Medicare's Controversial History

The idea behind Medicare grew out of the movement for government health and retirement insurance that spawned Social Security. However, a national health care plan felt like Communism to some, so the program was initially met with resistance. Medicare was signed into law by President Lyndon Johnson in 1965. When Medicare went into effect in 1966, over 19 million people enrolled [Ref].


Image courtesy Social Security Administration
On July 1, 1966, SSA Commissioner Bob Ball held a press conference to announce plans for implementing Medicare.

Through the 1970s and 80s, changes to Medicare were relatively minor. The program was adjusted slightly to increase efficiency and reduce costs, and coverage was expanded to include permanently disabled people and people with end-stage renal disease in 1972. In 1988, the Medicare Catastrophic Coverage Act made sweeping changes that included prescription drug benefits. However, to pay for the expansion of Medicare, higher-income seniors had to pay higher premiums and deductibles. The high-income seniors refused to subsidize low-income seniors. In one incident, a group of angry seniors physically chased the bill's sponsor, Illinois Congressman Dan Rostenkowski, to his car [Ref]. The next year, Congress repealed the changes.

The next major change came in 1997, when managed-care options were offered (Medicare + Choice, or Advantage Plans). This was part of a move to privatize some aspects of Medicare. Today the 2003 Medicare Prescription Drug, Improvement, and Modernization Act (MMA) gets most of the headlines. In addition to adding the prescription drug plan, MMA links premiums to beneficiary income. An increase in government spending, however, will primarily pay for this expansion of Medicare.

From early disagreements about the type of national health care system the U.S. should adopt (the most popular alternative was a voucher system), to constant struggles with funding, program expansion and fraud, Medicare has always been controversial. Politicians often call Medicare a "third rail" -- touch it and die." Seniors who depend on the system can react harshly to any changes.


Medicare spending is projected to increase to nearly $500 billion dollars by 2012.

Most of the current controversy stems from the new prescription drug plan. Critics say that the plan costly to the government and confusing to seniors. Many opponents also claim that it was designed to boost the profits of pharmaceutical corporations rather than help seniors afford prescription drugs. The plan does not offer any price controls on drugs. The fact that private health insurers administer the various drug plans is another sore spot for some critics. But so many Americans need prescription drugs to survive that any assistance in paying drug costs is welcome.

For lots more information on Medicare and related topics, check out the links on the next page.

Medicare Fraud
The United States General Accounting Office reported a $12.6 billion dollar loss to the Medicare program due to fraud in 1998 [Ref]. Not only does that fraud put a strain on the Medicare trust fund, it also causes higher premiums and deductibles for Medicare recipients. Medicare fraud can take many forms. In some cases, it is as simple as billing Medicare for medical services that were never performed, or billing for services or equipment that are more expensive that what was actually performed. In some cases, swindlers use stolen Medicare numbers to create phantom patients and bill Medicare for non-existent appointments and tests. Some aggressively pursue seniors with door-to-door or telephone marketing and use intimidating tactics that pressure them into purchasing expensive equipment or procedures.

You can help prevent Medicare fraud by following a few simple tips:

  • Safeguard your Medicare number.
  • Don't give in to hard-sell or scare tactics.
  • Be suspicious of "free" tests or doctors who waive your co-pay.
  • Watch for providers who bill for procedures that they never performed.
  • Report Medicare fraud by calling 1-800-HHS-TIPS (1-800-447-8477)