Wednesday marks the 60th anniversary of Medicare. On July 30, 1965, President Lyndon Johnson signed the Social Security Act (HR 6675) at the Harry S. Truman Presidential Library in Independence, MO issuing the first Medicare card to “Give ‘em hell Harry” who had proposed universal coverage in 1945 against fierce opposition from the American Medical Association who labelled it socialized medicine.
The program began in January 1966 enrolling 19 million in its Part A (hospital) and Part B (ambulatory, physicians) programs. The country was divided over the contentious war in Vietnam and civil rights at home. In the six decades since, the Medicare program has expanded to become the industry’s most important program and society’s most valued safety net. Here’s why:
Payments to hospitals, doctors and other services are based on what Medicare decides it should pay, and the regulations by which it is earned. Payments to insurers, employers and individual insurance payments are calibrated to what Medicare allows. Its calculus around costs is the basis for the majority of funds that flow in the U.S. system. It is literally the baseline against which rates are set and agreements with payers and providers are negotiated. It is literally the payer against which every dollar in healthcare is linked directly or indirectly.
And to America’s seniors it is financial security earned through years of work, readily accessible and never compromised.
Medicare represents 32% of total healthcare spending plus half of funds (8% of total spending) sent to states for their Medicaid programs. In the last 30 years, it’s become the federal governments’ Petrie dish for cost containment projects i.e. alternative payment models, primary care gatekeeping for in managing chronic care, penalties for unnecessary complications and readmissions and, most prominently, private Medicare Advantage plans that now enroll 35 of Medicare’s 68 million enrollees.
Medicare is also political quicksand: seniors are high-propensity voters who want no part of funding cuts, access constraints, closed panels, restrictive formularies and higher co-pays and premiums in their coverage. Lawmakers, economists and health industry leaders know Medicare funding is not sustainable. Thus, Medicaid is a softer-target because issues of access, utilization and funding to be dumped on states to figure out. Thus, the rationale behind the One Big Beautiful Act’s $960 billion cuts.
| 1965 | 2025 | Change | |
| US Population Total (Mil) | 200 | 347 | +74% |
| Total U.S. GDP (Bil) | $742.3 | $ 3,051.0 | +311% |
| National Health Expenditures | $41.6 | $ 5,263.0 | +1243% |
| Health System Spending as % of GDP | 5.7 | 18.0 | +216% |
| % Medicare $$
% Medicaid $$ |
13
12 |
32
16 |
+146%
+33% |
| Life expectancy | 70.2 | 78.4 | +12% |
| Medicare enrollment (Million) | 19 | 68 | +258% |
Unadjusted for inflation
Looking ahead, the future of Medicare is uncertain. The ratio of working age to 65+ population dropped from 7:1 in 1965 to 3:1 today and is projected to shrink to 2:5 to 1 by 2050. That means payroll contributions by companies and employees will be stretched and funding for Medicare will shrink while demand for the system’s services increases.
Its efforts to rein in costs and improve outcomes via pay-for-performance, alternative payment models, value-based purchasing and others have had mixed results: most were designed before the full impact of artificial intelligence was imagined, analytic tools capable of dissecting Big Data were actualized and technologies that enable safe and effective self-diagnostics and treatment mainstreamed.
So, on Medicare’s 60th birthday, its legacy is a mixed bag: it has provided needed health services to three generations of seniors, but its costs and failure to hardwire an appropriate balance between preventive, chronic and acute and long-term care services remain work not completed.
Paul
National Health Expenditure Projections, 2024–33: Despite Insurance Coverage Declines, Health to Grow as Share of GDP June 25, 2025 https://www.healthaffairs.org/doi/10.1377/hlthaff.2025.00545
Quotables
Ashley Thompson, AHA on hospital transparency rule: “We are concerned that the ongoing focus on the machine-readable files, rather than the consumer-friendly shoppable service information, diverts attention away from the price transparency efforts that are most meaningful to patients. We encourage CMS to focus future efforts on the information that will best help patients understand and compare their expected costs prior to care. The outsized focus on machine-readable file data can distract patients from the more intuitive tools that provide individualized, and therefore most accurate, estimates based on their cost-sharing amounts, their progress toward meeting their deductible and other pertinent information such as patient demographics.
Moreover, individual policy improvements rather than a comprehensive review of the numerous and sometimes conflicting price transparency requirements at both the state and federal levels are not in the best interest of patients or employers. We urge CMS to focus future efforts to reform price transparency on streamlining policies to remove complexity and administrative burden. The current landscape of pricing information is challenging for patients and employers to navigate and use effectively, and it adds excessive costs, confusion and workforce burden to the health care system.1,2,3 Addressing the hospital machine-readable files in isolation is misguided; CMS should coordinate and streamline any future changes across all hospital and insurer requirements to create a price transparency environment that is both usable and meaningful to patients and employers.”
AHA Comments on CMS RFI on Hospital Price Transparency Accuracy and Completeness | AHA July 21, 2025
Dr. Murphy on Medicare Advantage in Congressional Hearing July 21: “I applaud you all for doing it right. What I’d like to see are UnitedHealthcare, Humana and Aetna sitting in front of us because they have bastardized the system and they have ruined Medicare Advantage. That’s the outrage that we’re seeing. We have to correct this, and this is a bipartisan issue. We can’t throw away a good program, but we can throw away bad actors.”
The House of Representatives’ Ways & Means Committee convened the “Joint Health and Oversight Subcommittee Hearing on Medicare Advantage: Past Lessons, Present Insights, Future Opportunities.” Medicare Advantage House hearing provokes criticism of program – Modern Healthcare July 22, 2025
Andrews on insurer utilization:” While it is of course possible that certain populations could be consuming more healthcare services while others consume less, we can find no evidence of an increase in utilization of healthcare services nationally. Moreover, we can see that utilization by Medicare fee-for-service beneficiaries has been flat to declining in the last five years for the most resource-intensive and expensive types of healthcare utilization: hospital inpatient, hospital outpatient, skilled nursing, inpatient rehabilitation and home health. The one obvious exception is Part D spending, which resembles the “hockey stick” growth craved by Wall Street and PBM executives, many of whom work for subsidiaries of some of those same health insurers…
Karl Marx said that “religion is the opiate of the masses,” proving that he did not understand Americans, for whom a good deal or, even better, free stuff is the most powerful opiate. No one who can think critically – which excludes far too many health economy stakeholders – should be surprised to find that 20M Americans are savvy enough to sign up for healthcare that is 14x cheaper than the average cell phone bill.
What is surprising is to discover that so many health insurers seem to have, in the words of Juicy J, “messed around and got addicted” to the opiates of “dual enrollees” and premium subsidies for ACA exchange products. As Katy Perry sang in the same song, the question for health insurers and Congress is this: “Are you ready for a perfect storm?”
the return of the death spiral? Trilliant July 24, 2025
Shulkin on incentives and value in health system: “What we have to really understand is that we practice in a system that is filled with many different incentives that aren’t aligned. I think it’s this fragmentation of our health care system and that lack of aligned incentives that sometimes prevent us from doing what we should be doing. The more that people have had a chance to work within these complex health systems, the more they understand that knowing how to change the systems of care and looking at the alignment between the clinical approaches and the financial systems or the reimbursement systems is really the key to determining how fast we can make change in these systems.
My hope for the future is that the provider community, the health plan community, the pharmaceutical community, and government can all begin to understand that if we don’t break some of those silos down and look at this as one true integrated system of health care, we’re never going to really reach the optimal levels of health, wellness, and affordability that we all hope for and strive for. Looking at our experience over the past 30 years, I don’t know too many people who have been in leadership the number of years that I have been who would not say, “Boy, I wish we had been able to move the system quicker and faster and had a bigger impact.” In fact, it’s been much slower than I think many of us had thought it would be, and I hope the next 30 years are very, very different in that regard.
Managed Care Reflections: A Q&A With David J. Shulkin, MD July 7, 2025
Employer Benefits News: health system reform urgency: “Our healthcare system’s misaligned incentives have created a troubling reality for employers and employees alike. Due to factors like Baumol’s cost disease and employers generally being price takers in the healthcare ecosystem, average employer medical trend has and likely will continue to be between 5% and 9% annually for employers operating under the status quo.
Traditional primary care has declined, with referrals to specialists having increased fourfold since 1999, dramatically increasing health care costs for everyone in the system and contributing to waste. This trend stems from our skewed priorities: Instead of focusing on prevention and health outcomes, we as a country are in a mindset of waiting until the problem is big and then bouncing between ever-more atomized specialists. It’s no coincidence that, in their new strategy, CMMI identifies prevention as the cornerstone of healthy living.
The historic fragmented and reactive approach, along with our health care system’s inability to efficiently address chronic disease, is one of the addressable reasons why employer health care costs are rising. Only 1 in 5 Americans have had an annual wellness visit with a primary care provider recently, an endemic failure in prevention that is echoing across the national health conversation. When employees don’t have benefits that address their specific needs — be that increased access and time with a doctor who can build a relationship with the employee, telehealth capabilities, culturally competent care options, or integration with mental health care resources — health problems inevitably worsen, leading to negative health outcomes for the employee and greater expense for the employer.”
CMMI and the One Big Beautiful Bill Act are all in on prevention | Employee Benefit News July 24, 2025
Economy
CBO assessment: OBBBA: Last Monday, the Congressional Budget Office released its estimate of the budgetary effects of the One Big Beautiful Bill Act, as enacted. CBO projects the law will increase the number of people without insurance by 10 million in 2034, as well as increase the budget deficit by $3.4 trillion over the 2025-2034 period relative to CBO’s 2025 baseline. This includes an estimated $1.06 trillion reduction in federal spending for changes made to the Medicaid program and Health Insurance Marketplaces in Subtitle B. Most of the reductions in this section can be attributed to provisions that implement community engagement (or “work”) requirements for Medicaid expansion beneficiaries ($325.6 billion reduction), freeze Medicaid provider taxes ($191.1 billion reduction) and reduce funding for state directed payments ($149.4 billion reduction)
CBO https://www.cbo.gov/topics/health-care
Pitchbook: Private equity: In the two months following President Donald Trump’s Liberation Day tariffs announcement, PE activity has stalled across the U.S. particularly in the Midwest and South by 32%.
Q2 2025 US PE Breakdown | PitchBook July 11, 2025
K Pow Analytics: Housing shortage accurate: “… the population, housing stock, and households broadly move together over time across markets. And much of the household growth we’ve experienced especially over the past several years in particular has come from nonfamilies, which are much smaller in physical size. We’re talking substantial growth in 1 person households, whether renting or owning.
All of which is primarily due to old age and/or affluence- not exactly healthy growth in my opinion… And just so we’re clear, nonfamily households are much more represented across renters (around 50% of that tenure), so these trends are just more pronounced for that cohort…”
K Pow on Housing: www.kennycapitaladvisory.com/data
Healthcare M&A: “The number of M&A transactions in the first half of 2025 was 18% lower than 2024’s first six months, according to an analysis of closed deals in Modern Healthcare’s Data & Insights hub.
There were 154 fewer deals across 18 healthcare sectors tracked by KPMG, Baker Donelson and Ziegler for Modern Healthcare. Only five sectors showed an increase from the first half of 2024.
The drop in closed deals was mainly due to less activity in the life sciences and pharmaceutical sector, which had 81 fewer deals, representing a 31% year-over-year decrease. Healthcare staffing saw the most activity.”
Healthcare M&A activity slumped in first half of 2025 – Modern Healthcare July 25, 2025
Report: Digital health funding: “After a strong start to the year, digital health experienced a pullback in Q2’25. Deal volume declined, marking the lowest level of quarterly activity in the last 5 years. The drop reflects growing selectivity in a market still grappling with economic uncertainty and selective capital allocation.
AI continued to dominate funding, reflecting capital concentration in fewer, high-conviction bets. Established companies attracted investors, as evident by the quarter’s two $1B+ IPOs. The result is a market divided between mature companies attracting major capital, while the broader sector contracts.”
State of Digital Health Q2’25 Report – CB Insights Research July 24, 2925
Hospitals
HCA, Tenet profitability: “Two major investor-owned hospital chains upped their 2025 revenue and profit forecasts this week, in stark contrast to health insurers, who’ve been doing the opposite.
HCA Healthcare and Tenet Healthcare, for-profit chains that collectively own 240 hospitals, both said their revenue and profit came in stronger than expected in the second quarter, which ended June 30, prompting them to issue more optimistic financial forecasts for the year…
Centene on Friday became the sixth insurer to offer up a gloomier financial outlook for the year than it had previously, after Elevance did the same last week.
Hospitals’ finances are strongly influenced by two factors: the prices they negotiate with insurers and how many patients they treat in their facilities. Right now, the latter does not appear to be the main driver of their strong profits. Inpatient and outpatient surgeries, which tend to be hospitals’ profit centers, were down slightly at both companies. Admissions barely budged. Another hospital chain, Community Health Systems, reported similarly underwhelming patient numbers this week…
One number may help explain why hospitals are faring well as insurers struggle: the amount of money hospitals make on each patient. In Tenet’s outpatient surgery business, revenue per case was up 8.3% year-over-year on a same-facility basis. In its hospital segment, that metric grew 5.2%. Tenet chalked that up to charging insurers higher prices — framed as patients having better-paying insurance — and its focus on offering higher-acuity services like cardiac care and orthopedics. At HCA, revenue per admission grew 4% year-over-year on a same-facility basis…”
Tenet, HCA report Q2 earnings, boost outlook | STAT July 25, 2025
Insurers
DOJ investigation of UHG: UnitedHealth Group is complying with criminal and civil investigations into its Medicare Advantage business, the company said in a July 24 regulatory filing.
The disclosure comes after The Wall Street Journal reported in May that the Justice Department has been investigating allegations of Medicare Advantage fraud. In May, the company said it had not been notified about any investigation by the Justice Department.
UNITEDHEALTH GROUP INCORPORATED 8-K 2025-07-23
Related: United protecting its reputation: “In legal letters and court filings, UnitedHealth has invoked last year’s murder of Brian Thompson, the chief executive of the company’s health insurance division, to argue that intense criticism of the company risks inciting further violence.
The tactics have had an impact. Amazon and Vimeo both removed Ms. Strause’s film. The Guardian postponed publishing an investigation of the company after UnitedHealth sued over a previous article it said was defamatory.
UnitedHealth joins a growing group of companies and wealthy individuals, including President Trump, who are using legal threats and lawsuits to deter or penalize criticism.”
UnitedHealth’s Campaign to Quiet Critics – The New York Times July 12, 2025
Physicians
NBER Report: Physician employment by hospitals: The Commonwealth Fund-Arnold Ventures analysis focused on the “The economic and social importance of hospitals and physicians—two sub-sectors that collectively account for 52.4% of total health spending and 9.4% of GDP (Hartman et al., 2018)—makes the impact of these acquisitions an important policy issue in its own right. P.4
“The mergers we study – hospital acquisitions of physician practices – have reshaped the $1 trillion US physician industry, nearly doubling the share of physicians working for hospitals between 2008 and 2016. We combine novel data and machine learning algorithms to identify a large number of integration events, spanning a wide range of markets with different competitive circumstances. We merge the integration events with claims data from a large national insurer to study their effects on prices. Focusing on childbirths, the most ubiquitous admission among the privately insured, we find that, on average, these mergers led to price increases for hospitals and physicians of 3.3% and 15.1%, respectively, with no discernible effects on quality measures. Using demand estimation to characterize substitution patterns for both physicians and hospitals, we construct tests that demonstrate price increases are larger among transactions with greater scope for foreclosure and recapture. Our estimates suggest that the costs of these mergers of hospitals and physicians have been substantial, and our mechanism tests offer guidance in predicting where the anticompetitive effects of non-horizontal mergers are likely to be strongest.”
Are Hospital Acquisitions of Physician Practices Anticompetitive? | NBER July 2025
Study: Impact of physician and hospital participation in Medicare Bundled Payments for Care Improvement Advanced (BPCI-A): “This cohort study including 846 529 Medicare beneficiaries found that treatment by physicians in BPCI-A−participating group practices was associated with an $855 differential reduction in spending at 90 days compared to nonparticipating practices. Likewise, treatment at BPCI-A−participating hospitals was associated with a $613 differential reduction. These findings suggest that physicians and hospitals may be effective at reducing spending in bundled payments, and that future models should consider strategies to align physicians when participation is restricted to hospitals.”
Hospital employment of physicians: Hospital consolidation of physician practices has also been associated with increased costs, according to a recent study published by the National Bureau of Economic Research. The study found that the share of private physician practices acquired by hospitals rose by 71.5% between 2008 and 2016. By 2016, nearly half of all physician practices were hospital owned. Two years post-merger, prices increased 15.1% for physician services, with no measurable improvement in quality.
The study also found that hospitals are hiring faster than practices are growing. Between 2013 and 2022, the number of hospital-employed physicians increased by 33%, from around 157,000 to more than 205,000. In comparison, private practices grew by just 17%, according to a May report in the Journal of the Society of Laparoscopic and Robotic Surgeons…
The percentage of payer-operated physician practices has grown significantly since 2016, according to a newly published study in Health Affairs Scholar.
Payer-operated practices accounted for 4.2% of Medicare primary care services in 2023, up from 0.78% in 2016. Optum, the physician practice branch of UnitedHealth Group, controlled 2.71% of the national market by service volume, making it the dominant payer-affiliated provider in primary care.
Study: Physician participation in Medicare: Researchers analyzed Medicare Part B claims filed by 791,025 physicians to Medicare from 2010 to 2024.Findings:
“…the share of physicians exiting Medicare in any given year increased significantly from 1.80% to 3.60%. There was a gradual increase in physician exit during 2010 to 2013, a period of stability from 2014 to 2016, a gradual increase from 2017 to 2019, a spike during the pandemic (2020 to 2021), and a return in 2023 to levels above the 2019 rate.
“The exit rate among primary care physicians in 2023 (4.41%) was higher than that seen for hospital-based specialists (3.50%), surgical specialists (2.99%), and medical specialists (2.49%). Similarly, over time (2010 to 2023), the age-adjusted share of primary care physicians exiting Medicare increased by 0.21 percentage points, which was a significantly higher annual growth in exit than that seen among surgical specialists (0.14 percentage points), hospital-based specialists (0.08 percentage points), and medical specialists (0.06 percentage points).”
“The findings may reflect multiple factors, including the greater burden of new communication methods (e.g., portal messages) and demands for clinical documentation.”
Note: “Study limitations include a reliance on Medicare fee-for-service claims and inability to distinguish exit from Medicare vs exit from clinical practice or retirement. Additionally, we did not fully describe the overall physician supply since we did not include physician entry.”
Trends in Physician Exit from Fee-for-Service Medicare | Health Policy | JAMA Health Forum | JAMA Network July 18, 2025
Polling
Gallup: Institutional confidence: “Americans’ average confidence in major U.S. institutions is unchanged since last year, with a near-record-low 28% of U.S. adults expressing “a great deal” or “quite a lot” of confidence in nine institutions tracked consistently since 1979. This is the fourth consecutive year of sub-30% averages, but this overall stability belies significant shifts in partisans’ confidence after Donald Trump replaced Joe Biden as president.
On average across these nine institutions, Democrats’ confidence, at 26%, has decreased by five percentage points and sits at a new low, while Republicans’ 37% reflects an increase of nine points and is the highest reading since 2020. Partisans’ confidence levels diverge the most on the presidency and the police, with Republicans much more confident than Democrats in each.
More generally, of 18 key U.S. institutions included in this year’s survey, just three earn majority-level confidence from Americans — small business, the military and science.” Topline findings:
Gallup: % Great deal/quite a lot of trust and confidence in the medical system
| All Adults | Republicans | Independents | Democrats | |
| 2025 | 32 | 35 | 32 | 32 |
| 2024 change: | +5 | -4 | -9 |
Institutional comparisons: % great deal/quite a lot of trust and confidence in institutions sometimes associated with the medical system in 2025:
| All Adults | Republicans | Independents | Democrats | |
| Big Business | 15 | 26 | 13 | 11 |
| Small business | 70 | 79 | 67 | 68 |
| Big Tech | 24 | 33 | 23 | 18 |
| Higher Education | 42 | 26 | 40 | 61 |
| Church/Organized Religion | 36 | 64 | 30 | 21 |
| Banks | 30 | 38 | 25 | 33 |
| Congress | 10 | 19 | 8 | 5 |
| Presidency | 30 | 80 | 19 | 3 |
Gallup: Democrats’ Confidence in U.S. Institutions Sinks to New Low July 17, 2025
KFF: opinions about insurers:
- A large majority of the public (73%) think that delays and denials of services and treatments by health insurance companies are a major problem. Majorities across demographic groups agree that denials and delays of care are a major problem.
- Few are aware of insurer initiative: to reduce the burden of prior authorizations. Just two in ten (20%) adults say they’ve heard “a lot” or “some” about this new initiative. In addition, few people think it’s likely that health insurance companies will follow through on this pledge, with six in ten adults saying it is “not too likely” or “not at all likely” that health insurance companies will follow through on the voluntary initiative in a way that makes a difference for patients.
- Among the half (51%) of insured adults who say they have had to get a prior authorization in the past 2 years, many report difficulty navigating the process. Almost half (47%) of those who were required to get a prior authorization in the past two years say it was “somewhat difficult” (34%) or “very difficult” (13%) to navigate the process of getting prior approval for a health care service, treatment, or needed medication.
KFF Health Tracking Poll: Public Finds Prior Authorization Process Difficult to Manage | KFF July 25, 2025
White House Executive Order on homelessness: “Endemic vagrancy, disorderly behavior, sudden confrontations, and violent attacks have made our cities unsafe. The number of individuals living on the streets in the United States on a single night during the last year of the previous administration — 274,224 — was the highest ever recorded. The overwhelming majority of these individuals are addicted to drugs, have a mental health condition, or both. Nearly two-thirds of homeless individuals report having regularly used hard drugs like methamphetamines, cocaine, or opioids in their lifetimes. An equally large share of homeless individuals reported suffering from mental health conditions. The Federal Government and the States have spent tens of billions of dollars on failed programs that address homelessness but not its root causes, leaving other citizens vulnerable to public safety threats.
Shifting homeless individuals into long-term institutional settings for humane treatment through the appropriate use of civil commitment will restore public order. Surrendering our cities and citizens to disorder and fear is neither compassionate to the homeless nor other citizens. My Administration will take a new approach focused on protecting public safety.”
Ending Crime and Disorder on America’s Streets – The White House Ending Crime and Disorder on America’s Streets – The White House
Public health
Report: Caregiving in the US 2025: Excerpts: “In 2025, 63 million American adults provided ongoing care to adults or children with a medical condition or disability—representing almost one-quarter of all adults in the United States. This is a dramatic increase of 45% since Caregiving in the US was fielded in 2015. Of these 63 million caregivers, 59 million care for an adult with a complex medical condition or disability…
Today, roughly one in four American adults (24%) is a family caregiver. In addition, 59 million caregivers report caring for adults ages 18 and older, and 4 million report caring for a child under age 18 with an illness or disability… The average caregiver is 51 years old. Women still account for the majority of caregivers (61%) and 61%of all caregivers identify as non-Hispanic white individuals. Latino/Hispanic caregivers represent 16% African American/Black caregivers 13%; and Asian American, Native Hawaiian, and Pacific Islander (AANHPI) caregivers 6%.
More than half (55 percent) provide these types of tasks, yet only 22 percent received training for this. One in five family caregivers rate their health as fair or poor, and nearly a quarter say they have difficulty caring for themselves.
Caregiving in the US 2025: Key Trends, Strains, and Policy Needs July 24, 2025
Study: Global Effectiveness of COVID-19 vaccinations: “This comparative effectiveness study found that COVID-19 vaccinations averted 2.5 million deaths during 2020-2024 (sensitivity range estimates, 1.4-4.0 million) and saved 15 million life-years (sensitivity range estimates, 7-24 million life-years). The estimated benefits had a steep age gradient.”
