US Medicare is a social insurance program which provides health insurance coverage for people aged 65 and over, and for those who meet certain other special criteria. Medicare (US) is a single-payer health care system, similar to systems in other countries, such as Canada, Australia and the UK, except that US Medicare only covers a part of the total population. This short article reviews the history of Medicare in the United States, and examines the challenges which the program faces due to demographic changes and spiraling costs of medical treatment.
In a single-payer health care system there is one large insurance fund which pays the health costs of the entire population, or a large group of the population, such as people over 65 years of age. In these systems, an organization, the Federal government in the case of US Medicare, collects the insurance payments through taxes, and uses the fund to provide a universal health care service.
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 concluded that the only way to finance elderly health care was the same mechanism used to finance old age pensions: collect the payments from those in work, and provide the health insurance protection to those who have retired without requiring any further payments.
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.
However many conservative politicians, including Barry Goldwater, Ronald Reagan and George Bush Senior, opposed Medicare. They argued that such a scheme would lead to the end of individual responsibility, and perhaps even to the advent of socialism in the US.
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 risen extremely rapidly since the introduction of the Medicare scheme. There are many new, expensive treatments which have become available since the 1960s when the scheme was introduced.
Those responsible for the fund have predicted that if present trends continue the health insurance fund will become insolvent in 2019. One can therefore expect that in the next decade the U. S. Federal government will see fixing this Medicare crisis as one of its top domestic priorities.
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This entry was posted on Friday, September 24th, 2010 at 3:19 am and is filed under Health Insurance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
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