What Has Been the Impact of Medicare on the Healthcare System?

Impacts of Medicare on the health care system include more affordable health care insurance for the elderly, the development of new health care research and the consolidation of health care payment systems. It has also brought about an increase in hospital expenditures and an adjustment in the focus of hospital services and treatment.

Before an amendment to Social Security in 1965 initiated the Medicare program, less than half of elderly Americans had health insurance, but due to Medicare, more than 99 percent of the elderly have health insurance as of 2015. Although no definitive evidence exists that Medicare lowers the mortality rate, statistics show that it reduces out-of-pocket medical costs for the elderly by about 40 percent. Medicare has also altered medical payment methods; instead of paying separately for diverse services, Medicare bundles multiple services together into single payments. This method has also been adopted by private health plans when paying for hospital services. The large amounts of money Medicare has infused into the health system has spurred new research into treatment technology.

The emphasis of Medicare on outpatient treatment rather than inpatient hospital treatment has brought about changes in the hospital system. Hospitals have consolidated into larger, more coordinated health care facilities. The overall number of hospital beds has declined. Average hospital stays tend to be shorter. For-profit health care facilities have increased, while nonprofit facilities have decreased.