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Health Policy and Legislation in Medicare

by | Mar 26

In November 2003, the U.S. congress passed a controversial healthpolicybill that president George W. Bush signed into law. The new legislation makes the most far-reaching changes to medicare since the program was created in 1965. Please address the following questions:

Why were changes to medicare deemed necessary?

What are the main provisions of the new legislation? Do you think they accomplish the desired goals?

Who was involved in setting the agenda for this policy change?

Discuss the roles and interest of specific agenda setters and their influences on the development of the legislation. Why was the legislation controversial?

Discuss the claims of the law’s supporters and detractors. Whowill benefit from the changes? Do you think having electronically stored data(such as costs and access to individual patient files) played a role in the decision-making process?


After winning presidency with campaign promises of reforming the health care system, President Clinton appointed his wife Hillary to head a task force to formulate a plan for reform. The proposal mandated employers to provide health insurance and pay 80% of the premium costs. It guaranteed continued health insurance to individuals who lost employment or changed employment. A major linchpin of this proposal was regulation of the health insurance industry. States were required to identify one or more regional alliances to serve as purchasing agents for health care insurance. Workers could choose between low cost (HMO) type plans or fee for service plans. The benefits offered would be standardized. All workers would be pooled without consideration of age, gender or health status. The percentage of employee compensation which could be spent on health care insurance was limited. Although the plan attempted to build on the existing employment-based structure, it ultimately was defeated because of an opposition which included some insurers and provider organizations and most Republicans. Perhaps due to its complexity, the plan drew little support in the face of such opposition.


Under this plan, individuals and their employers could make regular, tax-free deposits to MSAs, which would be the property of the individual. They could withdraw money without penalty only to pay medical expenses or health insurance premiums. Money they did not spend would grow with interest, and they could use it for medical expenses after retirement, roll it over into an IRA or pension plan or leave it as part of their estate. Some states have enacted legislation which permit such accounts. Proponents argue that such a proposal would save billions of dollars and restore the right of choice of a health care provider. President Bush supported this concept during the recent campaign. Opponents suggest that this would be an attractive option to younger and healthy workers but by removing these workers from the insurance pool, the resulting increase in insurance rates would threaten to destroy any type of insurance indemnity system. A limited version of the medical savings account idea was included as part of the Medicare reform package passed by Congress in November 2003.


– Tax credits for the purchase of health insurance
Those who do not receive employer financed health insurance are disadvantaged because the cost of individual health insurance is high and because they must purchase such coverage from income that has already been taxed. In the recent campaign, President Bush proposed a tax credit of $2000 for the purchase of health insurance.

– Expansion of the State-Children Health Insurance Program (S-CHIP) to include adults
The State Children’s Health Insurance Program (S-CHIP) was enacted in 1997 with bipartisan support and enables states to insure children from working families with incomes too high to qualify for Medicaid but too low to afford private health insurance through separate state programs, Medicaid expansions, or a combination of both. Each state with an approved plan receives enhanced Federal matching payments for its S-CHIP expenditures up to a fixed state “allotment”. Many Democrats, including Candidate Gore in the recent campaign, advocate allowing parents to also participate in the program thereby providing government-funded health insurance to many who are presently uninsured.


Prescription drugs are the fastest-growing part of the nation’s health care expense. Pharmacy bills have become a significant item in the budget of most families, even those with medical insurance. For many of the 37% of Americans without prescription coverage, the problem is critical. The problem is most acute for seniors who constitute 12% of …



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