In the United States the Medicare system provides health insurance coverage for those who are above 65 years of age. Medicare is a social insurance program, a single-payer health care system, and it operates in a similar way to the Medicare systems in Canada and Australia, except that in the US it is restricted to those above 65, plus some other groups of people such as the disabled. This article reviews the history of Medicare in the US, from its founding in the Sixties, to the funding crisis faced today due to demographic changes, and to spiraling health care costs.
In a single-payer health care system there is one large insurance fund which pays the health costs of the entire population, or a large group of the population, such as people over 65 years of age. In these systems, an organization, the Federal government in the case of US Medicare, collects the insurance payments through taxes, and uses the fund to provide a universal health care service.
In the United States in 1961 the former commissioner of Social Security, Robert M. Ball, examined the problem of funding health insurance for senior citizens. He concluded that the major issue was that the elderly often required expensive medical treatment because of their age, but were not able to pay health insurance costs because they were no longer working, and they relied on a pension for income.
Ball therefore concluded that the only way to finance elderly health care was the same mechanism used to finance old age pensions: collect the payments from those in work, and provide the health insurance protection to those who have retired without requiring any further payments.
Ball, and Medicare’s supporters today, would argue that Medicare is not an unearned entitlement. It is a form of social insurance where people pay into the scheme when they are young, and able to work, and they draw out from the scheme when they are old, and sick. Although some people will pay in more than they get out, the scheme’s supporters would still argue that is true of any insurance scheme.
However many conservative politicians, including Barry Goldwater, Ronald Reagan and George Bush Senior, opposed Medicare. They argued that such a scheme would lead to the end of individual responsibility, and perhaps even to the advent of socialism in the US.
Medicare became law in 1965. At the time Lyndon B. Johnston was president, and he enrolled the first two Medicare members: Harry S. Truman, and Mrs. Truman, the former president and first lady.
Nowadays Medicare faces a severe funding challenge. There are two causes. Firstly the advances in medical science now mean that people tend to live much longer. This has caused a demographic shift towards an aging population. Those who are young, able to work, and required to contribute to Medicare through their taxes, are required to fund a health insurance fund for an ever increasing number of elderly beneficiaries from the scheme.
Secondly, medical costs have risen extremely rapidly since the introduction of the Medicare scheme. There are many new, expensive treatments which have become available since the 1960s when the scheme was introduced.
Those responsible for the fund have predicted that if present trends continue the health insurance fund will become insolvent in 2019. One can therefore expect that in the next decade the U. S. Federal government will see fixing this Medicare crisis as one of its top domestic priorities.
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