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Historical Changes-Medicare

Historical Changes-Medicare

Medicare is a national health insurance program in the United States that provides a full range of services. Medicare originally referred to a program that provided medical care to families and dependents of people serving in the military. The Dependents’ Medical Care Act was originally passed into law in 1956. Under the leadership of President Lyndon Johnson, Medicare was enacted under the Social Security Act in 1965. The Medicare Act amendment included providing health insurance to people aged 65 years and older. The insurance coverage was provided regardless of income or medical history.

Before this amendment, it was approximated that only 60% of people older than 65 years had health insurance. The other 40% were unable to afford insurance as it was expensive for them. In those days, older adults faced challenges when trying to get private health insurance coverage. Older adults paid more than three times more than the general population if they wanted health insurance coverage. Former President Harry Truman and his wife, Bess Truman, were the first recipients of the amended program. Medicare eliminates health insurance premiums and deductibles for people who are 65 years and older.

Medicare has been operational for more than half a century now since its enactment. Medicare has undergone several changes during that time. It began in 1965 under the Social Security Administration (SSA) and is now administered by the Centers for Medicare and Medicaid Services (CMS). Medicare changed the healthcare system because it removed racial segregation to help ensure that all American citizens received quality care. The program was expanded to provide more services, including physical and chiropractic practice, in 1972. In the 1970s, Medicare added the option to make payments to HMOs (health maintenance organizations). This association with HMOs was officially formalized and expanded under the leadership of Bill Clinton in 1997. This was included under Medicare Part C. In 1982, the government temporarily added hospice benefits for the elderly. This was made permanent in 1984. Medicare was further expanded in 2001 to cover amyotrophic lateral sclerosis (ALS) in younger people. Younger people with permanent disabilities were included in the Medicare program as the years progressed. This was for patients who received Social Security Disability Insurance (SSDI) payments. Under President George Bush in 2003, the Medicare program for covering self-administered drugs (not all) was passed and went into effect in 2006. This was included under Medicare Part D ( Matulis & Lloyd, 2018).

There are four parts to Medicare, Part A, Part B, Part C, and Part D. Each of these parts covers a specific area within healthcare. Part A requires covers hospice care, skilled nursing facilities, and most home health visits. It requires coinsurance for extended inpatient hospital care. Part B provides outpatient medical coverage. This includes preventative services, physician visits, and some home health visits. Some of these benefits, however, come with a deductible and some coinsurance. Part C is the advantage part of Medicare, and as mentioned above, offers an alternative to collect Medicare benefits through HMOs. Private health insurance companies can provide the same Medicare benefits as original Medicare in Part C. An Individual is, therefore, free to choose between Part C and original Medicare. As earlier mentioned, Part D covers outpatient prescription drugs. Only private insurance companies that have been contracted by the government can provide this type of coverage. Medicare, however, does not cover many important things that are useful to the older population. Some of these include dental services, hearing aids, and eyeglasses, and these have to be paid for out-of-pocket.

Despite this, Medicare has still changed the US healthcare program significantly. Prior to its inception, life expectancy was much lower. The life expectancy increased by 5 years after the implementation of this program. There have, however, been a few problems with this program, and one of them is the lack of transparency in the healthcare industry. Lack of cost transparency means that patients often receive medical care without being aware of the cost and only receive their medical bills after. Price transparency is meant to reduce healthcare spending, but it rarely works (Wilensky & Tietelbaum, 2020). The patient is usually unaware of the price of their services and therefore runs a risk of overspending and making poor healthcare choices. This mainly stems from the way the implementation of cost transparency has been handled as opposed to the fundamental problem with the concept.

The government has become aware of this issue. Policymakers have been trying to establish cost control. The Affordable Care Act (ACA), established in 2010, required healthcare providers to create a price list for all services provided. Most recently, President Trump signed an executive order that requires all healthcare providers to disclose the prices to patients before they receive treatment (Benavidez, 2019). Price transparency allows patients to make informed decisions on the available options for treatment, and various medical services have varying costs.

Medicare has changed its policies on price transparency. Prior to this, companies did not relay the price to patients, and this lack of price transparency affected uninsured individuals the most. This is because individuals who are uninsured generally have lower incomes, and hospitals charge them higher fees. A combination of these factors deterred these individuals from seeking medical attention (Garfield et al., 2020)

The affordability of healthcare has constantly been fluctuating, and this has resulted in a greater demand for the policies of healthcare. The CMS came up with price transparency proposals and price look-up tools, which were launched in 2018. They allow patients to make comparisons of Medicare prices in various hospitals and clinics. However, Benavidez (2019) states that consumers rarely use healthcare price tools even if they have access to such tools. this is due to the fact that insurance usually covers the majority of the high costs that can be associated with health care. This makes it easier for the consumers not to care, especially since they don’t benefit directly from the cost-saving. They also don’t have to bear the burden of choosing the most expensive route. Another reason for this is that because it’s hard to judge the quality of care, most patients will use price as a judge of that. This they do by assuming that higher costs translate to better care.

The CMS also created new rules that require physicians to pay the prices of medications offered under Part D of Medicare. With the creation of price transparency, there has been a lot of competition between various stakeholders in the healthcare industry. Since the implementation of price transparency, the stakeholders involved in the provision of healthcare have tried to match their prices and provide the best quality of care for the lowest price possible. The patient stands to gain the most from the competition rising in the industry; they are guaranteed to pay lower prices.


Benavidez G, F., (2019). Price Transparency in Health Care Has Been Disappointing, but It Doesn’t Have To Be. JAMA Health Forum. doi:10.1001/jamahealthforum.2019.0032

Garfield, R., Damico, A., & Orgera, K. (2020). The coverage gap: uninsured poor adults in states that do not expand Medicaid. Kaiser Family Foundation Issue Brief.

Matulis, R., & Lloyd, J. (2018). The history, evolution, and future of Medicaid accountable care organizations. Center for Health Care Strategies website. https://www. chcs. org/resource/history-evolution-future-medicaid-accountable-care-organizations/. Published February.

Wilensky, S. E., & Tietelbaum, J. B., (2020). Essentials of health policy and law (4th ed.). Burlington, MA: Jones & Bartlett Learning.


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Historical Changes-Medicare

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Historical Changes-Medicare


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