Social Security Amendments of 1965

Legislation

By: United States Congress

Date: 1965

Source: Our Documents. "Social Security Act Amendments (1965)." <http://ourdocuments.gov/> (accessed May 29, 2006).

About the Author: The United States Congress is the primary law-making branch of the Federal government.

INTRODUCTION

For the first hundred years of the United States' existence, financial security in old age was generally provided by one's children. This model of elder care offered numerous advantages, including simplicity, cost-effectiveness, and an awareness of the quality of care being provided.

As the nineteenth century drew to a close, demographic changes steadily eroded this plan's effectiveness. Industrialization concentrated most of the nation's economic growth in cities; from 1890 to 1940 the proportion of Americans living in urban areas doubled to more than fifty percent. Workers migrating from farms to cities frequently left their parents behind, interrupting the extended family life that predominated in rural areas.

Scientific advances also brought changes. As health care, nutrition, and sanitation improved, life expectancies climbed rapidly, rising by a full decade between 1900 and 1930, thereby increasing the senior population. These changes created a nation with more elderly citizens, along with questions of how to care for them.

While these demographic trends converged, America tumbled into the worst economic collapse of its history, the Great Depression. As the stock market plummeted and thousands of banks failed, the gross national product contracted by more than half. Wages paid to all workers dropped by forty percent and millions of men found themselves jobless. With no safety net to catch them, elderly Americans were particularly susceptible to impoverishment.

As the Depression deepened, Americans began to contemplate previously unthinkable relief measures, including some form of government plan to ensure financial security. In 1934, with economic recovery nowhere in sight, President Franklin D. Roosevelt announced a plan to provide economic security for senior citizens. Noting the demographic changes that had occurred, he framed his proposal simply as a new approach to the traditional values that made America great. The Social Security Act became law the following year.

Social Security's two major provisions targeted senior citizens. Title I provided financial support to state programs for the elderly, while Title II created a system under which workers made contributions throughout their careers, then received a lump sum payment following retirement. Through the years, the Social Security System was amended and expanded to provide additional benefits, including survivor benefits for deceased workers' families and increased benefit amounts for all participants. Beginning in 1940, the system began making monthly payments to retirees, and the first monthly check of $22.54 was issued.

The largest single change to Social Security occurred in 1965 with the creation of the Medicare program. Targeted specifically at health-care costs, Medicare was made available to all senior citizens and became a key element of President Johnson's sweeping War on Poverty and Great Society initiatives.

PRIMARY SOURCE

AN ACT

To provide a hospital insurance program for the aged under the Social Security Act with a supplementary medical benefits program and an extended program of medical assistance, to increase benefits under the Old-Age, Survivors, and Disability Insurance System, to improve the Federal-State public assistance programs, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act, with the following table of contents, may be cited as the "Social Security Amendments of 1965." …

Title I—Health Insurance for the Aged and Medical Assistance

short title

This title may be cited as the "Health Insurance for the Aged Act."

Part l—Health Insurance benefits for the Aged

Entitlement to Hospital Insurance Benefits

SEC. 101. Title II of the Social Security Act is amended by adding at the end thereof the following new section:

"Entitlement to Hospital Insurance Benefits

"SEC. 226. (a) Every individual who—

"(1) has attained the age of 65, and

"(2) is entitled to monthly insurance benefits under section 202 or is a qualified railroad retirement beneficiary, shall be entitled to hospital insurance benefits under part A of title XVIII for each month for which he meets the condition specified in paragraph (2), beginning with the first month after June 1966 for which he meets the conditions specified in paragraphs (1) and (2).

"(b) For purposes of subsection (a)—

"(1) entitlement of an individual to hospital insurance benefits for a month shall consist of entitlement to have payment made under, and subject to the limitations in, part A of title XVIII on his behalf for inpatient hospital services, post-hospital extended care services, post-hospital home health services, and outpatient hospital diagnostic services (as such terms are defined in part C of title XVIII) furnished him in the United States (or outside the United States in the case of inpatient hospital services furnished under the conditions described in section 1814(f)) during such months except that (A) no such payment may be made for post-hospital extended care services furnished before January 1967, and (B) no such payment may be made for post-hospital extended care services or post-hospital home health services unless the discharge from the hospital required to qualify such services for payment under part A of title XVIII occurred after June 30, 1966, or on or after the first day of the month in which he attains age 65, whichever is later; and

"(2) an individual shall be deemed entitled to monthly insurance benefits under section 202, or to be a qualified railroad retirement beneficiary, for the month in which he died if he would have been entitled to such benefits, or would have been a qualified railroad retirement beneficiary, for such month had he died in the next month.

SIGNIFICANCE

The idea of federally funded health insurance did not originate with President Johnson. The concept was first proposed by President Harry Truman, who in 1945 asked Congress to create a national health insurance program. Twenty years of debate followed, as supporters and opponents wrangled over the form such a plan should take.

Today, Medicare, the primary medical insurer for senior citizens, offers multiple benefits. Medicare Part A covers hospitalization and is provided to all Social Security participants. Medicare Part B covers doctor services and some other costs not covered by Part A. Part B is optional, and participants pay both a monthly premium and an annual deductible. In 2006, Medicare added prescription drug coverage, known as Part D, to help seniors pay rising medication costs.

As of 2006, approximately forty million Americans participated in Medicare. Just as demographic trends played a significant role in the birth of the Social Security System, today they threaten to bankrupt it. A 1998 bipartisan report on the programs's future found that the following fifty years would see the number of recipients double, while the number of active workers paying into the system remained roughly constant. The report projected that the Medicare system would be bankrupt by 2010.

Medicare's future appears murky. Despite grim projections pointing to approaching insolvency, however, lawmakers are reluctant to take meaningful action. Changes such as reducing benefits, increasing premiums, restricting coverage of some procedures, or raising the eligibility age are politically unpopular with voters. Some minor changes have been made to shore up Medicare. However, as of 2006, Medicare's insolvency date is projected to be somewhere around 2019.

FURTHER RESOURCES

Books

Cassel, Christine. Medicare Matters: What Geriatric Medicine Can Teach American Health Care. Berkeley, California: University of California Press, 2005.

Matthews, Joseph L., and Dorothy Matthews Berman. Social Security, Medicare & Government Pensions: Get the Most of Your Retirement and Medical Benefits. Berkeley, California: NOLO Press, 2006.

Oberlander, Jonathan. The Political Life of Medicare. Chicago: University of Chicago Press, 2003.

Periodicals

Adams, Rebecca. "Looming Medicare Fixes Make a Bitter Prescription." CQ Weekly. 64 (2006):1209–1210.

Gleckman, Howard. "Medicare Surprise." Business Week. 3982 (2006): 38.

Marmor, Theodore R., and Gary J. McKissick. "Medicare's Future: Fact, Fiction and Folly." American Journal of Law & Medicine. 26 (2000): 225–253.

Web sites

Heritage Foundation. "The Cost of Medicare: What the Future Holds." December 15, 2003 <http://www. heritage.org/Research/HealthCare/HL815.cfm> (accessed May 29, 2006).

Progressive Policy Institute. "An 'ABC' Proposal to Modernize Medicare." February 14, 2003 <http://www.ppionline. org/> (accessed May 29, 2006).

Social Security and Medicare Boards of Trustees. "Status of the Social Security and Medicare Programs." 2006 <http://www.ssa.gov/OACT/TRSUM/trsummary.html> (accessed May 29, 2006).