In 1982, the United States Congress passed the Tax Equity and Fiscal Responsibility (TEFRA) Act (PL 97-248), which amended Title XIV of the Social Security Act to grant coverage of hospice services under Medicare with a sunset clause for expiration in 1986.  The sunset clause was established as a precaution against potential cost overruns of hospice (Keller and Bell, 1984).  It had been previously determined that twenty percent to one third of Medicare expenditures went to patients who were dying, a great concern for a Congress that was interested in exploring methods that secured the Medicare Trust Fund while slashing spending on social programs (Miller & Mike, 1995).  Hospice was viewed as a potential solution.  In the 1970s, the Health Care Financing Administration initiated the National Hospice Study to determine if hospice was indeed a cost-saving measure (Miller & Mike 1995).

    Prior to the passage of TEFRA, almost all hospices were funded by private organizations and staffed heavily with volunteers.  In addition, many individuals did not utilize hospice, as third-party reimbursement was scarce (Keller & Bell, 1984).  Without this legislation, many people did not have access to quality care in the final stages of their lives.  The costs of continuing treatment and the emotional grief experienced by family members of the patient intensified the burden to the health care system (Dooley, 1982).

    The hospice movement led to the exploration of issues related to death and dying.  Americans were more comfortable institutionalizing the elderly and terminally ill than to provide care for them in their homes during their final days (Corbett & Hai, 1979).   A negative impression of hospice was evident in the traditional medical community at the time. The emphasis of traditional medicine is on curing illness and prolonging life utilizing whatever technological measures possible.  The death of a patient had also been equated with failure in the medical community.  Hospice threatened the authority and control of the “expert” physician by involving the patient, family, and other medical and psychosocial professionals in both the planning and provision of care.  Given these deviations from the prevailing medical philosophy, physicians were reluctant to accept the hospice concept  (Dooley, 1982).  In addition, the prevailing licensing, certification, and reimbursement practices at the time with its emphasis on conventional medical principles, did not encourage the development of hospices (Dooley, 1982).

    The Medicare and Medicaid hospice provisions were part of the Consolidation Omnibus Budget and Reconciliation Act (COBRA) of 1985.  The spending and revenue provisions presented in this Act were introduced in response to a budget deficit that had grown considerably during the first term of the Reagan administration.  The tax cuts and increased military spending enacted during this time resulted in a federal budget in disarray, prompting Congress to curb spending on domestic programs (Jansson, 1997).  This was the first budgeting bill that passed after the enactment of the Balanced Budget and Emergency Deficit Control Act of 1985 (PL 99-177), which called for the incremental reduction of the federal deficit to zero by 1991 (Thomas Bill Summary & Status, WWW document, 1985).  COBRA underwent several revisions, committee referrals, and amendments before it was enacted in its final form.