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

President Lyndon B. Johnson signed Medicare into law on July 30, 1965. The program began on July 1, 1966. At that time, most Americans over 65 had no health insurance at all — many could not afford it, and insurance companies often refused to cover older adults because of their age and medical conditions.

Medicare was created to solve that problem. It was part of a larger set of social programs called the Great Society. The law that created Medicare also created Medicaid, a separate program for people with low incomes regardless of age.

When Medicare first started, it had two parts: Part A covered hospital stays, and Part B covered doctor visits and outpatient care. Seniors paid a monthly premium for Part B, just as they do today, though the amount was much smaller.

Key Takeaways

  • Medicare began on July 1, 1966, after President Johnson signed it into law the year before.
  • The program was created because most people over 65 had no health insurance and could not afford medical care.
  • Part A (hospital insurance) and Part B (doctor and outpatient care) were the original two parts of Medicare.
  • Medicare has expanded since 1966 to include prescription drug coverage (Part D) and other benefits that did not exist when the program started.

Why Medicare was created in the 1960s

Before 1966, older Americans faced a real crisis. Medical costs were rising, but most seniors lived on fixed incomes from Social Security. Private insurance companies either refused to insure people over 65 or charged them prices so high that few could pay.

Studies at the time showed that seniors were skipping doctor visits, not filling prescriptions, and going without needed care because they could not afford it. Hospital stays could wipe out a lifetime of savings. Congress and the President decided the federal government needed to step in.

The debate over whether the government should run a health program for seniors was fierce. Some people argued it was socialism. Others said it was the only way to prevent older Americans from becoming destitute because of medical bills. The side supporting Medicare won the vote.

How many people enrolled when Medicare started

On the first day Medicare began, about 9 million people signed up. That number grew quickly as word spread and more seniors learned about the program. By the end of 1966, enrollment had reached about 19 million people.

Not every senior enrolled right away. Some did not know about the program. Others were suspicious of government insurance. Some had private coverage through former employers and did not think they needed Medicare. Over time, enrollment grew as more people turned 65 and became may be able to access.

What Medicare covered in 1966 versus today

The original Medicare program was simpler than it is now. Part A paid for hospital stays, skilled nursing facility care, hospice, and some home health services. Part B paid for doctor visits, lab tests, X-rays, and outpatient hospital services. There was no prescription drug coverage.

Over the decades, Congress added new benefits. In 1972, Medicare coverage expanded to include people under 65 with permanent disabilities and people with end-stage renal disease. In 1997, Medicare + Choice (now called Medicare Advantage, or Part C) was created, allowing seniors to choose a private insurance plan instead of traditional Medicare. In 2006, Part D was added to cover prescription drugs.

Today's Medicare also covers preventive services like cancer screenings and vaccines that were not part of the original program. The rules about what is covered, how much you pay, and which doctors you can see have all changed since 1966.

How Medicare was funded from the start

Medicare was funded the same way it is today: through payroll taxes. Workers and employers each paid a tax on wages, and that money went into two trust funds — one for Part A (Hospital Insurance) and one for Part B (Medical Insurance).

Part A was designed to be self-supporting from these taxes. Part B required a monthly premium from seniors, but the government also contributed money from general tax revenue to help pay for it. This split between payroll taxes and general revenue continues today.

When Medicare started, the program cost far less than anyone expected. Medical costs were lower, and fewer people were may be able to access. Over time, as more people lived longer and medical technology became more expensive, the cost of Medicare grew much faster than the payroll tax revenue coming in.

How Medicare has changed since 1966

The biggest changes to Medicare have been the addition of new parts and new benefits. Part C (Medicare Advantage) gave seniors the choice to get their Medicare benefits through a private insurance company instead of the government. Part D added prescription drug coverage, which many seniors said they desperately needed.

The rules about what you pay have also changed. When Medicare started, there were no annual deductibles for Part B. Today there are. The monthly premium for Part B has risen from a few dollars to over $160 per month for most people. Out-of-pocket costs have increased across the board.

Congress has also changed which doctors and hospitals can participate in Medicare, how much they are paid, and what services are covered. Some services that were covered in 1966 are no longer covered, and many new services have been added.

Why the history of Medicare matters to you today

Understanding when and why Medicare started helps explain how it works now. Medicare was built on the idea that older Americans should not lose their homes or go without medical care because of age. That principle is still at the heart of the program.

The program has grown and changed because the world has changed. People live longer now. Medical technology is more advanced and more expensive. The number of people on Medicare has grown from 9 million to over 65 million. The challenges Medicare faces today — rising costs, funding questions, coverage gaps — are partly a result of how much has changed since 1966.

Knowing this history can help you understand news stories about Medicare, debates over its future, and decisions Congress makes about the program. It also helps explain why Medicare works the way it does and why some benefits exist while others do not.

Frequently Asked Questions

Did Medicare exist before 1966?

No. Before 1966, there was no federal health insurance program for seniors. Some older Americans had private insurance through former employers, but most had no coverage at all. A few states ran their own programs for poor seniors, but these were small and limited.

Was Social Security created at the same time as Medicare?

No. Social Security was created in 1935, about 30 years before Medicare. Social Security provides monthly income to retired workers, disabled people, and survivors of deceased workers. Medicare, created in 1965, provides health insurance. They are separate programs, though many seniors receive both.

How many people were 65 or older when Medicare started?

About 18 million Americans were 65 or older in 1966. That was roughly 9 percent of the total population. Today, about 60 million people are 65 or older, making up roughly 18 percent of the population. The aging of America is one reason Medicare costs have grown so much.

Could you be denied Medicare coverage in 1966 because of a pre-existing condition?

No. From the start, Medicare covered all people 65 and older regardless of their health history or pre-existing conditions. This was one of the major differences between Medicare and private insurance at the time, which often refused to cover people with existing illnesses.