Medical Economics reports on the birth of Medicare

Medicare was signed into law in the summer of 1965, and even though it did not go into effect until the following year, Medical Economics began analyzing the program and its impact on primary care physicians right away.

Much of our reporting looked at how the program might affect hospitals and physicians’ relationships with them. That was hardly surprising, given that Medicare’s original goal-and most of the focus among lawmakers and the general public at the time-was on protecting the elderly against financially ruinous hospital bills.

An article in the August 23, 1965 issue of Medical Economics predicted that doctors would come under greater pressure both to hospitalize elderly patients and to discharge them quickly once they had been admitted. Regarding the former, the article quotes a Pennsylvania surgeon, Charles Young: “Now that the over-65s who didn’t have private insurance have come under Medicare, some are bound to want to be hospitalized when they need any sort of treatment.”

The pressure to discharge would come from the utilization committees that hospitals were required to have to receive Medicare funds. The article calls these the “watchdog group of staff doctors appointed to certify that your patient is sick enough to be in the hospital, and to make sure he doesn’t stay any longer than necessary.”

“As a physician, you’ll have to work harder to keep ahead of your utilization review committee,” it warned. “In making hospital rounds, you’ll have fellow physicians checking your patients, your judgment, and in some cases, your work.”

The article predicted that Medicare would accelerate the trend of doctors’ practices becoming “hospital-oriented,” because, increasingly, that’s where elderly patients would be. It quotes an executive at a suburban Chicago hospital: “By and large, medicine today is not a home practice, it’s an office-hospital practice. And hospitals eventually will have to provide space and facilities for doctors to get a better job done.”

NEXT: Medicare's possible impact on doctors' practices

Some of our coverage also looked at Medicare’s possible impact on doctors’ practices. The August 23 article warned, for example, of more visits from elderly hypochondriacs and from “bargain hunters,” such as the hypothetical “Mr. D” who has “read through the Medicare act and noted all that it entitles him to-and he wants it all because it’s available and doesn’t cost him much.”

An article from earlier that summer addressed the question of whether doctors should participate in Medicare at all. The article reported that that summer’s American Medical Association meeting included-echoing today’s Tea Party movement-“emotion-charged speeches larded with references to the Boston Tea Party, Bunker Hill, the muskets of the American Revolution and other symbols of resistance and rebellion.”

Opponents of Medicare urged physicians not to sign any Medicare forms, including those required for admitting a Medicare beneficiary to the hospital. But supporters countered that hospitals might then not admit the patient, because they would not get paid for doing so.

Moreover, supporters said, the only way nonparticipation could be effective would be if every doctor in a community participated-something that even die-hard Medicare opponents admitted was highly unlikely. And a medical society or other group trying to organize nonparticipation might find itself subjected to a federal anti-trust suit for restraint of trade.

“With very few exceptions, doctors want to be law-abiding citizens,” Irvin E. Hendryson, MD, an AMA trustee was quoted as saying. “If all else fails and conditions get to the point of being really destructive of good care, we’ll have to consider what to do about it.”

On the subject of payments to physicians, predictions regarding Medicare’s impact proved largely accurate. The legislation said that physician reimbursement would be set according to “reasonable” and “prevailing” fees at the time. But Charles Letourneau, MD, a hospital consultant and president of the American College of Legal Medicine foresaw that the ambiguities surrounding those terms would lead to government-set fees.

Going even further, an executive with a commercial insurance provider said, “The basis of paying physicians for the care of those 65 and over will undoubtedly exert a strong influence on charges for care of those under 65”-a prediction that has also proven on target.

Less accurate was the prediction that Medicare would lead to the revival of house calls, which even then were disappearing. The reasoning was that Medicare included coverage for home care, provided that the patient was under the care of a physician, and thus “more doctors will be looking after more patients in their homes.

“The trend is apt to be gradual, but at some time in the future, doctors may find they’ve gone full circle-from the home to the hospital and back to the home again.” Clearly, that time has not yet arrived.