Medicare's 47th Anniversary

Medicare - one of our nation's most popular and successful programs - was signed into law by President Lyndon Johnson on July 30, 1965.  Before the enactment of Medicare, only 50 percent of seniors had health insurance and 35 percent lived in poverty.  That was a time when even a minor illness or injury could bankrupt older Americans and their families. 

Fast forward to 2012 and nearly 50 million Americans are receiving guaranteed health care benefits through the Medicare program regardless of their medical condition or income.  This includes:

• 41 million Americans age 65 and above, and

• 9 million disabled Americans receiving Social Security benefits.

By the time the last of the baby boomers reaches age 65, it is expected that close to 80 million people will be covered through Medicare.  Along with Social Security and Medicaid, Medicare is vital to our economic and health security in retirement or if we become disabled.  

Medicare: Saving money, saving lives

Over half of Medicare beneficiaries have annual incomes of less than $23,000 and savings of less than $53,000. 

• Forty-five percent have three or more chronic conditions, and

• More than a quarter have a cognitive/mental impairment. 

Having guaranteed health insurance coverage without regard to health status is particularly beneficial for members of minority groups.  Two-thirds of African Americans and Hispanics have incomes below $23,000, and communities of color have a higher risk than Whites for certain chronic conditions such as diabetes.

Medicare’s Moving Parts

A wide array of health care services is covered through Medicare Parts A, B, C and D: 

• Part A covers hospital, skilled nursing facility, home health and hospice care.  It is funded by the payroll taxes that we pay during our working years.
• Part B covers physician visits, outpatient visits, preventive services, and home health care. The government funds 75 percent of Part B costs and beneficiaries pay the other 25 percent. 
• About 25 percent of Medicare beneficiaries elect to receive their coverage through Part C Medicare Advantage plans, such as private health maintenance organizations (HMOs). 
• Help with the cost of prescription drugs comes through the Part D outpatient prescription drug benefit that is offered through private plans funded by the government and beneficiary premiums. 

Medicaid, which also began in 1965, provides help with Medicare's premiums and cost-sharing for over 20 percent of beneficiaries with low incomes and assets who qualify for both programs.  It is also an important program for many middle-class Americans who exhaust their savings paying for long-term services and supports and rely on assistance from Medicaid.

Medicare’s Future

The Affordable Care Act improves care for Medicare beneficiaries and strengthens the Medicare program.  Improved benefits include:

• The elimination of out-of-pocket costs for preventive screenings and services - such as screenings for cancer, diabetes, and other chronic diseases - and for annual wellness visits and personalized prevention plans. 

• Discounts on prescription drugs in the Part D coverage gap known as the "donut hole," which will be phased out by 2020. 

The Affordable Care Act also offers new incentives for doctors, hospitals and other providers to coordinate care, especially for individuals with multiple chronic conditions, and to reduce hospital readmissions and infections.  The goal is to improve the quality of care and save money.

The Affordable Care Act strengthens Medicare's financing by reducing waste, fraud and abuse; slowing the rate of increase in payments to providers; and phasing out overpayments to private Medicare Advantage plans.  The impact of these provisions has already added an estimated eight years to Medicare’s solvency and lowered Part B out-of-pocket costs for beneficiaries. 

There’s a lot to celebrate about Medicare’s past, and thanks to the Affordable Care Act, a more hopeful outlook for the present and future.