In the United States the Medicare system provides health insurance coverage for those who are above 65 years of age. Medicare is a social insurance program, a single-payer health care system, and it operates in a similar way to the Medicare systems in Canada and Australia, except that in the US it is restricted to those above 65, plus some other groups of people such as the disabled. This article reviews the history of Medicare in the US, from its founding in the Sixties, to the funding crisis faced today due to demographic changes, and to spiraling health care costs.

In a single-payer health care system there is one large insurance fund which covers the health care costs of the entire population, or a large group of the population. The single payer, which is usually the national government, collects the insurance premiums, usually in the form of a health tax. This money is then paid into the insurance fund, where it covers the health costs of the nation’s population.

In the United States in 1961 the former commissioner of Social Security, Robert M. Ball, examined the problem of funding health insurance for senior citizens. He concluded that the major issue was that the elderly often required expensive medical treatment because of their age, but were not able to pay health insurance costs because they were no longer working, and they relied on a pension for income.

Ball therefore said that the only way in which health care could be funded for the elderly was to use the same mechanism which is used to fund retirement pensions. Payments should be collected from those who were in work, and able to pay, and the benefits should be provided after retirement.

Ball, and Medicare’s supporters today, would argue that Medicare is not an unearned entitlement. It is a form of social insurance where people pay into the scheme when they are young, and able to work, and they draw out from the scheme when they are old, and sick. Although some people will pay in more than they get out, the scheme’s supporters would still argue that is true of any insurance scheme.

Medicare has been opposed by many conservative US politicians including Ronald Reagan and George Bush Senior. These have often argued that Medicare was socialist medicine, would lead to a socialism and/or communism in America, and would lead to an end of individual responsibility.

Medicare became law in 1965. At the time Lyndon B. Johnston was president, and he enrolled the first two Medicare members: Harry S. Truman, and Mrs. Truman, the former president and first lady.

In the present day Medicare is facing a severe financial crisis, which arises from two fundamental causes. Firstly there is a demographic shift towards an older population. Ironically this has been caused by medical advances which mean that people now live much longer. Those who are under 65, in work, and paying taxes, now find that they have to support an increasing number of over 65s benefiting from the Medicare scheme.

Secondly, medical costs have rapidly increased in the last 40 years. Many expensive, new treatments are not available, which were not known about when the scheme was set up.

Those responsible for the fund have predicted that if present trends continue the health insurance fund will become insolvent in 2019. One can therefore expect that in the next decade the U. S. Federal government will see fixing this Medicare crisis as one of its top domestic priorities.

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