Forty-five years ago today, President Lyndon Johnson signed the Social Security Act of 1965, landmark legislation that created the health programs Medicare and Medicaid. Intended to extend health insurance to elderly people, children, people with disabilities and people eligible for income assistance, Medicare and Medicaid have become two essential pillars that support not only our health system but also our economy, with a direct economic impact that adds billions to Maine’s economy.
The hospitals, clinics, doctors and nurses, labs and technicians, pharmacies and drug makers, research institutions and medical technology developers, etc., that constitute our health care system are supported by several pillars of funding: private health insurance purchased by employers and individuals, out-of-pocket expenditures by citizens, grants from government and private foundations, and our nation’s major public health programs, Medicaid and Medicare.
Of the $2.1 trillion spent on health care in 2007, 37 percent came from Medicaid and Medicare alone. Without these essential pillars, the system we have established would simply collapse.
Medicare and Medicaid also function to control costs within the system.
People who have health insurance are more healthy because they are able to access health care in a way that helps them prevent illness or detect it earlier. Addressing a health problem earlier tends to be more effective and less costly. Not surprisingly then, people who don’t have health insurance (perhaps from the loss of work) tend not to access preventive care and are often unable to detect illness until later stages, when treatment is more complicated and more expensive.
Even if you are fortunate enough to have health insurance, it has an impact on you when others do not. When a person who doesn’t have health insurance becomes seriously ill and accesses the health system, it’s usually too expensive for them to pay for their care. But the costs of their care don’t just disappear — health care providers are forced to pass the costs on to other payers in the form of incrementally higher charges.
Without Medicaid and Medicare providing health insurance to approximately 90 million Americans, their health would suffer, their treatment would be more expensive, and few would be able to pay for the full cost of their care. Those costs would shift principally to private health insurance premiums paid by employers and individuals. In short, if Medicaid and Medicare didn’t exist, we’d all demand that our elected leaders create them.
These programs also have a vital function in Maine’s economy and in Maine communities. In Maine alone, more than 500,000 people have access to health insurance through Medicaid or Medicare.
While Medicare is entirely federally funded, Medicaid (known here as MaineCare) is supported with both state and federal funds. In recent years, for every $1 the state spends on Medicaid, it receives $3 or more in federal matching funds (this high matching rate is thanks to last year’s federal fiscal stimulus bill — unanimously supported by Maine’s bipartisan federal delegation: Sens. Olympia Snowe and Susan Collins; Reps. Mike Michaud and Chellie Pingree.) Particularly in difficult times like these, an investment of limited state resources that delivers such a big economic return is an essential element of keeping Maine people working and easing the effects of the recession.
Not to be overlooked is how these health programs meet the needs of our families and our communities. Imagine how the absence of these health programs would affect the demands on all of us to care for an aging parent, our ability to afford the cost of our own care and that of our children.
Because of Medicaid and Medicare:
Fewer families face economic hardship; lack of health insurance is a major factor in personal bankruptcy declarations.
Preventable illnesses place fewer burdens on families, care networks and community resources.
In Maine alone, 134,000 children are healthier and more prepared to learn; children account for 59 percent of the people who receive health insurance through Medicaid.
Prevention and early detection of illness are our best tools to address all the negative effects of illness. Access to health insurance under Medicaid and Medicare is essential to our system of prevention and early detection.
On this 45th anniversary of their creation, it’s important that we recognize Medicaid and Medicare for what they truly are and have been for almost half a century: solutions to our growing health care problems, built on the foundation of the common good and shared prosperity.
Ben Dudley is executive director of Engage Maine.