Intended for healthcare professionals

Observations Yankee Doodling

US Medicare, Medicaid, and nurse practitioners all turn 50

BMJ 2015; 351 doi: (Published 20 July 2015) Cite this as: BMJ 2015;351:h3863

This article has a correction. Please see:

  1. Douglas Kamerow, senior scholar, Robert Graham Center for policy studies in primary care, professor of family medicine, Georgetown University, and associate editor, The BMJ
  1. dkamerow{at}

Much accomplished, much more to be done

This month marks the 50th anniversary of the creation of Medicare and Medicaid in the United States. In 1965, when President Lyndon Johnson signed the law that had been a dream of two of his predecessors, John F Kennedy and Harry S Truman, he handed the first two Medicare cards to the then 81 year old Truman and his wife. Truman had fought for a more comprehensive national health insurance system during his presidency, but political realities limited Johnson’s law to two separate programs that covered just elderly people (Medicare) and poor people (Medicaid).

Johnson was able to include coverage of poor people in the law only because conservative opponents to universal health insurance thought that including them initially would prevent later changes leading to a truly comprehensive program, what the critics called “socialized medicine.”1 And it did, for 45 years, until the passage of the Affordable Care Act in 2010.

Before Medicare older Americans were often medically destitute. Less than half had health insurance in 1962, compared with 2% today. Within a decade of the passage of Medicare, older people’s access to care had improved, with increases in rates of admission to hospital and physician contacts. The rate of cataract procedures, for example, doubled. By 1984 life expectancy of 65 year olds had risen 15%, due in part to healthcare paid for by Medicare.1

Another huge, if indirect, accomplishment of Medicare was effectively desegregating hospitals. Once Medicare became the primary payer for hospital stays, no hospital could afford not to accept Medicare patients. As a federal program, Medicare refused to reimburse racially segregated facilities, leading to the end of at least one age old method of discrimination.

Changes to coverage and payment systems

Medicaid, less universally beloved than Medicare, has always been hobbled by its half federal, half state administration and funding, leading to wide variation in enrollment and coverage policies. At first it covered only poor single parents and their children, and levels of payment to physicians were so low that many patients found it difficult to find a doctor. Over the years, however, Medicaid has taken a leadership role in support of community health centers, experiments in healthcare delivery schemes, and the patient centered community home movement.2

Medicare too has evolved with the times. Originally it was completely a fee for service system, under which hospitals and doctors were incentivized to deliver more and more care. To moderate rising costs, Congress instituted payment reforms that changed the way Medicare paid for inpatient and then outpatient care.

Hospital stays became the unit of payment for inpatient care, rather than individual services or procedures, using so called diagnosis-related groups. Because Medicare is the largest insurer, other payers followed suit in using these prospective payments for hospital stays. Similarly, Congress pegged ambulatory care payments to a schedule that was supposed to reflect the resources used to deliver the care rather than to traditional “usual and customary charges.” These changes helped to slow the growth of healthcare spending, but others, such as the use of a “sustainable growth rate” to moderate physician service charges, failed utterly and were repealed.

As originally conceived, Medicare covered treatment services only and specifically excluded preventive care. Over the years, Congress slowly added appropriate (and some inappropriate) preventive services to Medicare, one at a time, according to political pressure.3 Only with the passage of the Affordable Care Act in 2010, 45 years after its inception, did Medicare cover evidence based preventive services and provide an annual “well care” visit to recipients for these services to be reviewed and delivered.

Attempts to curb costs and improve quality

Many other amendments to Medicare regulations over the years have tried to deal with rising costs, quality problems, and a perceived need to increase competition among providers to improve quality and lower costs. Hospitals and physicians now have to report quality measures, and incentives and penalties encourage adoption of electronic medical records. Numerous demonstration projects have tested alternative strategies to improve care and reduce costs. However, as the Medicare population has increased, aged, and developed multiple chronic diseases, caring for them has become more and more complex, leading to increased rather than decreased costs.

By far the biggest changes to Medicare and Medicaid were brought about by the Affordable Care Act. Besides covering preventive services and decreasing some of the costs associated with prescription drug purchases in Medicare, the act created accountable care organizations, large groups of providers that could share costs and profits for the care of populations and be responsible for the quality of care delivered. It also focused on such quality improvement measures as decreasing rates of readmission to hospital and of hospital acquired infections among Medicare patients. The act dramatically enlarged Medicaid, to become a true safety net program in states that have elected to participate. And $100bn (£65bn; €90bn) was targeted to a new center to research ways to improve outcomes among Medicare and Medicaid patients while reducing costs.

Role of non-physicians in healthcare teams

Much has changed in Medicare and Medicaid, but much more will have to be done if the triple aim of improved care, improved outcomes, and decreased costs is to be achieved. This will be difficult, given that the number of Medicare beneficiaries is expected to grow from about 50 million to 80 million people by 2030.4 Medicaid enrollments will also grow as more states sign up for the enhanced federal Medicaid payments. As a result, spending on Medicare and Medicaid will take a growing portion of the federal budget. In addition to structural changes in the programs’ organization, and payment changes to reflect increases in costs, a focus on primary care and community care teams will be crucial if care and outcomes are to improve.

This is where the third important 50th anniversary comes in. Everyone is noting that Medicare and Medicaid are 50 years old, but 1965 also marked the beginning of the advanced practice nurse training programs in the US.5 Nurse practitioners, as they came to be called, began as public health nurses who obtained further clinical training to become independent clinicians. They now number over 200 000. They and all the other non-physician members of healthcare teams have a vital role to play if Medicare and Medicaid are ever to fulfill their promise.


Cite this as: BMJ 2015;351:h3863


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