Medicare & Medicaid

Medicare, Medicaid turn 50: Taking a look at their past and future

| 5 Min Read

About one in every three Americans has health coverage under Medicare or Medicaid, and the number of people with coverage under the programs is expected to increase in the next decade. On the 50th anniversary of these two programs, learn about their pasts and what’s in store for the future.

President Lyndon B. Johnson signed both programs into law in 1965. Prior to the launch of Medicare, roughly one-half of older adults in the United States lacked health insurance, but after its launch, coverage became nearly universal. Today, Medicaid covers nearly one-half of all births. A special communication in JAMA’s theme issue on Medicare and Medicaid takes a close look at the history of these programs and what to expect in the coming years.

Almost overnight, Medicare and Medicaid became the core of the nation’s public health insurance system. Together these programs serve more than 100 million of the nation’s most vulnerable patients—low-income children and families, people with disabilities and the elderly.

In part due to the success of these programs in improving patients’ access to care, between 2010 and 2050, the number of Americans older than 80 years will nearly triple, and the number older than 90 years will quadruple, according to the JAMA report. Meanwhile, gains in longevity are likely to lead to more people living longer with multiple chronic conditions, the report said.

Initially, Medicare’s payment system followed practices used by private insurers. Over time, the program has become a leader—for example, it developed the diagnosis related group classification for hospitals and the resource-based relative value scale for physicians, which became models for many private insurers, according to the report.

The program also has sought to usher in payment and delivery system reforms such as accountable care organizations and stronger incentives for quality improvements. The movement to new models of care is likely to accelerate as implementation of the most recent Medicare legislation, the Medicare Access and CHIP Reauthorization Act (MACRA), gets underway.

“Although it is too soon to tell, these changes could have far-reaching effects for clinicians and health care entities in the years ahead,” the JAMA report said.

Another significant change comes with the repeal of the sustainable growth rate (SGR) formula. The MACRA legislation that repealed the SGR includes two paths for Medicare payments beginning in 2019: A modified fee-for-service model with a merit-based incentive payment system or alternative payment models.

As the nation’s main source of health coverage for people with low incomes, Medicaid serves nearly 70 million people per year. Over the last five decades, the U.S. Congress and the states have expanded Medicaid to cover more low-income people, especially children and pregnant women. Today, Medicaid provides coverage to more than one-third of all children and more than three-fourths of children in households below 100 percent of the federal poverty level.

According to the JAMA report, people with Medicaid coverage fare better than those who are uninsured on key measures of access to care, use, unmet needs and financial security. For example, 87 percent of adults with Medicaid report that they have access to a usual source of care other than an emergency department, compared to 47 percent of uninsured adults. Most Medicaid beneficiaries are also more likely to see a physician regularly compared with the uninsured population.

Still, access to physicians continues to be an issue for Medicaid. According to the JAMA report, about one-third of primary care physicians do not accept new Medicaid patients, and physician participation is more limited in Medicaid than in Medicare or private insurance. “This is related to the relatively low reimbursement rates in many states,” the report said.

With so many Americans using Medicare and Medicaid for their insurance coverage and both programs accounting for nearly 40 percent of national health spending, it’s clear that these programs will continue to shape the future of health care.

Payment and delivery reforms will continue, especially for Medicare. According to a recent AMA study conducted with the RAND Corporation, physicians reported that they want to move to new payment models but need help managing and responding to the many quality programs and metrics from payers to ensure their long-term sustainability. The provisions for alternative payment models in the SGR repeal legislation were created to offer that assistance.

The AMA has been working to support physician-designed alternative payment models, focusing on identifying and developing models so that physicians in each specialty—whether they are independent or employed—have at least one model in which they could feasibly participate. 

It’s also clear that addressing chronic diseases will take an increasingly prominent place in medical care. The AMA is working to improve health outcomes for two of the nation’s most troubling chronic diseases. By tackling high blood pressure and prediabetes,  and collaborating with other stakeholders, the AMA is developing new approaches to prevent progression of heart disease and type 2 diabetes.

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