Persuasive/argumentative Paper 1500-1800 Medicare Is an Entitlement

Many lessons can be learned from the events of the recent financial crisis. One remarkable insight refers to the liability of the federal government to the well-being of the nation, a commitment that goes far beyond the classical role of the government in the American legislative and economic tradition: just like a doctor, the government can and should regulate the nation's health; its involvement is not always necessary, but becomes irreplaceable on a cloudy day.

This paper does not aim to describe Medicare as an insurance program or to review its financial or medical features. Instead, I will analyze the main effects of program on its recipients and the general population. Furthermore, I will argue that despite its obvious drawbacks, the contemporary Medicare program is still the best solution for providing medical services under the framework of the US Social Security and has a unique place in the social contract between the federal government and its citizens.

The establishment of Medicare in 1965 has revolutionized the liability of the federal government to its citizens. The program is much more than a public health insurance policy; it is a nation-wide social contract, which aims to protect the American society's most vulnerable members - its elderly, sick, and disabled persons - whose entitlement to the program is based merely on their physical state.

An Overview on Medicare

Medicare is an entitlement program designed to serve three groups of US citizens: elderly above 65 years of age, disabled persons entitled for Social Security benefits and chronic patients with end stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS).

In short, the coverage is based on two programs, namely the hospital insurance (HI, part A) and the supplementary medical insurance (SMI, part B). Part A is mandatory and covers hospitalization services for a time limit of 90 days. Outpatient treatment and diagnosis services are covered in the voluntary Part B, for which most of Medicare patients choose to pay a premium.

The main source of financing of the program, in addition to premiums paid for Part B and other copayments and deductibles, is a payroll tax, a part of the Social Security tax that is paid by both employers and employees (1.45% each).

Medicare vs. Medicaid

Medicare is a unique national medical coverage scheme. As discussed below, mainly because its eligibility thresholds are determined only by age and/or severe medical conditions. This rule distinguish Medicare from other public medical insurance policies such as the European model, which has similar financing sources (namely payroll taxes), but covers all the country's residents.

In addition, Medicare should not be confused with Medicaid, its "twin" healthcare coverage program, whose objectives and implementation methods are essentially different from those of Medicare. Patel & Rushefsky (2006) shed light on some of the main differences between the two programs:

First, although the two programs were adopted at the same time, Medicaid was designed to pay for services not covered by Medicare (e.g. nursing home care) and to expand the coverage for indigent Medicare patients as well as for poor citizens, which are not eligible for Medicare coverage.

Second, due to the different target populations, Medicare is perceived as contributory in nature (i.e. a part of Social Security), whereas Medicaid has an image of a welfare program. Thus, Medicare receives much more support from the public.

Third, Medicare is financed and regulated solely by the federal government and has a nation-wide, uniform coverage program. In contrast, Medicaid receives funds from both the federal and state government; it gives the state freedom to make decisions on coverage and eligibility, bringing about inequalities among and within states. In addition, very few physicians participate in Medicaid due to its considerably lower reimbursement compared to the Medicare program.

Medicare as Social Contract

Medicare is a social contract between the federal government and the citizens, aiming to pay for the health needs of vulnerable groups that cannot be met by the private healthcare system (Linn, 2007). As suggested by Skocpol, the underlying concept of Medicare's social contract is a "national commitment to fund a consistent set of health services with maximum choice of providers." (1998)

The second party to this agreement, mainly the public, shares the costs and constraints of the program. To illustrate and simplify this point it can be argued that the public's contribution to the program is twofold:

First and probably most obvious, taxpayers' money finances the program. We can safely assume that most (but not all) taxpayers, being at working age and physically fit to work, are not eligible for Medicare; hence, an interesting point here is that the contract is not only between the government and the public, but also among the relatively weak and strong groups of Americans. In other words, Medicare should not be seen as an insurance policy or as a savings account. It is rather a dynamic system of mutual benefits