Medicaid

Established in 1965 as an amendment to the Social Security Act of 1935, Medicaid offered financial assistance for medical bills for the poor of America.

In the late 1950s, the American government began to grapple with the problems facing the poor in securing medical insurance. Large numbers of the poor population of the United States had no insurance coverage, which contributed to the declining health of the lower class. Congress first addressed this issue with the Kerr-Mills Act of 1960, which provided government financial assistance to low-income families and the elderly.

The Great Society of President Lyndon B. Johnson in the 1960s sought to do something for everyone. Continuing the commitment of the New Deal for government to help those who could not help themselves, it provided medical care to the poor for the first time. Amendments to the Social Security Act of 1935 became law in 1965. The two main components of this reform were Medicaid and Medicare, financial medical assistance for the elderly, both of which were to be administered through the U. S. Department of Health, Education, and Welfare. These programs were intended to extend health care insurance to the poor and elderly who, for the most part, did not possess any form of health insurance.

Under the Medicaid program, the federal government would match state funds for certain required programs such as “hospital and physicians’ services, care in a skilled nursing facility, home health service, family planning, and early diagnosis and treatment of illnesses.” Some optional forms of coverage included prescription drugs, eyeglasses, and care in intermediate-care facilities, which states could provide at their own discretion. Those eligible for these programs were categorized as “low-income people that are aged, blind, disabled, pregnant, or members of families with dependent children, and certain other children.”

Medicaid did not enjoy strong support after its implementation. Criticism immediately focused on the way individual states ran their programs. Since each state determined what constituted the income level necessary to receive Medicaid, discrepancies among the individual states occurred. Some states established poverty lines that included a larger number of the poor than other states.

Also, each state was able to determine what extra services it would apply to qualifiers of Medicaid. Some states offered many of the extra options while other states offered none.

Medicaid also received criticism due to the sizable cost of the funding for the program. Analysts estimated that the annual cost would amount to a little over $1.3 billion in 1965. By 1968, however, the yearly government funding for Medicaid had more than doubled, and the funds needed to support the program grew in each succeeding year. The government had not anticipated correctly the number of people who would be eligible for this program and the benefits that it provided.

Since the implementation of Medicaid in 1965, there have been numerous amendments to the original legislation. Medicaid has become a hot political topic, due to the amount of funding it now requires. Many physicians do not agree with the way that Medicaid covers their patients, and some have tried to avoid patients who use this form of coverage.

By initiating Medicaid, the federal government, for the first time, began to take a serious look at the availability of health care and insurance for the underprivileged of American society. The program resulted in an increase in the quality and amount of care that low-income people received, making it a revolutionary piece of legislation.

Further reading: John Holahan, Financing Health Care for the Poor (Lexington, Mass.: Lexington Books, 1975).

—Jennifer Howell