A Little Bit Of Medicare History...

In the United States the Medicare system provides health insurance coverage for those who are above 65 years of age 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 covers the health care costs of the entire population, or a large group of the population. The single payer, which is usually the national government, collects the insurance premiums, usually in the form of a health tax. This money is then paid into the insurance fund, where it covers the health costs of the nation's population.

In 1961, in the US, Robert M. Ball (former commissioner of Social Security) recognized the obstacles to financing health insurance for older people. In simple terms, the old require more regular, and more costly medical treatment, on account of their age, while they have less disposable income to buy private health insurance because they are retired.

Ball therefore said that the only way in which health care could be funded for the elderly was to use the same mechanism which is used to fund retirement pensions. Payments should be collected from those who were in work, and able to pay, and the benefits should be provided after retirement.

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.

Medicare has been opposed by many conservative US politicians including Ronald Reagan and George Bush Senior. These have often argued that Medicare was socialist medicine, would lead to a socialism and/or communism in America, and would lead to an end of individual responsibility.

Despite conservative opposition Medicare became US law in 1965. Lyndon B. Johnson was president at the time, and he enrolled as the first scheme member former president Truman, with Mrs. Truman as the second member.

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 the costs of medical treatment have increased very rapidly, particularly for many new treatments which were not available when the scheme was set up in the 1960s.

The most alarming projections from the actuaries responsible for monitoring the fund, are that the health insurance fund will be insolvent by 2019. Resolving this funding crisis in American health care will therefore be one of the main priorities of US Federal governments in the next decade.