Final answer:
The Medicare program, created in 1965, is a government-administered social insurance for the elderly and others eligible to help with high healthcare costs. Alongside Medicare, Medicaid helps low-income individuals, underscoring the government's role in managing healthcare market failures.
Step-by-step explanation:
The Medicare program is a public policy tool implemented by the U.S. government to provide health insurance to specific groups, such as the elderly aged 65 and over, who face high average healthcare costs. This program, first established in 1965 as part of the Social Security Act, is a form of social insurance funded by payroll taxes. It ensures that seniors, regardless of income level, have access to healthcare without prohibitive costs. Additionally, Medicaid and other health programs are in place to support low-income families, military veterans, and children from low-income households, supplementing the government's role in addressing market failures within the healthcare industry.
The Role of Medicare and Medicaid
Medicare is significant because private health insurance often proves too costly for retirees and may not cover all their healthcare needs. Concurrently, Medicaid is designed to aid those with low incomes in acquiring health services. The establishment of these programs highlights the government's intervention in situations where free markets do not adequately provide critical services at affordable prices.
Importance in U.S. Health Policy
The introduction of such healthcare programs underscores a substantial governmental role in mitigating market failures by financing and providing access to healthcare. Notably, the healthcare market is an instance where government intervention is deemed vital, especially for demographics such as the elderly who experience higher healthcare costs.