The High Stakes Struggle Over the Future of Medicare

Following the passage of the Medicare Modernization Act (MMA) of 2003, the future of Medicare is less clear than at any time since its inception almost 40 years ago. Medicare policy regarding financing coverage and delivery mechanisms has been the object of intermittently fierce political debate and maneuvering since 1995 when a conservative Republican majority gained control of Congress and ended the political consensus that had guided Medicare policy for three decades. This consensus had supported Medicare as a single payer healthcare system—for most Americans aged 65 and older, persons with disabilities and endstage renal disease—funded by the federal payroll tax and general revenues, as well as by beneficiary premiums and co-payments.

A new Republican Congressional majority in 1995 quickly challenged the Medicare policy consensus by pushing for large reductions in Medicare funding and incorporating market mechanisms designed to reduce costs by creating more competition among insurance plans and providers. These efforts eventually produced some relatively small reductions in projected Medicare spending and one major initiative, the MedicareþChoice program, to expand the role of managed care in Medicare. The results of the MedicareþChoice program, however, disappointed its backers as the percentage of beneficiaries who chose managed care reached a peak of only 16% in 1999 and then declined to 11% in 2003

– The Gerontologist

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