The continuing debate over changes in geriatric care in the United Kingdom could be informed by some difficult lessons learnt from recent developments in the United States.1 Medicare, created by US law in 1965, is a low cost health insurance programme that is available to most Americans aged 65 or older and to some disabled younger people. Medicare is a traditional indemnity insurance plan that reimburses physicians, hospitals, and other professionals for providing Medicare beneficiaries with acute healthcare services. The coverage does not include drugs or, with few exceptions, preventive or long term care services.

In the mid-1980s Medicare began looking to “managed care” to help control its runaway expenditure. Under managed Medicare, an insurance company known as a health maintenance organisation accepts from the Medicare programme a fixed capitation payment for each person it enrolls, and it agrees to provide that person with at least the standard package of Medicare benefits. The amount of the capitation payment is based on the person's age, sex, income, type of residence (nursing home or independent dwelling), and geographical location. The health maintenance organisation may, at …