Human Services News

Medicare at 40: Looking Back, Moving Forward

When Medicare was enacted in 1965, more than half of elderly Americans were uninsured. Seniors lost their health insurance when they retired, and private insurance companies were reluctant to provide coverage to them.

Since that time, Medicare---now in its 40th year---has achieved its two basic goals: protecting elderly and disabled Americans from burdensome medical care bills and ensuring they get needed health care.

In "Medicare at Forty," (Health Care Financing Review, Winter 2005--06), Commonwealth Fund President Karen Davis, Ph.D., and Senior Program Officer Sara R. Collins, Ph.D., look back at Medicare's successes, describe its challenges as health care costs rise and waves of baby boomers face retirement, and suggest policy options to ensure health and financial security for all Americans.

Beneficiaries Satisfied with Quality, Access to Care Medicare beneficiaries report a high level of satisfaction with the program, and with the care they receive.

They are less likely to go without needed care because of costs or to report access problems, like skipping a medical test or not seeing a specialist when needed.

The most common access problem for aged Medicare beneficiaries---not filling a prescription---is likely to change with the implementation of the new prescription drug legislation.

Challenges to Providing Care: Racial Disparities and Rising Costs Although Medicare was instrumental in desegregating U.S. hospitals---due to requirements under Title VI of the Civil Rights Act---racial and ethnic disparities persist.

Medicare has had somewhat slower spending growth than have private health insurers, mainly due to the structured payment systems and regulatory controls of the program.

Future Policy Options With increasing costs and an expanding pool of enrollees straining the federal budget, new strategies are needed to encourage people to save for health care expenses in retirement.

These accounts, managed by Medicare and invested in government securities, would give working-age adults the option of setting aside a portion of wages to meet expenses not covered by Medicare, like premiums or long-term care expenses.

Such coverage, dubbed Medicare Extra or Part E, could help eliminate confusion for beneficiaries, as well as cut expenses by reducing duplicated and unnecessary administrative expenses.

For the sickest Medicare patients, innovations in care management, like advance practice nurses who provide follow-up care to high-risk patients, could reduce costs and improve outcomes.