When Medicare and Medicaid were established in 1965, their costs increased much more than government planners expected. What was changed in 1982 in an attempt to keep costs down?

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In 1982, the U.S. government introduced the Prospective Payment System (PPS) for hospitals under Medicare, where payments to healthcare providers were determined based on the diagnosis of the patient rather than the cost of care provided. This was an attempt to control rising healthcare costs by encouraging efficiency and reducing the incentive for unnecessary services.

When Medicare and Medicaid Were Established in 1965, Their Costs