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The History and Evolution of CHIP and the Medicare Program

When Lyndon B. Johnson took the presidency in 1964, the Medicare program was finally established as a system to provide healthcare coverage to elderly citizens around the nation.

By Vera Gruessner

- When the medical industry including diagnostics and treatment became more complex and sophisticated in the early 1900s, everyday citizens began to see a surge in the costs for healthcare services. With more complicated procedures, treatment for most medical conditions became more expensive. This led many to propose healthcare coverage like the creation of the Medicare Program or the Children’s Health Insurance Program (CHIP).

Medicare’s History

Today, even a person who is admitted to the hospital for several days, the costs to care for them could delve into thousands of dollars. The Medicare program grew out of a sincere need for medical coverage among the elderly and sick including the financial impact of disease and high medical costs.

More complex healthcare services led to a jump in cost and many families in the early 1900s could be financially ruined if a parent or child got sick. In the 1920s, European nations began to develop government-run medical coverage programs, but the United States strayed from the pack and did not establish a federal health insurance program at the time.

In 1906, the American Association of Labor Legislation (AALL) pursued the development of state-run health coverage programs, but was ultimately unsuccessful. There were legislative actions proposed, but were defeated in the first half of the twentieth century.

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In the 1940s, under Franklin Delano Roosevelt’s administration, the Wagner-Murray-Dingell bill was proposed to support a national health insurance plan to be funded through the Social Security department. In 1944, Roosevelt showed support of the Wagner-Murray-Dingell bill, but his death in 1945 put a stop to the passage of the legislation.

“There was little progress on national health insurance under President Eisenhower, who opposed the idea,” the Center for Medicare Advocacy stated in a paper.

“Even so, the Eisenhower Administration could not ignore the debate about the need for national healthcare insurance and, accordingly, took limited action to try to increase private insurance coverage of low-income groups. These efforts failed, largely because critics argued that they would not improve the situation of low-income groups, as the proposals did not provide sufficient incentives to private insurance companies to insure low-income people.”

When Lyndon B. Johnson took the presidency in 1964, the Medicare program was finally established as a system to provide healthcare coverage to elderly citizens around the nation. Both Johnson’s presidency and a large democratic representation in Congress led to the passage of Medicare legislation.

Since the creation of the Medicare program, it has undergone several legislative changes including the Balanced Budget Act of 1997 and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. Medicare will need to continue renovations in order to address rising healthcare costs around the nation.

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For example, the Medicare program would benefit from being allowed the right to negotiate prescription drug pricing with pharmaceuticals under the Part D system. Currently, the Centers for Medicare & Medicaid Services Innovation Center is working to create new models of care and payment reforms in order to minimize the hikes in medical spending.

CHIP’s evolution over nearly 20 years

In 1997, the Children’s Health Insurance Program (CHIP) was created to offer children in low-income families who don’t qualify for Medicaid the right to medical coverage. The Henry J. Kaiser Family Foundation stated that both the Affordable Care Act and Congress’s reauthorization of federal funding for CHIP in 2009 helped extend the program further.

Between CHIP and Medicaid coverage, more than one out of three children are given healthcare coverage throughout the United States. The CHIP program has given essentially a “safety-net” for children of low-income families especially during tougher economic times, the brief from the Kaiser Family Foundation explained.

“Children with Medicaid and CHIP have much better access to primary and preventive care and fewer unmet health needs than uninsured children. They also have much better access to specialist and dental care,” the Kaiser Family Foundation brief concluded.

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“Further, children covered by Medicaid and CHIP fare as well as privately insured children on measures of primary and preventive care access. However, some research finds disparities between publicly and privately insured children in their access to specialist and dental care.”

“Also, Medicaid and CHIP children visit the emergency department more than other children, which may be due, in part, to barriers to access to timely primary care, such as lack of available after-hours care. Most physicians who care for children participate in Medicaid and CHIP, but dentist participation is low.”

When CHIP was first signed into law in 1997, the number of uninsured children in the country fell from 14 percent to just 7 percent. The program initially offered states federal funding and flexibility in designing their state-based coverage system in a comparable way to Medicaid, according to the Medicaid and CHIP Payment and Access Commission (MACPAC).

By the year 2000, every state and the District of Columbia had enrolled children in the state-based CHIP coverage plans. While in 1997, 10 million children around the country lacked health insurance, by 2012, less than five million offspring were uninsured due to the provisions of CHIP.

The latest important action taken to support funding for children’s healthcare coverage took place on April 16, 2015 when President Barack Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015, the National Conference of State Legislatures recounted.

“The legislation extends the Children's Health Insurance Program for two years, as well as express lane eligibility, outreach and enrollment, and other programs, such as the Childhood Obesity Demonstration Project,” the brief stated.

“In addition to renewing CHIP, the law also renews funding for the Maternal, Infant, and Early Childhood Home Visiting Program, among others.”


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