Chapter 2
How Will Health
Care Reform Affect
the Medicare and
Medicaid Populations?
Medicare will go deep into the red in less than a decade. But he
[President Obama] and congressional Democrats are planning to
raid, not aid, Medicare by cutting $500 billion from the program
to fund his health-care experiment. e president also plans to cut
hospital payments and Medicare Advantage, all of which will mean
fewer treatment options for seniors.
Michael S. Steele, Protecting Our Seniors,
Washington Post, August 24, 2009
When JFK and then Lyndon Johnson tried to pass Medicare, they
said this was a government takeover of health care; they were going
to get between you and your doctorthe same argument that’s
being made today.
President Barack Obama, town hall meeting, August 15, 2009
20 ◾  Understanding Health Care Reform
In early March of 2010, I attended a dinner party. e host, a lawyer for one of
the country’s largest health care systems, complained about the fact that the new
health care reform bill would have no “public option.” A pediatrician who prac-
tices at an academic medical center was encouraged by the fact that the new leg-
islation will ensure that the vast majority of children are covered by insurance,
but he expressed his concerns that cuts in reimbursements for many adult ser-
vices may have drastic consequences on the ability of our hospital to provide our
current level of services. A former chef who now works in a small business wor-
ried whether his employer would continue to pay for his insurance or whether he
would have to buy his own insurance through an insurance exchangebut he
was happy that I can now keep my daughter on my policy until she is twenty-six
and hopefully has a job. I asked, “Who here is happy with our current health
care system?” An elderly couple at the table sheepishly raised their hands. We
have Medicare and a supplemental policy that I buy myself so everything gets
paid for and we can see any doctors we want. And now Obama is going to ll the
Medicare prescription drug doughnut hole’ so the cost for our medicines will
go down.” ey were very happy with a system that had raised controversy fty
years earlier when many thought it was the rst step toward socialized medicine.
e worry for all of the other young people around our dinner table was whether
Medicare will last for another fty years.
Medicare, the government-funded health insurance plan, covers 47 million
Americans, making it the largest health insurer in the nation.
It was established
by the Social Security Act of 1965 to provide aordable insurance for the elderly
at a time when half of the elderly in the United States had no health insurance.
President Lyndon B. Johnson enrolled the rst Medicare beneciary—former
president Harry S. Trumanon July 30, 1965. Medicare was initially met with
some skepticism as critics saw it as a rst step toward socialized medicine. In
1964, George H. W. Bush described Medicare as socialized medicine.Today
Medicare has become an integral part of our society, although many people take
it for granted and few understand its structure, its strengths, and its limitations. A
speaker at a 2010 town hall meeting in Simpsonville, South Carolina, illustrated
this best when he shouted, “Keep your government hands o my Medicare.
Over the past decade the Medicare per-capita spending has increased annu-
ally by 6.8 percenta rate that is slightly less than the 7.1 percent growth seen
in the private insurance industry over the same time period. In 2010, Medicare
will represent 12 percent of federal spending.
e cost of Medicare was esti-
mated to increase to $1,038 billion in 2020 in the absence of reform according
to the Congressional Budget Oce.
In 1965, the median age in the United States was 28.4; today it is 36.6.
Many of our elderly undergo expensive procedures that were not even available

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