Medicare Turns 59: Privatization Experiment Fails

Medicare, the federal health insurance program for seniors and the disabled, turned 59 years old on July 30th.

Why it matters: Medicare has provided crucial health coverage for millions of Americans since its inception in 1965, but the program faces ongoing threats from privatization efforts and proposed budget cuts.

The details:

• Before Medicare, nearly half of American seniors lacked health insurance, and many exhausted their savings to afford medical care.
• In its first year, Medicare reduced poverty among the senior population by 66% and has continued to improve health outcomes for beneficiaries.
• Despite its success, Medicare has faced continuous threats from conservative factions seeking to cut and privatize the program.
• The privatized version of Medicare, known as Medicare Advantage (MA), has been criticized for overbilling the government and denying care that traditional Medicare would cover.

Efforts to privatize Medicare began in the 1970s, based on the belief that free-market competition would reduce health care costs. However, health care does not operate like other market goods, as needs are driven by necessity rather than choice.

What they’re saying:

• “Medicare remains one of the most popular and efficient federal programs. Most beneficiaries report high levels of satisfaction with their quality of care.” – Opinion piece
• “Conservative opposition to Medicare is not new. Since its inception, Medicare has been labeled as ‘socialism’ by some, including Ronald Reagan, who in 1962 warned that the program would undermine American freedom.” – Opinion piece

The other side: Conservatives argue that privatization and budget cuts are necessary to ensure Medicare’s long-term sustainability, while Democrats largely support protecting and expanding the program.

What’s next: Continuous advocacy is essential to preserve Medicare and protect it from further privatization efforts and budget cuts. The Biden administration has taken steps to hold private Medicare Advantage plans accountable, but more work is needed to safeguard traditional Medicare.

Full story

President Lyndon B. Johnson signed Medicare into law 59 years ago today in Independence, Missouri. The program was designed to provide the elderly and disabled with dignified access to health care.

💡#OTD in 1965, President Lyndon B. Johnson signed #Medicare and #Medicaid into law and gave President Harry Truman the first Medicare Card!

59 years later, nearly 150 million people across the country are now covered by these programs!

Learn more at https://t.co/f2p1jcYMc3. pic.twitter.com/Kz4skxfO2V

— Secretary Xavier Becerra (@SecBecerra) July 30, 2024

Medicare has fulfilled this promise for generations. However, since the 1970s, there have been attempts to privatize the program. This was based on the belief that free-market competition would reduce health care costs.

On the anniversary of Medicare and Medicaid, more Americans have health insurance than under any president in history.

It matters.

Despite Republican attempts in Congress to put these programs on the chopping block, Kamala and I will always fight to protect and strengthen them.

— President Biden (@POTUS) July 30, 2024

Yet, health care doesn’t work like other market goods. Consumers can’t easily compare prices or opt-out if it doesn’t suit them. Health care needs are driven by necessity, not choice.

Medicare and Medicaid became law 59 years ago today.

As extreme MAGA Republicans try to dismantle these vital programs, Democrats will keep pushing to protect and expand them — including by passing my Medicare for All bill!

We’ll always fight to put patients over profits.

— Rep. Pramila Jayapal (@RepJayapal) July 30, 2024

Privatization efforts led to the creation of Medicare Advantage (MA) plans in 2003. These plans restrict access to care through limited networks and various requirements that don’t exist in traditional Medicare. MA plans often limit patients’ access to a significant portion of physicians and hospitals.

This can be especially problematic for critically ill patients needing specialized care.

Medicare privatization’s impact on care

The Office of Inspector General reported in 2018 that 75% of denied claims appealed under MA plans were overturned on the first appeal.

This suggests many initial denials were unjustified. Coverage restrictions in MA plans also extend to medications. A study showed that by 2020, major providers had significantly narrowed the range of commonly prescribed physician-administered medications covered.

Another issue with MA plans is the difficulty in switching back to traditional Medicare. Pre-existing condition clauses make such transitions cost-prohibitive for many patients. The results of Medicare privatization have shown that these plans are inefficient, administratively burdensome, and more expensive for taxpayers.

The government pays considerably more per person for MA plans compared to traditional Medicare. Redirecting the excess money spent on MA plans could enhance traditional Medicare. This could eliminate the need for supplemental Medigap policies and expand benefits to include essential services for all beneficiaries.

As Medicare turns 59, it’s clear that the privatization experiment has failed. It has caused patient harm and incurred unnecessary costs. It is time to reinvest in traditional Medicare and ensure it truly serves America’s seniors as initially intended.