How Medicare benefits doctors: A complicated history


Fifty years ago, President Lyndon Baines Johnson signed Medicare (and Medicaid) into law.   Medicare’s relationship with physicians since then can best be described as a complicated one.

First, recall that Medicare became law notwithstanding the American Medical Association’s fierce opposition to it. Three years prior to its enactment, AMA President Ed Annis warned that, “We doctors fear that the American public is in danger of being blitzed, brainwashed, and bandwagoned” by the Kennedy administration’s proposal to provide compulsory health insurance to the elderly.  The AMA continued to fight tooth-and-nail against Medicare, even after the Johnson administration took up the cause following President Kennedy’s assassination.

After Medicare was enacted, however, the AMA came to the table to negotiate with the administration on its implementation. The ACP, for its part, did not participate in the debate over Medicare’s enactment, but once it became law, the College “began to realize that it could no longer limit its mission to education, professional standards, and fellowship: it had to became an advocate in policy and political arenas” as Dr. Lynne Kirk and I recount in the chapter “The American College of Physicians and Public Policy” in the recently-published Serving Our Patients and Profession: A Centennial History of the American College of Physicians, 1915-2015.

Second, despite the AMA’s forebodings, physicians and their patients have flourished under Medicare.  Before Medicare, seniors were often uninsured and many lived in poverty.  “While 48 percent of the elderly lacked health coverage in 1962, today just 2 percent do. And while the 15-year increase in life expectancy at age 65 achieved between 1965 and 1984 cannot be wholly attributed to Medicare, without its coverage many elderly Americans would simply not have had access to the medical advances that also have contributed to rising longevity” observes the Commonwealth Fund.  “In the early 1960s, the choices for uninsured elderly patients needing hospital service were to spend their savings, rely on funding from their children, seek welfare (and the social stigma this carried), hope for charity from the hospitals or avoid care altogether” wrote Rosemary Stevens, a sociologist at the University of Pennsylvania, quoted in the Politifact discussion of “Were the early 1960s a golden age for health care?”

Before Medicare, much of the care that physicians provided to seniors was on a charitable or uncompensated care basis.  After Medicare, demand for medical care grew, pumping hundreds of billions of dollars into care provided by physicians.  It should be no surprise to anyone, then, that physicians saw huge gains in payments and their incomes: between 1967 and 1993 physician payments from Medicare grew at an average annual rate of 13.7 percent.  And despite price controls and spending caps, like the recently repealed Medicare SGR formula, Medicare per capita payments to physicians have continued to increase to the present day, although payments and incomes for primary care physicians have lagged behind other specialists.  In addition, U.S.-trained physicians who entered practice after 1965 have benefited from Medicare paying for their post-graduate education.

Yet my sense is that many physicians today look at Medicare with a complicated set of emotions: appreciation for all of the good it has done for their patients, acknowledgement that physicians themselves have greatly benefited from the infusion of public dollars, yet concern that Medicare has begat greater government intervention in the patient-physician relationship, as evidenced by a never-ending cascade of rules,  mandates, and performance measures imposed on harried doctors and their patients.

Looking forward, most physicians are probably aware that Medicare will become an even bigger part of their daily lives, with more than 10,000 baby-boomers becoming Medicare-eligible each day for the next 20 years, yet they likely view this development with uncertainty and some trepidation.  Can the country afford it?  Who will pay for it?  Will greater government spending lead to even greater government controls, regulations, and paperwork?  Will payments be fair and adequate?  Will Medicare really begin to do something meaningful to reduce the disparities in payments between primary care and other physician specialties?  Will pay-for-performance really improve patient care, or just be another hassle with unintended adverse consequences for patients?

These are all good questions, with no clear answers.  But on the most important question — have physicians and their patients benefited over the past half century from Medicare?–the answer has to be an unequivocal yes.  The challenge going forward is to continue to sustain, support and fund the Medicare in a fiscally-responsible way, for the next 50 years and longer, while empowering physicians to improve care to patients without tying their hands with more unnecessary and counterproductive mandates.

Bob Doherty is senior vice president, governmental affairs and public policy, American College of Physicians and blogs at the ACP Advocate Blog.

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