Medicare began in 1965 as a federal insurance program for people 65 and older

President Lyndon B. Johnson signed Medicare into law on July 30, 1965. The program launched on July 1, 1966. It was created to provide hospital and medical insurance to Americans aged 65 and over, regardless of income or medical history. Before Medicare, most seniors had no health insurance at all — insurance companies often refused to cover people over 65 because the cost of their care was too high.

The law that created Medicare is called the Social Security Amendments of 1965. It was passed by Congress and became part of the Social Security Act. At the time, about half of all Americans over 65 had no health insurance. Many seniors chose between paying for medical care and paying for food or housing.

Medicare was not the first government health program in the United States, but it was the largest. It covered a population that the private insurance market had largely abandoned. The program grew quickly — by the end of 1966, about 19 million people were enrolled.

Key Takeaways

  • Medicare was signed into law on July 30, 1965, and began covering people on July 1, 1966.
  • The program was created because private insurance companies refused to insure people over 65, leaving millions of seniors without coverage.
  • Medicare originally had two parts: Part A (hospital insurance) and Part B (medical insurance), though more parts were added later.
  • The first person to sign up for Medicare was former President Harry Truman, who received his card on March 24, 1966.

What Medicare covered when it started in 1966

The original Medicare program had two parts. Part A covered hospital stays, skilled nursing facility care, hospice, and some home health services. Part B covered doctor visits, outpatient care, medical equipment, and some preventive services. People paid a monthly premium for Part B, but Part A was free for those who had paid into Social Security.

The program did not cover everything. Prescription drugs, dental care, vision care, and hearing aids were not included. Many seniors still had to pay out of pocket for these services. Deductibles and copayments also meant that seniors shared the cost of their care with Medicare.

In those early years, Medicare was run by a new agency called the Centers for Medicare and Medicaid Services (CMS), though it was originally called the Social Security Administration's Bureau of Health Insurance. The program was funded through payroll taxes — workers and employers both contributed money that went into a trust fund.

Why Medicare was created in 1965

After World War II, many Americans had health insurance through their employers. But when workers retired at 65, they lost that coverage. Insurance companies would not sell policies to seniors because they used more medical care and cost more to insure. Seniors who had savings could pay out of pocket, but many could not afford it.

By the early 1960s, the problem had become a major political issue. Surveys showed that one-third of seniors lived in poverty. Medical bills were a leading cause of bankruptcy among older Americans. Labor unions, senior advocacy groups, and some doctors pushed Congress to create a government program.

The debate was fierce. The American Medical Association opposed Medicare, arguing that it was socialism and would harm the quality of care. Insurance companies also opposed it because they saw it as competition. But supporters, including President Johnson, argued that seniors deserved the same access to care as working-age Americans.

How Medicare expanded after 1966

Medicare did not stay the same after it launched. In 1972, Congress expanded the program to cover people under 65 who had been on disability for at least two years, and people of any age with end-stage renal disease (kidney failure requiring dialysis or transplant).

In 1988, Congress added Part D coverage for prescription drugs, though this part did not actually begin until 2006. The gap between when it was authorized and when it started reflects how complicated it was to design a drug benefit that worked with the rest of Medicare.

In 1997, Part C (also called Medicare Advantage) was created. This allowed seniors to choose a private insurance plan instead of traditional Medicare, as long as the plan covered at least the same services as Parts A and B.

The first Medicare enrollees and early challenges

On March 24, 1966, former President Harry Truman became the first person to receive a Medicare card. Truman had left office in 1953 and had no federal health insurance as a former president. He was 81 years old when he enrolled. His wife, Bess, received card number 2.

The first months of Medicare were chaotic. Hospitals and doctors' offices were overwhelmed with paperwork. Many providers did not understand the rules. Some seniors were confused about how to use their new coverage. But the program worked — seniors who had delayed medical care because they could not afford it finally sought treatment.

One early problem was that Medicare's costs grew faster than expected. Congress had to adjust payments to hospitals and doctors several times in the first few years. This pattern of cost growth has continued, making Medicare funding a major political debate ever since.

How Medicare compares to health insurance before 1966

Before Medicare, seniors had few options. Some had insurance through a former employer, but most policies ended at retirement. Others bought individual policies from insurance companies, but these were expensive and often did not cover much. Many seniors had no insurance at all.

For those without insurance, a serious illness could be catastrophic. Hospitals sometimes turned away patients who could not pay. Others admitted patients and then pursued them for debt for years. Seniors often delayed care until they were very sick, which made treatment more expensive and less effective.

Medicare changed this. It may provide that every senior 65 and older could see a doctor and go to a hospital without worrying about being denied care because of age or pre-existing conditions. This was a major shift in how American health care worked.

Frequently Asked Questions

Did Medicare exist before 1965?

No. Before 1965, there was no federal health insurance program for seniors. Some states had small programs, and some seniors had insurance through employers or bought it privately, but nothing like Medicare existed. The Veterans Health Administration provided care to veterans, but that was separate.

Was Social Security the same as Medicare?

No. Social Security, which started in 1935, is a retirement income program. Medicare, which started in 1966, is a health insurance program. They are separate programs run by the same agency (the Social Security Administration originally, now CMS). You can have one without the other, though most people 65 and older have both.

How many people were on Medicare when it started?

About 19 million people enrolled in Medicare during its first year, 1966. This was roughly 90 percent of all Americans aged 65 and older. The program grew as more people turned 65 and became aware of it. Today, Medicare covers about 67 million people.

Did Medicare cover everyone over 65 from the start?

Yes, Medicare was available to all Americans 65 and older starting July 1, 1966, regardless of income or health status. This was different from many other government programs that only help people below a certain income level. Medicare is based on age, not need.

What happened to private health insurance for seniors after Medicare started?

Private insurance companies still sell policies to seniors today, but they are different from before 1966. These policies, called Medigap or Medicare Supplement plans, are designed to cover costs that Medicare does not pay, like deductibles and copayments. Some seniors also choose Medicare Advantage plans, which are private alternatives to traditional Medicare.