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Twenty years of Medicare and Medicaid - Covered populations, use of benefits, and program expenditures

Twenty years of Medicare and Medicaid - Covered populations, use of benefits, and program expenditures

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Introduction

This article examines program data for the 20th anniversary Medicare and Medicaid. It focuses on beneficiaries' experiences and the costs and use of services. The 20th anniversary is clearly a moment when significant questions are being raised about the basic features of these programs, such as the eligible populations, the covered service and financing, and when there are marked changes in the health care system. It is easy to see the main issues facing Medicare and Medicaid, as well as the possibilities for the future.

There are questions about the availability of care, equitable distribution of services, appropriateness of covered services, effectiveness and efficiency of financing and delivery of these services. There are many important decisions ahead as the public considers whether the Medicare or Medicaid laws are appropriate to current needs and goals. Policy officials also examine the strengths and weaknesses in the different options for altering the programs.

This article examines the 20-year history of Medicare and Medicaid, looking at the subsets that are eligible, trends in service use, and expenditures.

On the 10th anniversary, the Medicare program was ten years old. The earlier article described a 10-year retrospective of Medicare program data, which examined the experiences of beneficiaries, their use of services, and the costs. This review concluded that Medicare had achieved its primary goal of paying large amounts of hospital and medical bills. The implementation of Medicare didn't result in an unbounded demand from beneficiaries for covered services. Rather, major budgetary concerns arose due to the steady and consistent increase in the cost of medical care services each year.

In the beginning years of Medicare and Medicaid, there was not much in the way of data bases, statistical reports or research studies that could be used for program analysis. Recent years have seen a wealth in statistical information and studies. Ata from the National Center for Health Statistics and the U.S. Bureau of the Census and the Social Security Administration; hundreds of articles analysing many aspects of the programs; surveys and reports from other government agencies and the private sector about the sociodemographic characteristics of the Medicare and Medicaid populations. The Medicare program data is generally more comprehensive than the Medicaid program's. This is evident in many in-depth studies that examine the Medicare program experience. It cannot be replicated for Medicaid.

The most important feature of Medicare and Medicaid, the eligible populations, is currently under discussion. Therefore it seems appropriate not to focus only on the Medicare program experience and other aspects of the beneficiary population of Social Security Administration. It is important to know the characteristics and basic connections between the Social Security old age, disability, social welfare programs and beneficiaries in order to understand the current composition and characteristics of people enrolled in Medicare or Medicaid. Only about 30,000 people, out of more than 50,000,000, are currently beneficiaries or in related categories of the social insurance/social welfare systems.

Despite all the information available, there are still limitations to data (e.g. time lags and inaccuracies as well as a lack of certain details) which limit the accuracy and depth of program accounting. We will be using a small number of data sets from the many to highlight the information we have learned about the enrolled population, their program spending, and how they use the services.

We start by giving an overview of Medicare and Medicaid and then a brief summary of current health sector and program issues. Next, we will discuss the coverage of the populations and the use of the services. Finally, we will discuss program expenditures. We conclude with some general conclusions about the 20-year history of the two programs as well as future directions.

Delivery and financing of long-term care

There is a general concern in the Nation about the aging population. Policies that provide funding and delivery mechanisms for long-term care are needed. Medicare is an acute-care program. Medicaid has taken on the responsibility of paying for long-term care. Many people feel that Medicaid cannot continue to carry this responsibility indefinitely. Many seniors do not have insurance to cover long-term or nursing home care. A majority of the elderly are at risk of financial ruin and dependence due to a long-term disability or illness that will require personal and nursing care services. As the 65-year-old population increases, the current financing problem will only get worse.

The lack of affordable long-term care services that are appropriate and less expensive in many communities is a related issue. Seniors with impaired eyesight will likely need personal and support services, as well as medical care. Long-term care patients often have difficulty obtaining the right combination of these services, unless they are in an institution. Many people with functional limitations want to stay in the community and retain their independence for as long as they can. It is important to develop new ways of caring for the elderly in the community.

Medicare entitlement

Nearly all of the 65-year-old population is covered by Medicare. The aged Medicare population comprised 13 percent of those 65-66 years old in 1984. Due to increased life expectancy, and future changes in social security retirement age (which is expected to rise to 67), recommendations have been made for increasing Medicare eligibility to 67 year olds. The majority of people would have coverage for health insurance if they were still working until the age of 67. Private health insurance can be obtained until 67 for those who have retired earlier. While most people over 60 are healthy, many retire earlier due to work restrictions. This can make it difficult to obtain stop-gap insurance coverage.

The universal Medicare coverage for the elderly is a more serious issue. The overall economic situation of the elderly has improved over the past 20 years. This has raised the question of whether Medicare should be restricted or more targeted at the most vulnerable. New issues could arise if Medicare were to be a need-tested program. This would make it difficult for non-poor elderly people to have adequate private insurance.

Conclusions and summary

This data collection suggests that there is a wide base of information available to help us gain an understanding of the 20-year history of beneficiaries of Medicare and Medicaid programs. Below is a summary listing of the most important facts that should be considered when making future decisions about the beneficiaries and the program structure.

Medicare was created so that almost all the elderly population could be eligible for hospital treatment the day it was implemented. There were over 8 million people, or 44 percent, 65 and older, who had no hospital insurance on June 30, 1966. The Medicare enrollment of 19.1 million seniors, almost the entire 65-year-old population, was made effective on July 1, 1966. This dramatic shift in coverage of elderly people was a key factor in Medicare's rapid and profound impact on the older population and the overall health care system. It took many decades for most people to become eligible for social security benefits, despite the fact that the social security program was enacted in 1935.

The Medicare program covers 75 percent of the hospital and 58% of physician's expenditures for the elderly. This has been the case for more than 28,000,000 people over the past 20-years. The mortality rate of the elderly population has declined significantly over the past 20 years. Many believe that this is due to better access to healthcare, improved treatment and an overall improvement in economic conditions for the elderly. In absolute terms, the number of people over 65 has increased during the last 20 years. Projections for the future indicate that this percentage will increase. A second finding was that there were no significant differences in health care use by race. This is due to the fact that Medicare reimbursement allowed low-income seniors and minorities access to healthcare.

An analysis of the characteristics and costs of services for the elderly suggests that certain sub-groups may be more vulnerable to future changes to the Medicare program and changes to the health care industry. While the elderly are generally more financially secure today than when Medicare was created, there is still a large income gap with 12 percent of them (3.3 million) living below the poverty line in 1984. Minorities, women, older people, and persons living alone are at greatest risk of becoming poor. Future program changes must be evaluated in light of continuing access to care for these vulnerable populations.

If no catastrophic protection is offered, elderly people in poor health could also be at risk of financial insecurity due to future Medicare cost sharing changes. There is not a uniform need for services among the elderly population. Instead, the distribution of services is more like that of other insurance groups. Most people use a very small number of services and a few people use a lot of services. Due to the nature of the life cycle, the last years often see the need for medical and hospital services. However, some elderly suffer from costly illnesses and can live several years. The elderly in poor health are currently the most vulnerable because the cost-sharing provisions for services are tied to them. Future cost-sharing reforms should consider the liability of beneficiaries in case of catastrophic illness to avoid undue financial burden.

Changes in the health system can also affect elderly people in poorer health than the average. Insurers and providers of prepaid capitated health insurance may try to enroll those who are the most healthy and thus, less likely to use health care resources. Access to care for those with functional limitations and chronic illness could be reduced if there are not incentives to offer services to these seniors. This means that Medicare payments for future health care delivery systems should be fair from both the provider and beneficiary perspective.

 

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