Is the Affordable Care Act the New Medicaid/Medicare?

Wilbur J. Cohen, U.S. Secretary of Health, Education and Welfare under President Lyndon B. Johnson, created the United States Medicare and Medicaid programs in the 1960s.  Inspired by the success New Deal at the end of the Great Depression, Cohen aimed to provide “relief, recovery and reform” to older and low-income Americans who could not afford coverage in the competitive commercial market.

It’s hard to believe President Johnson could have imagined such success for the Medicare and Medicaid programs when he signed them into law in July 1965. At that time, his main objective was simply to provide “the miracle of healing to the old and to the poor.”

While Medicaid is a federally funded program, it is controlled by local governments in each state and county. If one is eligible, based on age and disability, several applications and an evaluation of a person’s income and resource restrictions must be coordinated to determine to what degree Medicaid will to help pay for all medical expenses. Medicare offers many similar services as Medicaid, but it is available only to people over age 65, or younger if they are found to be certified disabled, who have worked and paid into the U.S. Social Security system.

Today, at the 50 year anniversary of the two programs, the nation still relies on that legislation. In fact, the Obama administration continues to make improvements to both platforms, in addition to using them as a basis for the Affordable Care Act, referred to by many as “Obamacare.” Like Medicare and Medicaid, the Affordable Care Act offers a combination of federal and private healthcare coverage. Unlike its predecessors, the program is open to all Americans, rather than just the elderly or those with limited incomes.

First enacted in March 2010, Obamacare’s original provisions led many insurers to forecast a decline in enrollment due to an increase in out-of-pocket expenses. Under pressure from the Obama administration’s Affordable Care Act, however, Congress reduced payments to Medicare Advantage. The legislation stated that beginning in 2014, Medicare Advantage plans could not spend more than 15 percent of Medicare payment on administrative or insurance costs. This could result in a reduction of individual member plan cost by up to $1,000 without reduction of benefits. Since this legislation was passed, member enrollment unexpectedly increased from 11 million in 2010 to 16.6 million in 2015.

Today, under Obamacare, more than half of the states’ governments have expanded Medicaid eligibility. Overall health insurance enrollment has soared thanks to government subsidies to private insurers who are now providing and coordinating almost 80 percent of new beneficiaries. Additionally, over 30 percent of the 55 million Medicare beneficiaries and more than half the 66 million Medicaid beneficiaries are now in privatized health care plans. White House officials are hopeful that Obama’s healthcare program will one day garner the standing and popularity of Medicare and Medicaid.


Study Finds Rise in Medication Use by Those Newly Covered by Medicaid

According to a report by the IMS Institute for Healthcare Informatics, people newly covered by Medicaid in 2014 have caused a significant increase in prescription drug use. For instance, states that have expanded Medicaid programs saw a 25.4 percent increase in prescriptions over the past year. In states that chose not to expand their Medicaid programs, prescription drug use only increased by 2.8 percent.

The report sheds light on how consumers used their insurance in 2014, after millions of Americans gained coverage from the Affordable Care Act. This health care law expanded Medicaid eligibility in many states and set up marketplaces for consumers to shop for insurance. To learn more about U.S. medicine use and spending in 2014, click here.