The Federal Government Enters the Healthcare Field

Abstract

Medicare and Medicaid legislation received wide public approval with Americans feeling they were getting a lot from Medicare in return for the moderate increase in their FICA contribution paid into the Social Security system and shared by employers. Adjusting the annual federal income tax to gain revenue to pay for the cost of the federal/state Medicaid program also seemed like a good deal. To make this happen, the House Ways and Means Committee and the Senate Finance Committee worked closely with each other and respected each other’s jurisdiction, a level of cooperation rarely seen today. Payments under Medicare were divided into two parts: Part A for hospital payments and Part B for nonhospital payments. The federal government became an additional third-party payer. Unfortunately the data used to determine the funding needed to sustain the programs over time was inadequate and incomplete, resulting in quickly escalating funding deficits that continue even today. Having determined the government has a role in healthcare, Congress began the delicate dance of coming up with policies that would accommodate both systems (and philosophies)—supporting government safety net programs while maintaining a system of private insurance.