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“The Genesis and Development of Medicare”

Written By: Jason Shafrin - Feb• 21•06

The following is a timeline which summarizes the genesis and evolution of government provided health insurance in the United States.

Major Foreign Events:

  • 1883: Otto von Bismark, then Chancellor of Germany passes a compulsory health insurance bill for factory and mine workers
  • 1911: Germany extends compulsory insurance coverage to almost all employees
  • 1911: David Lloyd George, Chancellor of the Exchequer in Great Britain convinces Parliament to pass the National Health Insurance Act which provides: 1) a cash payment in the event of maternity or disability, 2) medical services if a workers should fall ill. The London correspondent for JAMA reports that British physicians incomes rose between 20-50% in prosperous areas and doubled in poor areas after the Nat’l Health Act.

Domestic Events:

  • 1906: John Commons, an economist at the U. of Wisconsin founds the American Association for Labor Legislation (AALL) to lobby for health care reform
  • 1917: War Risk Insurance Act – extends medical and hospital care to veterans
  • 1934: FDR creates Committee on Economic Security which advises the passage of government administered health insurance.
  • 1935: Under FDR, Social Security Act passes.
  • 1938: At the National Health Conference, FDR makes “the first definite affirmation by an American chief executive of the ultimate responsibility of the government for the health of its citizens”.
  • 1943: Wagner-Murray-Dingell bill proposed (not passed) which aims for compulsory national health insurance
  • 1946: Hill-Burton Hospital Survey and Construction Act
  • 1957: Forand Bill aiming for medicare bill introduced
  • 1960: Kerr-Mills bill passed, provides medical care for medically indigent
  • 1961: King-Anderson bill proposed (would have covered 14m recipients of social security over 65, predecessor to Medicare);
  • 1961: National Council of Senior Citizens – lobbying group for nationalized health insurance, AFL-CIO helps found
  • 1965: “MEDICARE” put into law, Mills bill passes, “Three layer cake”
    1. Title XVIII, Part A – Hospital Insurance: Provided all persons over 65 eligilbe for limited stay at hospital, based on King-Anderson
    2. Title XVIII, Part B – Supplementary Medical Insurance: Voluntary, for physicians’ and home health services,
    3. Title XIX, Medicaid – gives states options of how to care for medically needy, expansion of Kerr-Mills bill
  • 1971: Price Inflation – Physician charges rose 39% after Medicare compared with 15% in the 5 years before Medicare
  • 1972: Totally disabled included as eligible for Medicare benefits
  • 1974: Certificate of Need (CON) program adopted
  • 1981: Omnibus Budget Reconciliation Act – limits placed on inpatient, outpatient reimbursements.
  • 1982: Tax Equity and Fiscal Responsibility Act (TEFRA) – changes hospital reimbursement from cost+% to DRG

From “The Genesis and Development of Medicare” chapter by Ronald Hamowy in American Health Care: Government, Market Processes and the Public Interest, edited by Roger D. Feldman

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  1. […] I would like to thank Joseph Paduda for his kind words on March 2nd.  Principal of Health Strategy Associates, Mr. Paduda cited my Medicare timeline and stated: “Jason Shafrin at Healthcare-Economist.com has provided a brief timeline of the development of Medicare in the US. […]

  2. […] will help you answer all these questions and more.  You can also see my prior posts on the ‘Genesis and Development of Medicare‘ and ‘How to Pick a Medicare […]