Provides health insurance for qualified elderly or disabled
Americans who meet employment and tax-related qualifications or are married to someone who meets such qualifications.
In the mid-twentieth century, President Harry S Truman
tried to establish a health insurance plan for Americans, but
medical lobbyists caused his plan to fail. By 1965 spiraling
medical costs associated with old age wiped out the savings of
many of the elderly, leaving them impoverished. Because this
trend was contrary to the goals of the 1935 Social Security
Act, President Lyndon B. Johnson asked Congress in January
1965 to make Medicare legislation its first priority. Medicare
provides medical coverage for those over the age of 65 and
the permanently disabled. Most retired persons are covered
under the program, as are the terminally ill. Medicare is different from Medicaid, which provides medical coverage for
the poor. Johnson signed the Medicare bill into law in July
1965 and, as of 2000, 40 million Americans were receiving
Medicare benefits.
Medicare’s Part A hospital insurance program is provided
at no additional cost to those who are eligible. Payroll taxes
on employers and currently working employees, who each
pay half the cost, fund the hospital insurance. In 2001, employers and employees contributed 1.45 percent of each
worker’s total salary to Medicare’s hospital insurance trust
fund. Subject to a yearly deductible and per-service copayments of $20 over the $100 deductible, the federal government, through Medicare’s hospital insurance, covers inpatient hospital care, care in a facility that provides skilled
nursing or by a home health agency following hospitalization, and hospice care for terminally ill beneficiaries with six
or fewer months’ life expectancy.
Anyone entitled to hospital coverage under Part A can enroll in Medicare Part B, a supplemental medical insurance
program. After 2000, enrollment required payment of a
monthly premium amounting to $45.50. The premiums paid
25 percent of Medicare Part B’s expenses, and federal tax revenues paid the other 75 percent. Subject to deductibles and
copayments, the federal government pays for doctors’ services, services in the emergency room or an outpatient clinic,
laboratory tests, X-rays, physical therapy, and durable medical equipment such as oxygen tanks or wheelchairs.
Despite the fact that Medicare does not cover all the medical needs of the elderly in areas such as prescription medications, the program has remained enormously successful
in reducing poverty rates among the elderly. In 1959, 35.2
percent of Americans 65 or older lived in poverty. By 1999
only 9.7 percent of elderly Americans lived in poverty. This
change can be attributed to Medicaid, Medicare, and social
security.
Although Medicare has helped senior citizens in the past,
the program is experiencing problems. Under current guidelines, Medicare Part A is funded by a 2.9 percent payroll tax
that is placed in a hospital trust account. As the aging population increases this amount will be insufficient to cover the
hospital care of the baby boom generation. By 2008 the program will be unable to meet the financial responsibilities of
institutional care for the elderly. In addition, the everexpanding Medicare bureaucracy, with its 111,000 pages of
regulations and guidelines, denies 25 percent of all claims
submitted by physicians on the basis that the treatment was
not specifically approved under the program even if the doctor believed that it was medically necessary for the patient.
Doctors faced increased liability, as fines for unauthorized
procedures are $10,000 per incident. Fewer doctors are willing to accept Medicare because of the paperwork and liability placed on them. So the number of physicians using the
program are decreasing as the number of elderly patients is
increasing.
—Saranna R. Thornton