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Nineteen sixty five was a big year: Tom and Jerry aired for the first time on TV, the Beatles performed one of their biggest concerts in Shea Stadium, and Tokyo became the world’s largest city.

In our industry, however, the milestone to remember was two new healthcare programs that would expand access to care to millions of Americans: Medicare and Medicaid.

Signed into law on June 30, 1965, Medicare and Medicaid provides healthcare to 111 million Americans today. Medicare, in particular, covers 1 in 6 Americans and accounts for 77% of physician visits.

A recent survey found that 77% view the program to be very important. However, the Congressional Budget Office (CBO) predicts Medicare spending to increase to $981 billion by 2025, double what it is today, which would lead to the program’s insolvency by 2030. At a time when it seems as if we’re living longer, healthier lives, how did the situation become so dire?

    • We are living longer: Fifty years ago, life expectancy was 77.9 years for men and 81.3 years for women, and by 2013 it increased to 82.9 and 85.2 years respectively. The CBO projects it will continue to increase to 85.2 years for men and 87.5 years for women by 2038.
    • We have more chronic conditions: While Americans are living longer, they are also becoming sicker and suffering from multiple chronic conditions. In Medicare, over two thirds of enrollees have two or more chronic diseases
    • Older population + chronic conditions = expensive: The cost of Medicare has increased drastically now that baby boomers are eligible and people are living longer – it accounts for 14% of federal spending, and due to the prevalence of chronic disease, 10% of Medicare enrollees make up 60% of spending.

In response, the Centers of Medicare and Medicaid Services established the Innovation Center through the Affordable Care Act to explore new payments models that move the program away from its current fee-for-service payment model to improve accountability and quality of services, looking at bundled payments, Accountable Care Organizations and various models that provide incentives to team based care structures.

Even though over the last fifty years we moved from cartoons to reality TV and the Beatles to One Direction, healthcare continues to remain a focus. Medicare has so far been able to withstand political pressure and disbelievers despite its high costs. With new models in place and the upcoming election, it will be interesting to see how (and if) the program perseveres.

 

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