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Chapter 14. Medicare: The Great Transformation John Oberlander. Medicare: Offspring of NHI Failure. Medicare has its roots in 1910s struggle for national health insurance (NHI) After repeated policy failures: Proponents limited ambitions Sought to expand coverage to “deserving” group

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chapter 14

Chapter 14


The Great Transformation

John Oberlander

medicare offspring of nhi failure
Medicare: Offspring of NHI Failure
  • Medicare has its roots in 1910s struggle for national health insurance (NHI)
  • After repeated policy failures:
    • Proponents limited ambitions
    • Sought to expand coverage to “deserving” group
      • The elderly
medicare offspring of nhi failure3
Medicare: Offspring of NHI Failure
  • Champions of NHI then hoped Medicare would be incrementally expanded to cover all Americans
legacies of founding compromise
Legacies of Founding Compromise
  • To achieve passage:
    • Medicare proponents were forced to compromise with conservatives on a host of fronts
    • These compromises made it nearly impossible to expand Medicare later
provider accommodation under medicare
Provider Accommodation Under Medicare
  • Compromises were also made with medical providers
  • Payments under Medicare were to be determined by hospitals, doctors
  • Led to long-term increases in cost of program
effects of accommodation
Effects of Accommodation
  • “Blank check” to physicians, hospitals led to dramatic increase in cost of program
  • Financial “crises” common in first years of program
effects of accommodation7
Effects of Accommodation
  • Pressure to reform:
    • Led to institution of Diagnostic-Related Groups (and successors) in 1980s
managed care and beyond
Managed Care and Beyond
  • Prospective payment systems lowered cost of Medicare program
    • But providers made up the difference by shifting higher costs to private customers
  • Businesses responded to higher costs by moving into managed care
managed care and beyond9
Managed Care and Beyond
  • Pressure then built with Republican Revolution of 1994-95 for Medicare to post savings
    • Incorporate principles of managed care
the medicare modernization act 2003
The Medicare Modernization Act (2003)
  • Passed under President Bush
    • Complicated program represented vast expansion of Medicare into prescription drugs
  • Prominent role retained for private insurers
the medicare modernization act 200311
The Medicare Modernization Act (2003)
  • Savings partly attained through unique “doughnut-hole” structure
    • In which benefits curtailed for those facing middling costs
chapter 14 summary
Chapter 14 Summary
  • Medicare was the orphan of the national health insurance debate
  • Circumstances at enactment have had profound effects on the way the program has unfolded
  • Providers accommodated by program framers, particularly in terms of payment structures, amounts
chapter 14 summary13
Chapter 14 Summary
  • Political accommodation led to spiraling costs
    • Which were then controlled through prospective payment systems
  • Resultant cost shifting led business to move to managed care plans
    • Which were later introduced within Medicare