MEDICARE

The Medicare program provides health and hospital insurance to disabled persons and those age 65 and older. It was first proposed by President Harry Truman (1945–1953), but wasn't enacted as policy until President Lyndon Johnson (1963–1969) included it in one of his Great Society proposals in 1965.

Effective since 1966, Medicare was first managed by the Social Security Administration. In 1977, its operations were transferred to the newly created Health Care Financing Administration, where it remains today. Unlike the social welfare program Medicaid, Medicare does not place an income requirement on individuals who receive its services. To be eligible for Medicare, one must be disabled or be age 65 or older.

The Medicare program has two components: a hospital insurance program and a supplementary medical insurance program. The hospital insurance program covers reasonable and medically necessary treatments in a hospital or nursing home. It is funded through a 2.9 percent Social Security tax on employers and workers. The money generated from this tax is placed into a trust fund for use by the Medicare program.

The supplementary medical insurance program is a service offered to individuals who sign up for it with a monthly insurance premium, which, in addition to tax revenue contributions from the federal government, funds the program. Under the supplementary medical insurance program, an individual pays the monthly premium and a small annual deductible fee for medical costs.

While there are limitations as to what Medicare will pay for (no routine physical examinations, for example), most physicians accept Medicare patients. All health care providers accepting Medicare patients must meet state and local licensing laws and standards to qualify for Medicare reimbursements for their services.

Medicare assisted about 37 million people in 1995, spending $178 billion for their care. Under current laws, the year 2002 should see a rise in Medicare spending to $345 billion. Since the 1980s debate about the program has risen. With the quality of medical care increasingly improving, life expectancy also increases. This means Medicare will be taking care of people for a longer period of time.

The program experienced a surplus in the 1980s and 1990s, but its future in the twenty-first century is uncertain. Medicare expenditures are expected to increase more rapidly than tax revenues. As the costs of medical treatment increase and the number of Medicare recipients rise with the 2010 retirement of the post-World War II baby boom generation, the program faces great financial and systemic strain.