Medicare Then And Now
RENEE MONTAGNE, host:
A Republican plan for the 2012 budget unveiled this week includes an overhaul of Medicare. House Budget Chairman Paul Ryan, a Wisconsin Republican, wants to create a voucher like program to replace the popular health insurance program for the elderly and disabled. Medicare has evolved since it was signed into law in 1965. For a look at how it's changed, and why it's so expensive now, we turned to NPR health policy correspond Julie Rovner. Good morning.
JLUIE ROVNER: Good morning.
MONTAGNE: Let's start with what did Medicare look like just after it was passed - how much did it cost in 1965 compared to today?
ROVNER: Well, a whole lot less. I actually have numbers from 1970. It cost $7 billion and that was on about three and a half percent of federal spending. In 2010, the last full numbers we have, Medicare costs $524,000 billion. That's about 15 percent of federal spending. And obviously it's expected to rise as 78 million baby boomers join the program.
MONTAGNE: Why, Julie, was Medicare passed in the first place?
ROVNER: Well, private insurance wasn't really available for the elderly at the time. Only about 14 percent of older people had insurance because insurance companies wouldn't sell to them. They were considered bad risks. They were likely to get sick because they were older, and so it was thought that the government needed it to step in. And indeed, thanks to Medicare about 99 percent of older people today have health insurance.
MONTAGNE: What were people able to get back when the program started? The universe of possible medicine and drugs was much smaller, right?
ROVNER: Absolutely. Think about the things that we have now that we didn't have then: organ transplants, joint replacements, cholesterol lowering statin drugs, the array of blood pressure drugs. None of those things existed in 1965 or they just certainly didn't exist to the extent that they exist now. And in fact, the life expectancy at age 65, back in 1960, was about 14 years. Today it's almost 19 years, so people are living longer, in large part thanks to a lot of those medical advances, but a big reason why Medicare is so much more expensive. There's so much more that medicine can do.
MONTAGNE: And there's so much more medicine that people expect to have.
ROVNER: Absolutely, and Medicare is not immune from being part of the rest of the health care system. It's one of the only sectors in the economy where as you get more advances things get more expensive rather than less expensive. We pay less for computers, less for fancy TVs, but medical advances always cost more and not less. Like it or hate it, there are a lot of things in the new health care law that are aimed to try and slow the increase in health care costs. Most of those, interestingly, are going to be done through Medicare, since Medicare is such a large part of the health care system, but it's not entirely clear how well or whether those will work.
MONTAGNE: And Medicare also covers more people than it did 45 years ago.
ROVNER: That's right, and it's not just because the population is larger, but Medicare has actually added more people to its population. Of course it began only for the elderly. In 1972, Medicare added the disabled to its roles, people with end stage renal disease, with kidney failure now get Medicare. Medicare also added more benefits, so more expensive things like prescription drugs that were added in 2003.
MONTAGNE: So what are the political perils of trying to overhaul Medicare? I mean the most obvious one is it's really popular and people who vote don't want to lose what they've got.
ROVNER: That is the biggest one. And I think the Republicans who were trying to make some of these changes really know that this is a very political perilous thing that they are doing. But at some point I think both Republicans and Democrats know that they're going to have to do something with 78 million baby boomers about to join the program, the first ones starting this year. Something needs to be done to get Medicare costs under control for the long run.
MONTAGNE: NPR health policy correspondent Julie Rovner, thanks very much.
ROVNER: You're welcome.
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