Medicare, Medicaid Turn 50 On Thursday

As Congress continues its never-ending debate about Obamacare and Arkansas legislators consider alternatives to the private option, two government health care programs marked their 50th anniversaries on Thursday.

On July 30, 1965, President Lyndon Johnson signed the legislation creating Medicare and Medicaid. According to the federal government’s Medicare blog, before 1966 about half of all senior citizens did not have health insurance. Today, about one out of every three Americans are covered by those programs.

Medicare covered 53.8 million people in 2014 – 44.9 million of them age 65 and over, and 8.9 million of them disabled, the Medicare board of trustees reported last week. It spent $613.2 billion in 2014, with total income of $599.3 billion.

As baby boomers age and Americans live longer, the number of Medicare recipients is growing. According to the Kaiser Family Foundation, in 1999, Medicare served 39.2 million Americans – 14.6 million fewer than it does today. The number of Arkansans served by Medicare grew by 105,000 during roughly that time period, from 447,359 in 1999 to 552,375 in 2012.

Medicaid, meanwhile, also has grown exponentially. The program, which is funded by a federal-state match, covered 22.8 million people in 1977, according to the National Institutes of Health. Today it covers more than 70 million children, pregnant women, low-income adults, and people with disabilities. It also pays for nursing home care for senior citizens. Medicaid spending reached $476 billion in 2014, with $4.9 billion of that spent in Arkansas, according to the Kaiser Family Foundation.

About 902,000 Arkansans are enrolled in Medicaid, including the 218,376 recipients currently enrolled in the private option, which uses federal dollars under the Affordable Care Act to subsidize private insurance for lower-income Arkansans.

The private option has reduced the number of Arkansas’ uninsured. A Gallup poll released last summer found that Arkansas had the nation’s steepest drop in its uninsured rate – from 22.5% in 2013 to 12.4% in 2014. But some legislators oppose it as an expansion of government with unsustainable future costs. While federal funds currently pay for almost all the program, the state will begin paying 5% in 2017 and 10% by 2020.

Medicare and Medicaid are still growing. The Centers for Medicare & Medicaid Services projected this week that about 19.1 million additional people are projected to enroll in Medicare during the next 11 years. Medicaid spending is projected to have increased 12% in 2014 because of a 12.9% increase in total enrollment – 7.6 million beneficiaries – under the Affordable Care Act. Counting other programs, the Centers project that the percentage of national health care financed by federal, state and local governments will increase from 43% in 2013 to 47% in 2024.

And as Medicare and Medicaid take up a larger percentage of health care, they also compose a larger percentage of the federal budget, which has many people wondering about the programs’ sustainability. According to the Pete Peterson Foundation, in 1970 Medicare composed 3% of the federal budget, while Medicaid was 2%. In 2014, Medicare’s percentage had grown to 14%, while Medicaid’s was 9%.

Looking ahead, Medicare is projected to grow to 20% of the budget by 2040, while Medicaid grows to 12%. Medicare’s board of trustees reported earlier this month that Medicare expenditures will increase from 3.5% of gross domestic product in 2014 to 6% by 2089. However, another scenario places Medicare at 9% of GDP by then.

Meanwhile, Medicare’s board of trustees reported that Medicare Part A, which covers hospital expenditures, has been spending more money every year since 2008, though small surpluses are foreseen from 2015-2023. After that, deficits are projected to return until Medicare’s Hospital Insurance trust fund is depleted in 2030. At that point, Medicare Part A’s tax income will cover only 86% of expenses.