By Laurence M. Vance
On July 30, 1965 — fifty years ago —Lyndon Johnson signed into law the Social Security Amendments of 1965 that created two new government programs. Added to the Social Security Act of 1935 was Title XVIII, Medicare, and Title XIX, Medicaid. They were the nation’s first public health-insurance programs.
Medicare is government-funded health care for Americans 65 years old and older and for those who are permanently disabled, have end-stage renal disease, or ALS (Lou Gehrig’s disease). It is the second-largest federal domestic program, after Social Security. Medicare actually consists of four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage plan), and Part D (prescription-drug plan). Part A is funded by a payroll tax “contribution” of 2.9 percent (split between employer and employee) on every dollar of an employee’s income. There is also an additional 0.9 percent tax on earnings above a threshold of $200,000 ($250,000 for married couples). Participation in Parts B, C, and D is voluntary. They are funded by a combination of income-based beneficiary premiums and taxpayer subsidies. Enrollment in Medicare is open to all U.S. citizens or those who have been permanent legal residents for five continuous years and who have paid Medicare taxes for a minimum of 40 quarters (ten years). Most people become eligible for Medicare when they reach age 65, regardless of income or health status. According to the Kaiser Family Foundation, Medicare covers more than 55 million people (46.3 million people 65 years old and older and 9 million people with permanent disabilities under age 65). Spending on Medicare accounts for about 14 percent of the federal budget, just over one-fifth of total personal health expenditures, and 20 percent of total national health spending.
Medicaid is government-funded health care for poor Americans of any age and people with certain disabilities. It is the third-largest federal domestic program, after Social Security and Medicare. Medicaid is the primary source of health-insurance coverage for low-income populations and nursing-home long-term care. Medicare is a means-tested welfare program jointly financed by the federal government and the states, but designed and administered by the states within federal guidelines. Although states are not required to participate in the program, all of them do. Recipients must be U.S. citizens or legal permanent residents. According to the Kaiser Family Foundation, Medicaid covers about 70 million Americans, Medicaid finances about 16 percent of total personal health spending in the United States, almost two-thirds of all Medicaid spending for services is attributable to the elderly and the disabled even though they make up just one-quarter of all Medicaid enrollees, and the 5 percent of Medicaid beneficiaries with the highest costs drive more than half of all Medicaid spending, which is now about $450 billion a year. The Patient Protection and Affordable Care Act (Obamacare) expanded both Medicaid eligibility and federal funding.
There is another reason that Medicare and Medicaid are in the news this year, and one that threatens to spoil their birthday party.
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If you want to see the future of medical/health care in the USA look at end stage renal disease. Few people know that the technology exists for people to live almost normal lives on hemodialysis. The problem is that the government froze the way it is done in 1965. With 1965 technology costs resulted in the three times a week treatment regime that had people either on dialysis or recovering from it. The huge spikes of toxins in their blood make for short life expectancies.
ReplyDeleteTo control costs the government essentially took all the profit out of the treatments over time. Clinics make their money on drugs required, hospitals on hospitalizations. In other words the money is made on the complications from three times a week dialysis.
With short daily dialysis (hour to 1.5 hours a day, 6-7 days a week), the total treatment cost remains about the same. The requirement for drugs is driven to almost zero and people are healthy enough to do what they want to do including work full time which means they aren't have the complications that put them in the hospitals. Modern technology also means an automated machine that can be set up in the home. With the greater expense for the machines and no profit stream since government has single payer power in this regard, things stay in 1965 and people suffer and die in a few years or less more often than not. The only hope is that this technology gets revisited and with further advancements it can be made so cheap that people can do it out of pocket. It was affordable ten years ago for people with luxury car savings to put to it. The question is will anyone be motivated to do so in the face of ever greater government control.
IMO Government health care reforms aim to do a few basic things. 1) preserve or increase prices. 2) Patch up the effects of high prices by socializing them. 3) prevent disruptive technologies. 4) eliminate players from outside the club. 5) manage society It's been that way since 1910 and there's no end in sight.