ABSTRACT

Medicare and Medicaid have their own problems, and are partway to being fixed compared with their inception-state in 1965. This chapter begins with a brief review of the history of Medicare. Medicare became law of the land in 1965, with coverage essentially mimicking the types of coverage prevalent in privately purchased health insurance at the time—nearly full coverage for hospitalization and in-hospital doctor fees, and other medical expenses covered by a "major medical" plan paying 80% of costs above a deductible. Medicare's original payment structure was almost an open checkbook to health care providers. The chapter provides a discussion on the major changes in Medicare coverage options. The original Medicare enabling legislation contained precious few words about how Medicare would decide what to pay for. Medicare's structure was so inherently flawed, even at the beginning, that a large private insurance sector arose to provide "fixes" to the problems left unsolved in the original Medicare structure.