"Enhancing Wealth . . . Mitigating Risk"

Medicare History, Part II: How Costs and Benefits Have Changed

We're back for Part II of our three-part series on Medicare history – its beginning in 1966 compared with its 2019 evolution. In this part, we are going to be examining Medicare Part B.

Back in the original handbook, Part B was not called Part B, but simply “Medical Insurance.” And they guaranteed three types of payments for Medical Insurance: payments for “doctor’s services,” payments for other medical services and supplies, and, finally, payments for home health services. Let’s break them down the way Medicare did.

The most important thing to know about Medicare’s original medical service is the primary cost-sharing co-insurance has not changed in 50 years. It was 80/20 after a deductible in 1966, and it is 80/20 after a deductible in 2019. The only thing that has changed is the numbers.

The other thing that has not changed is that you can assign benefits to doctors or simply be reimbursed for charges today. (Most people are unaware they can pay their own bills and get them reimbursed – it is much, much easier and less hassle today to just assume benefits are assigned and get them paid directly.)

Here’s where some things change: In the original Medicare handbook, it was much easier for a doctor to take Medicare. To quote the handbook, “You select your own physician. A doctor does not have to 'sign up' or make any special arrangements to provide and charge for covered services. All that is necessary is that he be legally authorized to practice medicine or osteopathy in his state.” Today, for a medical provider to be allowed to bill Medicare, it must be “deemed” by CMS. Deemed status means they have been certified a having met the conditions of coverage and/or participation to be allowed to receive funding from the Medicare program.

Routine services, including annual physicals, did not get covered by Medicare in 1966 (Medicare only began covering routine exams as a result of the ACA less than 10 years ago, with a one-time “Welcome to Medicare” exam allowed to be covered only a few years prior to that). Only medically necessary treatment was what you could get from a physician back in ’66. It was the same with immunizations, something that, again, only got put onto the “allowed” side of the handbook after the ACA was passed. 

Some other practitioners were also excluded from coverage back then, including chiropractors (now covered for some conditions), naturopaths (still not covered), chiropodists (had to look that one up – it is a podiatrist, I think, and they’re covered for many services today), optometrists (limited coverage today – I know of very few that are deemed) and Christian Science practitioners (technically, they can be covered today, but I had a hard time nailing down specifics when I went to look it up; it is nowhere in the current Medicare handbook, and I’ve not run into that issue yet).

Medical equipment and lab tests appear relatively similar to what they are today. X-rays, oxygen equipment, wheelchairs, replacement limbs, chemo, etc., are all covered pretty much the same way in 2019 as they were back then. What’s excluded is also very similar: hearing aids, dentures, eyeglasses (although today Medicare will cover one set after cataract surgery) and patent medicines (those aren’t exactly OTC, but OTC drugs would be the modern equivalent). The one thing on the original list that made it from the not covered list to covered is orthopedic shoes.

Home health services gets its own page in the first book. It was a medical benefit back then (today it can share services with both A & B of Medicare, depending on circumstance). Medicare covered up to 100 visits in ’66 (no capped limit today in the handbook – the 100-day limit moved to skilled nursing care and was shifted to Part A). The list of wills and will nots are mostly similar to today’s home healthcare coverage (although co-insurance may differ; back then it was the 80/20, today it is all over the map up to 100% for certain services under the right conditions). They cover rehabilitative therapy, supplies and part-time nursing care. And they would not cover full-time nurses, prescription drugs, comfort and housekeeping, and food prep and delivery. 1966 was several years before the Activities of Daily Living were established; this would be clarified greatly in future years.

Those are the high points of Medicare’s medical insurance benefits. How Medicare’s medical insurance benefits came into being are a really fascinating story of compromise and political talk with stakeholders that I only recently started learning about, and it is the reason we have Medicare segmented into parts, with the medical side of it being considered the “optional” part of Medicare. With the medical insurance part of Medicare, you could see any licensed doctor and get the necessary care you needed for the first time in American history and the patient would only have a small bill to pay after the deductible. You even got some recuperative care covered too -- all for only $3 a month!  But let’s wait until Part III to talk about that.

Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. Cetera is under separate ownership from any other named entity.

10715 SW 104th Street, Miami, Florida 33176 United States

We are registered to sell Securities in the following state(s): Florida

We are licensed to sell Insurance in the following state(s): Florida

Online Privacy Policy | Privacy Promise | Business Continuity | Important Disclosures | Order Routing

Website Design For Financial Services Professionals | Copyright 2019 AdvisorWebsites.com. All rights reserved