History of Medicare in the U.S.
Social Security was implemented in 1932 in order to provide income for people in their retirement. By withdrawing a small sum from each paycheck from every US worker and depositing it into a government fund, the Social Security Trust Fund allows workers to receive regular income after retirement.
By the same token, the health care reform proposed by President Kennedy in 1962 was intended to prevent the elderly from going into bankruptcy when unexpected medical costs not covered by pensions or insurance were incurred.
Although health care insurance for the elderly was not a new concept-Roosevelt had included it in his original Social Security Bill in 1932, but removed it to ensure the bill's passage-Kennedy encountered a great deal of difficulty in passing this law. The American Medical Association (AMA) argued that the act would strain the United States' medical resources, lower doctors' incomes by making their jobs government-funded, and cause individuals to be assigned doctors based on insurance rather than preference. Congress was wary of passing a bill that would substantially increase the national tax rate. The American public, however, enthusiastically supported the idea, and Kennedy persisted in his efforts to pass the bill.
Johnson, during his first full term as president, signed Medicare into law on July 30, 1965. Medicare created an additional tax on the American worker, independent of Social Security. This tax, like the Social Security tax, was paid by employees, employers, and the self-employed. The tax went into its own trust, called the Federal Supplementary Medical Insurance Trust Fund, and was distributed to people enrolled in the Medicare system. The Medicare bill consisted of three parts: Part A guaranteed hospital insurance to the elderly, and Part B covered medical costs for outpatient hospital care for elderly patients who paid premiums for enrollment. The third part of the bill was Medicaid, an independent social security system that gave funds to impoverished individuals who could not afford medication. Medicaid covered, but was not limited to, individuals over the age of sixty-five.
The Medicare organization is based in Baltimore, Maryland, where applications from individuals reaching retirement age are received and evaluated. If a person qualifies for Medicare, he or she receives a Medicare card, which is used as proof of insurance when receiving medical treatment. Medicare creates relationships with insurance companies and participating hospitals that treat Medicare enrollees. When an individual is treated, the resulting claim is paid out of the Medicare Trust Fund.
Medicare has been changed from its original three-part configuration to encompass four parts. Part A, called Hospital Insurance Protection, provides insurance for health care administered within participating hospitals and post-hospital care. Individuals are immediately enrolled in Hospital Insurance Protection when they enroll in Medicare. Part A is primarily funded by the tax deposited in Medicare's Trust Fund. It is supplemented through the payment of deductibles and premiums from patients. The amount of the deductibles and premiums depends on the patients' financial status.
Part B, Medical Insurance Protection, covers medical care not included in Hospital Insurance Protection, such as outpatient care, physical therapy, and medical equipment. Individuals pay premiums to enroll in Part B, and the remaining funds are paid by the government. Part C, Medicare+Choice, allows individuals to contract alternative medical institutions through the Centers for Medicare & Medicaid Services, the Washington-based federal administrators of Medicare.
In 2005, under the administration of President George W. Bush, a law was passed to include prescription drug coverage for the elderly under Medicare, rather than continuing to allow it to be funded by Medicaid. The bill, considered Part D of Medicare, increased the costs of Medicare by nearly $100 billion. Medicare has been nearly synonymous with Social Security since its inception; neither program underwent any legislative changes in the twentieth century. Medicare has enabled elderly retired Americans to receive the care that they need, but it is becoming a greater expenditure for the nation as more individuals are eligible for it. In the twenty-first century, as the United States prepares for the largest demographic change in its history with the retirement of the Baby Boomers, Medicare will need to undergo major restructuring.