.  The system was adopted to replace cost-based systems.  

In 1984, The Deficit Reduction Act of 1984 (DEFRA) froze physician fees, established the Participating Physicians Program (assignment), and established fee schedules for laboratory services.

In 1990, the Medicare Part A deductible was $592.  This was a huge increase since 1980, due in large part to the OBRA 1981.  The Medicare Part B deductible was $75, and the Part B premium was $28.60/month.  The total Medicare population was 34.3 million.

In 1992, Congress established the Standardized Medicare Supplement (Medigap) program.  Originally there were ten (10) standardized plans that insurance companies could offer (Plans A through J).  There are still ten (10) standardized plans available, however, some plans have been dropped and others added (A thorough N).  

Medigap policies are marketed through private insurance companies, and companies must offer only policies in the “standardized” forms.  Some states such as Massachusetts, Minnesota, and Wisconsin require Medigap insurers to provide additional benefits.  

The Balanced Budget Act of 1997 brought about the Medicare Sustainable Growth Rate (SGR), which is a method of controlling Medicare spending as it relates to Physician reimbursements.  The SGR has come under considerable fire for several years, and Congress is currently attempting repeal it.

In 1998, the internet site was launched, and in 1999 the toll-free number 1-800-MEDICARE (1-800-633-4227), was made available nationwide and the first annual Medicare & You handbook was mailed to all Medicare beneficiary households.

In 2000, the Medicare Part A deductible was $776.  The Medicare Part B deductible was $100, and the Part B premium was $45.50/month.  The total Medicare population was $39.7 million.

In December 2003, The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) was passed, providing a new outpatient prescription drug benefit under Medicare beginning in 2006.  The MMA also established a new income-related Part B premium for beneficiaries (see Medicare Part B) with higher incomes (beginning in 2007), indexed the Part B deductible, created regional PPOs under the Medicare Advantage Program (previously Medicare Choice), along with financial and other incentives for private health plans to contract with Medicare.  The MMA also established a new way of assessing Medicare’s financial status by looking at general revenues as a share of total Medicare spending.

In 2005, Medicare began covering a “Welcome to Medicare” physical, along with other preventative services.  In 2010, the physical exam program was expanded to cover an annual physical.

In 2010, the Medicare Part A deductible was $1068.  The Medicare Part B deductible was $155, and the Standard Part B monthly premium was $110.00 (higher premium for higher income individuals and couples).  The total Medicare population was 49.4 million.

In 2011, the first of the baby boomers (generally recognized as those born between 1946 and 1963) began entering the Medicare program.  Today there are just over 50 million Medicare beneficiaries and that number is expected to grow substantially as more “boomers” begin to enroll.

What the future holds for Medicare is uncertain.  It has been reported by the Social Security and Medicare Board of Trustees that the Medicare Hospital Insurance (HI) trust fund will be depleted by 2026.  As it has since 2008, the HI Trust Fund will pay out more in hospital benefits and other expenditures than it receives in income in all years until reserve depletion.  

What the future holds is dependent on what we as a nation and our leaders do to protect our way of life and our children’s future.

Medicare Part A Medicare Part B Medicare Part C Medicare Part D