Medicare Past, Present, and Future

The roots of Medicare go back to our nation’s early efforts to achieve health coverage for its elderly and poor citizens – and the program continues to evolve. Here’s an overview of how Medicare came to be, where it is now, and where it’s going in the future.

Medicare timeline

The gradual evolution of Medicare began more than a hundred years ago. Here’s how it happened:

1902: The first U.S. workmen’s compensation law enacted – and was later declared unconstitutional
1915: Thirty states enacted the first major legislation to require employers to insure their workers against industrial accidents – called workmen’s compensation
1935: The first federal government health insurance bill introduced in Congress
1945: President Harry S. Truman became the first sitting president to officially endorse national health insurance
1961: President John F. Kennedy sent a message to Congress recommending health insurance for the elderly under Social Security
1965: President Lyndon B. Johnson signed Medicare into law
1972: Medicare eligibility extended to people with disabilities and to people with end-stage renal disease (ESRD)
1976: HMOs began to be offered as a Medicare option effective with the HMO Act of 1976
1983: The diagnosis-related group (DRG) prospective payment system began – soon after, Medicare members could enroll in an HMO or managed care plan
1997: The Medicare+Choice program – now known as Medicare Advantage – was enacted
2003: President George W. Bush signed the “Medicare Modernization Act” into law
2006: The voluntary Part D outpatient prescription drug benefit became available to beneficiaries from private drug plans and Medicare Advantage Plans

Medicare today

The Medicare program now serves more than 45 million people. As the number of people 65 and older continues to grow, that number will continue to increase.

In particular, enrollment in Medicare prescription drug plans continues to grow. Nearly 41 million Medicare beneficiaries have some form of prescription drug coverage. Here’s how they get it:

26.7 Million: Medicare Part D – Medicare Advantage Prescription Drug plan (MAPD) or stand-alone Prescription Drug Plan (PDP)
7.9 Million: Retiree drug plans such as Retiree Drug Subsidy (RDS), federal retiree programs, and TRICARE
6.2 Million: Other sources such as Veterans Affairs, retiree coverage without RDS, Indian Health Service, and state pharmacy assistance programs

Source: Centers for Medicare & Medicaid Services (CMS) enrollment Information as of February 1, 2009

The future of Medicare

For the first time, the White House, Congress, organized labor, large corporations, pharmaceutical companies, healthcare providers, and health insurers are making healthcare reform a priority, so reform is finally possible. The Obama administration’s budget sets aside $634 billion over ten years for overall healthcare reform, with $177 billion of that amount coming from reductions in Medicare Advantage funding. Congress is also considering Medicare Advantage payment reforms that could change the way Medicare Advantage reimbursements are determined.

With so much still undecided, it’s difficult to forecast what Medicare Advantage reimbursements might look like in future years, but if drastic Medicare Advantage funding cuts become law, members could face higher premiums, reduced coverage, and fewer options.

Watch Healthcare Video: What is Medicare?