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50 Years Later: How Medicare Changed Our Health System

President Lyndon B. Johnson signing Medicare into law. Seated with him is President Harry S. Truman.

In 1966, Medicare brought million of senior citizens health coverage as the first federal expansion of health insurance protection in the United States. The expansion became the largest of its kind in the country’s history.

But with the passage of 50 years since Medicare’s implementation — which now covers almost 50 million people — it’s easy to lose sight of what marked changes Medicare made to the medical landscape.

David Barton Smith, PhD, research professor in the Dornsife School of Public Health, wrote a book that examined the link between Medicare and the civil rights movement called “The Power to Heal: Civil Rights, Medicare and the Struggle to Transform America’ Health System,” which will be published July 1. Below, he points out the ways in which Medicare was an agent of change for the way people now get medical care.

By the 1960s, racial segregation in hospitals — as in other areas of American life — seemed intractable. That included separate hospitals, floors and treatment for black people, rigorously enforced by Jim Crow laws in the South and by more informal arrangements in many areas of the North.

“The tax dollars of blacks as well as whites flowed from northern states to the southern Jim Crow states,” Smith explained. “The Jim Crow states got $1.50 in program benefits for every 50 cents in taxes and the northern states got 50 cents in benefits for every $1.50 in taxes.”

Civil rights groups, outraged that federal money was fueling Jim Crow practices, fought against such practices.

Title VI of the Civil Rights Act in 1964 prohibited the use of federal funds to subsidize discrimination (this included discrimination in hospitals, schools, public works projects and social programs). However, no funding was provided for investigations of discrimination or the enforcement of integration. Additionally, fines couldn’t really be imposed and there was no mechanism for pulling money back from hospitals once they were allocated, according to Smith.

“The problem was that Title VI had no teeth and seemed to be an unenforceable charade,” he said.

The new Medicare program, however, offered a critical first test of Title VI as a tool to end discrimination. Hospitals could “choose” to participate in the program but that participation would require that they operate as fully integrated facilities. Without this “choice,” there would be no federal money. And it worked.

“Money, as the Medicare program proved, was more important than race when it came to these hospitals,” Smith said. “The nation’s hospitals were transformed almost overnight from our most racially and economically segregated private institutions into our most integrated ones.”

Patients could not be assigned rooms by race, lest the hospitals lose their funding. But, if there were only one bed and one bathroom per room, the problem posed by the restriction of assigning patients to rooms by race would disappear.

“For better or worse, hospitals were, over time, physically transformed,” Smith explained. “The Medicare dollars helped convert hospitals, particularly in racially tense communities, into facilities with private room accommodations and private bathrooms as well. It was an expensive transformation, and we all pay for that greater degree of privacy and racial insulation with our tax dollars and health insurance premiums.”

The spread of private rooms contributed to the United States having the highest per-person hospital costs in the world, even though the nation’s hospitals have fewer beds than most developed countries.

Before Medicare, the idea that everyone should receive the same level of care didn’t exist.

“The idea that people would be excluded from hospitals or medical care because of income, insurance status or race was taken for granted,” Smith said. “Care was provided directly in relation to one’s income, insurance and social status.”

Care for disadvantaged groups often ended up not being to the level that was needed. But with the thrust of the civil rights movement and the champions of Medicare, the acceptance of that standard began to change, according to Smith.

“‘Differences’ in health and access to care by income and race, something that was just accepted as the way things were, became ‘disparities’ — something that had to be corrected” Smith said.

Media interested in speaking with Smith should contact Frank Otto at 215.571.4244 or fmo26@drexel.edu.

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