Medicare for All. That’s the new buzz phrase among Democratic Presidential candidates for the 2020 election. But, proposals for a national health insurance program are nothing new. By the 1930s many Western democratic countries were adopting national health insurance programs, but the United States continued to rely on private health insurers. In 1934, in the midst of the Great Depression, President Franklin D. Roosevelt created the Committee on Economic Security. This committee was to draft a bill that would do just that, namely give economic security to Americans. The Social Security Act that was drafted included an old-age pension program, unemployment insurance financed by employers, health insurance for people in poverty, and financial assistance for widows with children and the disabled. However, the bill that Roosevelt signed into law on August 14, 1935, was more limited in scope and did not contain a health insurance component. President Roosevelt wanted to keep provisions for health insurance in the Social Security Act but feared the backlash would jeopardize passage of this legislation. Opponents argued that government-financed health care would allow the government to come between the doctor and the patient, mandating how doctors treat patients and how much they charge.

In 1937, the U.S. Surgeon General proposed that National Health Insurance, which was still being debated in Congress, first include Social Security beneficiaries. Two decades later in 1957, after years of national health insurance proposals going nowhere,¹ Congressmen Aime Forand and Cecil King proposed limiting this type of insurance to only cover some of the medical expenses of those 65 years of age and older, paid for by Social Security payroll taxes. The media dubbed this proposal Medicare. Those in this age cohort required twice as much hospital care as those younger than 65, and despite getting Social Security benefits, could not afford the rising cost of hospitalization. Only half had health insurance. Nearly one in three lived in poverty.

Despite Democratic support in the House and Senate, support from labor unions, and support from the candidate, then President John F. Kennedy, the strong opposition from fiscal conservatives in Congress, the insurance companies and the American Medical Association stalled legislation. It would take more debate, compromise, a landslide victory for Democrats in the 1964 election, reforms and reorganizations of committees and their rules and the newly elected President, Lyndon B. Johnson, to make this program his top priority to get Medicare passed and signed into law on July 30, 1965. When the law took effect in 1966, more than 19 million people enrolled in the program.

Original Medicare, as it is now called, contains Part A, inpatient hospital coverage,² and Part B, outpatient medical coverage,³ for Americans aged 65 and older receiving Social Security or Railroad Retirement benefits. Part B premiums are deducted from beneficiaries’ monthly Social Security or Railroad Retirement payments. In 1972, Medicare eligibility was extended to Social Security Disability Insurance beneficiaries younger than 65 and those with end-stage renal disease.

In June 1980, President Jimmy Carter signed the Social Security Disability Act of 1980 which created Medigap insurance policies. These policies, issued by private insurance companies and paid for by monthly premiums, pay for some or all of what Medicare does not, such as deductibles, coinsurances, and copayments, depending on the policy. Federal standards for these policies were not established until 1990.

The Balanced Budget Act of 1997 established the Medicare+Choice program, now called Medicare Part C or Medicare Advantage.⁴ These plans, alternatives to Original Medicare, are run by private insurance companies and are regulated by the Federal government. They must cover all of the services Original Medicare Part A and Part B covers. Medicare pays Medicare Advantage providers a per-enrollee fee to provide this coverage.⁵ In addition, many plans cover services Original Medicare does not such as vision and dental care. Most also offer prescription drug coverage, although Original Medicare beneficiaries can also opt-in for prescription coverage through Medicare Part D. Medicare Part D is administered by private insurance companies. Regardless of whether Medicare beneficiaries opt for Original Medicare or choose to pay for a Medicare Advantage plan, they must pay the Original Medicare Part B premium, which is $135.50 per month in 2019.⁶

While these plans offered new choices in health coverage for many seniors, they also complicated the process of choosing health coverage. To provide information for seniors about their choices, the Federal government launched the Medicare.gov website in 1998. Starting January 1, 1999, the 1-800-MEDICARE toll-free phone number was available nationwide and the first annual Medicare & You Handbook was mailed to all Medicare beneficiaries. Whether these informational resources help or not is debatable, but more than two decades later, the process is still confusing for many seniors and their loved ones who are trying to help them.⁷

Today’s market size shows the number of enrollees in Medicare Advantage plans in 1999, 2009, and 2018 in the United States. In 1999, 18% of Medicare beneficiaries were enrolled in Medicare Advantage plans; in 2009, 23% and in 2018, 34%. From 1999 to 2004, Medicare Advantage plan enrollment fell from 6.9 million to 5.3 million enrollees. Since then, however, enrollment has grown year after year. In 2018, 67% of Medicare Advantage enrollees had individual plans. Twenty percent were covered by employer- and union-sponsored group plans and the remaining 13% had special needs plans. Special needs plans are tailored to beneficiaries who have certain chronic conditions, are institutionalized, or qualify for both Medicare and Medicaid. While only 20% of enrollees nationwide are covered by Medicare Advantage group plans, nine states have a disproportionately high percentage of enrollees covered by such plans. In Alaska, 100% of Medicare Advantage enrollees were covered by group plans in 2018. The other eight states include West Virginia (53%), Michigan (51%), Illinois (42%), Kentucky (39%), Delaware (37%), Maryland (35%), New Jersey (34%), and Wyoming (30%). As more unions and large employers, including state governments, seek to lower their retiree healthcare costs, more are turning to Medicare Advantage plans to provide healthcare coverage. The Congressional Budget Office predicts that enrollment in all types of Medicare Advantage plans nationwide will include 42% of all Medicare beneficiaries by 2028.

¹ Thanks in part to lobbying efforts by the American Medical Association, which characterized National Health Insurance as “un-American” and implied that those in President Harry Truman’s Administration who supported it were Communists.
² Includes inpatient hospital stays, care in a skilled nursing facility on a short-term basis, hospice care, and some home health care.
³ Includes doctors’ services, outpatient care, medical supplies, and preventative services.
⁴ Medicare+Choice was renamed Medicare Advantage in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, signed by President George W. Bush. This law also established the Medicare Part D prescription drug benefit.
⁵ Before the Affordable Care Act revised payment structures to insurance companies that administer Medicare Advantage plans, the Medicare Payment Advisory Committee found that Medicare was paying 14% more per Medicare Advantage enrollee than the cost of care for an enrollee in Original Medicare due to changes over the years to encourage private plan participation and enrollment.
⁶ In 1965 the monthly premium was $3; in the early 2000s, about $50.
⁷ Judging from the more than 100 comments below the Center for Medicare & Medicaid Services YouTube video titled “Medicare & You: Understanding Your Medicare Choices”.

Geographic reference: United States
Year: 1999, 2009 and 2018
Market size: 6.9 million, 10.5 million and 20.4 million enrollees, respectively
Sources: Gretchen Jacobson, et. al., “A Dozen Facts About Medicare Advantage,” Henry J. Kaiser Family Foundation, November 13, 2018 available online here; Julian E. Zelizer, “How Medicare Was Made,” The New Yorker, February 15, 2015 available online here; History.com Editors, “Social Security Act,” A&E Television Networks, Last updated August 21, 2019 available online here; “National Health Insurance—A Brief History of Reform Efforts in the U.S.” Focus on Health Reform, The Henry J. Kaiser Family Foundation, March 2009 available online here; Nancy De Lew, “Medicare: 35 Years of Service,” Health Care Finance Review, Fall 2000, page 22, Medicare and Medicaid Research Review, U.S. National Library of Medicine, National Institutes of Health available online here; “The Parts of Medicare (A, B, C, D),” Medicare Interactive.org available online here; “Filling Gaps in Medicare Coverage and Getting Help with Medicare Costs,” Medicare Interactive.org available online here; “Medicare Timeline,” Henry J. Kaiser Family Foundation, March 24, 2015 available online here; Medicare & Medicaid Milestones 1937-2015, Center for Medicare & Medicaid Services, July 2015 available online here; “CMS’ Program History,” Center for Medicare & Medicaid Services, June 20, 2018 available online here; CMSHHSgov, “Medicare & You: Understanding Your Medicare Choices,” YouTube, April 30, 2015 available online here; “Medicare.gov” available online here; Chris I. Young, “Medicare vs. Medicare Advantage: How to Choose,” U.S. News & World Report, March 23, 2018 available online here; “Medicare Advantage (Part C),” eHealth Medicare, November 1, 2017 available online here; Steve Anderson, “A Brief History of Medicare in America,” Medicare Resources.org, February 27, 2018 available online here; George B. Moseley III, “The U.S. Health Care Non-System, 1908-2008,” AMA Journal of Ethics,” May 2008 available online here; “Medicare Advantage,” Henry J. Kaiser Foundation, October 10, 2017 available online here.
Image source: Sabine van Erp, “hands-old-old-age-elderly-2906458,” Pixabay, November 1, 2017 available online here.