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Medicare Turns Thirty

Excerpts from Senate Finance Committee Testimony by Karen Davis, Commonwealth Fund President

Karen Davis, president of The Commonwealth Fund, joins Bruce C. Vladeck, Administrator of the Health Care Financing Administration, Department of Health and Human Services; and Gail R. Wilensky, Senior Fellow, Project HOPE, in testifying before the Senate Finance Committee about the Medicare program on Tuesday, February 28 in room SD-215 of the Dirksen Senate Office Building, beginning at 9:30 AM.

Davis' testimony notes that when Medicare was enacted 30 years ago, most elderly were uninsured, having lost their health insurance on retirement. Today, the program covers 37 million older Americans, many of whom have limited financial resources, and serious disabling conditions.

Her testimony concludes that there are few attractive alternatives for reducing Medicare outlays and that any changes must be designed with care to avoid unintended consequences that are harmful either to vulnerable beneficiaries or to the health system that provides accessible, high quality care.

  • More than three-fourths of Medicare beneficiaries have incomes below $25,000.
  • Only 3 percent of Medicare outlays goes to elderly individuals with incomes in excess of $50,000.
  • The wide variation in Medicare outlays "the sickest 10 percent of beneficiaries averaged $28,120 in outlays in 1993, compared to $1,340 for the healthiest 90 percent" provides managed care plans with formidable incentives to enroll only healthier beneficiaries.
  • Medicare contains many elements similar to managed care plans. It sets prospective prices for hospitals and physicians at substantial "discount" to usual charges.
  • The 1993 Kaiser-Commonwealth Fund health insurance survey found that 52 percent of Medicare beneficiaries are very satisfied with their insurance, compared with 44 percent of families covered by employer-provided private coverage.
  • Widespread public support exists for Medicare from both the elderly and non-elderly. A Kaiser Family Foundation/Harvard University voter exit survey in November 1994 found that only 8 percent of voters favored decreasing spending on Medicare.

Publication Details



Medicare Turns Thirty, Testimony before the Senate Finance Committee, Karen Davis, The Commonwealth Fund, February 28, 1995