Five Influential Changes to Medicare

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Five Influential Changes to Medicare

During the Progressive Era of the early 20th century, reformers sought to increase access to medical coverage for all Americans. These early efforts failed because of backlash from the insurance industry, but opened the door for discussion on the future of medical insurance in the United States. In the 1940s, Harry Truman picked up the mantle of reform and reintroduced a plan for national health insurance.

Truman’s proposals were struck down in 1945, 1947, and 1949, and the discussion died out during the 1950s. President Kennedy reignited the debate in 1961 when he created a special task force to evaluate the possibility of a national health insurance plan for people over 65. In 1962, Kennedy took his ideas directly to the American people in a televised address.

Lyndon Johnson became the champion for Medicare after Kennedy’s assassination in 1963, and incorporated Medicare and Medicaid into his Great Society platform. By 1964, the idea gained enough popular support in the United States that Johnson was able to pass his bill, signing Medicare into law in 1965.

Over the course of the last 50 years, Medicare experienced five influential changes that expanded coverage, and brought more benefits to America’s seniors.

Richard Nixon Signs The Social Security Amendments Of 1972

As originally conceived, Medicare only covered Americans 65 or older. Divided into two parts, Medicare provided hospital and medical insurance to millions of seniors who paid into the system through payroll taxes. By the 1970s, a movement began to expand coverage to those under 65 who were unable to care for themselves.

In 1972, Congress passed H.R. 1, an new piece of legislation that addressed the needs of Americans with long-term disabilities. Under H.R. 1, Medicare changed in two ways. First, the law allowed anyone who had been on Social Security Disability for at least two years to apply for disability insurance through Medicaid, no matter how old the applicant was. The second provision aimed to protect those with ERSD (end-stage renal disease). The high cost of dialysis and kidney transplants were considered such a burden, that anyone with ERSD automatically qualified for Medicare, even if they had access to private insurance.

Upon signing the law, Nixon said, “It reaffirms and reinforces America’s traditional efforts to assist those of our citizens, who, through no fault of their own, are unable to help themselves. America has always cared for its aged poor, the blind, and the disabled–and this bill will move that concern to higher ground by providing better and more equitable benefits.”

Two years later, Nixon attempted a further expansion of healthcare that would cover all Americans. He argued, “Without adequate health care, no one can make full use of his or her talents and opportunities.” Despite his best efforts, Congress struck down any further expansion of Medicare coverage in the 1970s.

Jimmy Carter Signs The Omnibus Reconciliation Act Of 1980

At the end of his term, Jimmy Carter signed a new set of changes that tackled two growing concerns for Medicare recipients with the Omnibus Reconciliation Act of 1980.

The primary goal of the changes was to address the gap between coverage provided by Medicare, and the actual cost of treatment. Though Medicare did pay the majority of expenses for most ailments, many recipients found themselves paying enormous medical bills for copays and coinsurance. Medigap, Medicare’s supplemental insurance program, was originally a privately controlled entity. The Omnibus bill brought Medigap coverage under federal control and oversight.

In addition, Carter’s Medicare expansion created coverage for in home health services. These services include any medical care offered to a patient in that patient’s home, from nursing costs, to qualifying equipment, and more. The changes allowed patients to seek care for long-term and end of life illnesses in the comfort of their own homes, instead of in a hospital, hospice or nursing home.

Bill Clinton Creates Medicare Advantage

By the 1990s, Medicare had become an essential part of American society, but reformers sought to give recipients more choices in their coverage. In the Balanced Budget Act of 1997, Clinton gave them more options through the creation of Medicare Part C, more commonly known as Medicare Advantage.

Medicare Advantage facilitated competition for Medicare services by allowing private companies to bid on health care coverage. Medicare required that the bids offer the same level of coverage, in terms of dollar amount, as standard Medicare benefits, but allowed private companies to determine how those benefits were calculated. For example, a company could choose to have higher deductibles for home health care services, but eliminate copays for visit to the recipient’s physician. If the total cost of the Medicare Advantage plan was higher than the payment benchmarks established by Medicare, recipients had to pay the difference on their own, but if the plan was cheaper, recipients received rebates and discounts on treatment.

Medicare Advantage quickly became the preferred method of administration for Medicare, and millions of seniors opted-in to the program.

George W. Bush Adds Prescription Drug Coverage

When Lyndon Johnson first signed Medicare into law, prescription drug costs in the United States were a fraction of what they became in the early 21st century. By the time George W. Bush took office, drug costs were the majority of health related costs in the United States. Until this point, 25 percent of Medicare recipients did not have prescription drug coverage, and seniors had to pay for their medicine out of pocket.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 added prescription drug insurance to Medicare through the Medicare Part D program. Under the new rules, more than 30 million seniors received discounted pricing on drugs by paying a small monthly premium to Medicare Part D.

Barrack Obama Focuses On Prevention

The latest fundamental change to Medicare occurred with the passage of the Affordable Care Act in 2010. The Affordable Care Act attempted to expand access to healthcare for every American through a subsidized healthcare exchange, but the law also targeted a large gap in Medicare coverage: prevention.

In 2009, the Partnership For Prevention conducted a study to determine the economic impact of prevention versus treatment. The results were astounding. Minor investments in cancer screens, periodic health checkups, and preventative treatments could save the United States billions of dollars a year in medical costs; however, Medicare lacked provisions for preventative procedures outside of Part B coverage. Passage of the Affordable Care Act expanded preventative treatment coverage to all Medicare recipients free of charge.

The Future

Medicare is now an integral part of American society that must change and adapt to new realities every year. In doing so, the country can ensure its most vulnerable citizens have access to the healthcare, medicine, and services they need to live a healthier, more productive life.

Learn More

To learn to speak the language of health law and distinguish your role as a leader with specialized health care compliance expertise, look to pursue a Hofstra Law online master’s in health law and policy.


The American Presidency Project

Social Security Administration

Kaiser Health News

U.S. National Library of Medicine

Health Affairs