Where the Centers for Medicare and Medicaid Services Started and How It Grew

The Centers for Medicare and Medicaid Services began in 1965 as part of the Social Security Administration

The Centers for Medicare and Medicaid Services (CMS) was not founded as a separate agency. It started as the Medicare division within the Social Security Administration when Congress passed the Social Security Amendments of 1965, which created both Medicare and Medicaid. President Lyndon B. Johnson signed the law on July 30, 1965, and the new programs began on July 1, 1966.

At that time, the office handling Medicare was called the Medicare Bureau, and it sat inside the Social Security Administration's structure. The same law created Medicaid as a joint federal-state program, but Medicare — the federal program for people 65 and older — was the responsibility of the federal government alone. The Medicare Bureau had to build the entire system from scratch: contracts with hospitals, rules for payment, enrollment processes, and the infrastructure to process claims.

The first Medicare beneficiary enrolled on July 1, 1966. By the end of that year, over 19 million people had signed up. The scale of the operation meant the Medicare Bureau grew quickly and became one of the largest administrative programs in the federal government.

Key Takeaways

• CMS did not exist as its own agency in 1965; Medicare started as the Medicare Bureau inside the Social Security Administration.
• Congress created Medicare and Medicaid through the Social Security Amendments of 1965, signed into law on July 30, 1965.
• Medicare coverage began on July 1, 1966, and over 19 million people enrolled in the first year.
• CMS became a separate agency in 1977 when it split from Social Security and was renamed the Health Care Financing Administration.

How Medicare moved from Social Security to its own agency

By the 1970s, Medicare had grown so large that running it inside the Social Security Administration became unwieldy. The program had its own budget, its own rules, and its own relationship with hospitals and doctors — very different from Social Security's pension and disability work. In 1977, the federal government separated Medicare (and Medicaid) from Social Security and created a new independent agency called the Health Care Financing Administration (HCFA).

The HCFA reported directly to the Secretary of Health, Education, and Welfare (now called the Department of Health and Human Services). This move gave Medicare and Medicaid their own leadership, their own budget authority, and the ability to make decisions without going through Social Security's chain of command. The HCFA took over all the work the Medicare Bureau had been doing — processing claims, setting payment rates, managing contracts with providers, and handling enrollment.

The name change to Centers for Medicare and Medicaid Services

The HCFA kept that name for 24 years. In 2001, the agency was renamed the Centers for Medicare and Medicaid Services to better reflect what it actually did. The new name made clear that the agency ran three major programs: Medicare, Medicaid, and the Children's Health Insurance Program (CHIP, created in 1997). The acronym CMS stuck, and that is what the agency is called today.

The name change was not just cosmetic. It signaled that Medicare and Medicaid were not separate operations run by the same office, but part of a unified mission to manage health coverage for seniors, low-income families, and children. The agency's structure, however, still reflects that history — different divisions handle Medicare and Medicaid because they operate under different rules and serve different populations.

What CMS does now

Today, CMS is one of the largest federal agencies. It processes over 1 billion claims per year, manages the enrollment of over 150 million people across Medicare, Medicaid, and CHIP, and sets payment rates that affect how much hospitals and doctors earn. CMS also oversees the quality of care — it inspects nursing homes, sets standards for hospitals, and can penalize providers that do not meet those standards.

CMS is part of the Department of Health and Human Services and reports to the Secretary of HHS. The agency has regional offices in 10 regions across the country, and each region handles Medicare and Medicaid for its states. CMS also contracts with private insurance companies to process Medicare claims and manage some Medicaid programs on behalf of states.

Why the history matters to you

Understanding where CMS came from explains why Medicare and Medicaid work the way they do. Medicare is a federal program with the same rules nationwide because it was built as a single national system from the start. Medicaid, by contrast, varies from state to state because it was designed as a partnership between the federal government and states — each state runs its own program within federal guidelines.

When you call Medicare with a question, you are calling CMS (or a contractor working for CMS). When you call your state Medicaid office, you are calling a state agency that works with CMS. The split between federal and state authority traces back to 1965, when Congress wrote the law that way. Knowing that history helps explain why some answers come from the federal level and others depend on which state you live in.

Frequently Asked Questions

Was Medicare created by a specific president?

President Lyndon B. Johnson signed the Social Security Amendments of 1965 into law on July 30, 1965. The law created both Medicare and Medicaid. Johnson signed the bill at the Harry S. Truman Library in Independence, Missouri, as a tribute to Truman's earlier push for health coverage.

Is CMS the same as Medicare?

No. CMS is the federal agency that runs Medicare, Medicaid, and CHIP. Medicare is one of the three programs CMS manages. When you have a Medicare question, you contact CMS (or a Medicare contractor), but CMS also handles Medicaid for low-income people and CHIP for children.

Why did Medicare start on July 1, 1966, and not when ready after the law passed?

Congress passed the law in July 1965 but gave the government one year to build the entire system — sign up beneficiaries, contract with hospitals, train staff, and set up payment processes. Starting on July 1, 1966, gave CMS (then the Medicare Bureau) time to prepare for the massive enrollment that followed.

Can I contact CMS directly with a Medicare question?

You can reach Medicare by calling 1-800-MEDICARE. That number connects you to CMS's customer service line or a Medicare contractor in your region. For some questions, you may be directed to your state Medicaid office if your question involves both programs.