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.
A single-payer health care system is one in which there is one fund paying the health care costs of an entire population, or a large group of people. Systems such as the UK’s National Health Service and Canada’s and Australia’s Medicare services, are examples where a single payer (the national government) collects health insurance payments through the tax system, and uses the fund generated to administer a universal health care system for all citizens.
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 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.
Those who support Medicare would say that it is not an unearned entitlement. They would say it is social insurance, where people pay into the scheme when they are young, healthy, and in work, and they receive the benefits when they are old and sick.
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, medical costs have rapidly increased in the last 40 years. Many expensive, new treatments are not available, which were not known about when the scheme was set up.
It has been predicted that the scheme will run out of money in 2019 unless something is done. Fixing this crisis must therefore be a major domestic policy priority for US governments over the next decade.
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