Medicare became law on July 30, 1965, and started covering people on July 1, 1966

President Lyndon B. Johnson signed Medicare into law as part of the Social Security Act amendments on July 30, 1965. The program officially began covering people on July 1, 1966. The first Medicare card went to former President Harry Truman, presented by Johnson at a ceremony in Independence, Missouri.

Before 1966, most people over 65 had no health insurance. Many lost coverage when they retired because employer plans ended. Medical bills were a leading cause of bankruptcy for seniors, and hospital stays could wipe out a lifetime of savings. Medicare was created to solve this problem.

When Medicare launched, it covered about 19 million people aged 65 and older. The program was designed to be straightforward: Part A covered hospital stays, and Part B covered doctor visits. Both parts were optional at first, though Part A was automatic for people receiving Social Security.

Key Takeaways

  • Medicare became law on July 30, 1965, and started covering people on July 1, 1966, making it one of the largest social insurance programs ever created.
  • Before Medicare, most Americans over 65 had no health insurance and faced bankruptcy from medical bills, which is why the program was created.
  • The original program had two parts: Part A for hospital care and Part B for doctor visits, though both were optional at first.
  • Medicare expanded in 1972 to cover people under 65 with permanent disabilities and people with end-stage renal disease, broadening its reach beyond seniors.
  • Part D (prescription drug coverage) was added in 2006, more than 40 years after the program started, because drug costs had become a major burden for older Americans.

Why Medicare was created in the 1960s

The push for Medicare came from a straightforward fact: older Americans were poor and sick. In 1963, before Medicare existed, the median income for people over 65 was about half that of working-age adults. Medical costs were rising faster than inflation. A hospital stay could cost several months' worth of an older person's entire income.

Labor unions, senior advocacy groups, and doctors who treated poor patients all pushed for a solution. The American Medical Association opposed Medicare for years, arguing it was socialism. But public support grew, especially after President John F. Kennedy made healthcare for seniors a campaign issue in 1960.

When Johnson took office in 1963, he made Medicare a priority. Congress passed it in 1965 with strong bipartisan support. The vote in the House was 313 to 115 in favor. The Senate vote was 70 to 24 in favor.

What Medicare covered when it started

Original Medicare had two parts from day one. Part A covered inpatient hospital care, skilled nursing facility care, hospice, and some home health services. Part B covered doctor visits, outpatient hospital services, medical equipment, and some preventive care. People paid a monthly premium for Part B but not for Part A, since they had already paid into it through payroll taxes during their working years.

The program did not cover everything. Prescription drugs were not covered at all. Dental care, vision care, and hearing aids were not covered. There were deductibles and copayments. But for the first time, older Americans had a way to pay for the biggest medical expenses without losing their homes.

In the first year, about 90 percent of may be able to access seniors signed up for Part A, and about 50 percent signed up for Part B. The program cost about $4.5 billion in its first year — far less than Congress had feared.

How Medicare expanded after 1966

Medicare did not stay the same. In 1972, Congress expanded it to cover people under 65 who had been receiving disability benefits for at least two years, and people of any age with end-stage renal disease (kidney failure requiring dialysis). This was a major shift because it meant Medicare was no longer just for seniors.

In 1997, Congress created Part C, also called Medicare Advantage. This allowed private insurance companies to offer Medicare coverage as an alternative to traditional Medicare. People could choose to get their Part A and Part B benefits through a private plan instead of the government program.

In 2006, Part D was added to cover prescription drugs. This came after years of seniors cutting pills in half or skipping doses because they could not afford the full cost. Part D is run by private insurance companies but subsidized by Medicare, and it is optional — people can choose to add it or stick with traditional Medicare.

The cost of Medicare then and now

When Medicare started in 1966, the federal government spent about $4.5 billion on it that year. Adjusted for inflation, that would be roughly $40 billion in 1990s dollars. In 2023, Medicare spending was projected to be over $848 billion — far more than anyone predicted in 1966.

The reasons for the increase are complex. Medical technology became more expensive. The population aged, so more people became may be able to access. Drug prices rose faster than other costs. But the program also kept millions of older Americans out of poverty and prevented countless bankruptcies from medical bills.

Congress has adjusted Medicare's costs and coverage many times since 1966. Deductibles and copayments have increased. New services have been added. The program has changed shape repeatedly, but the basic idea — that older Americans should not have to choose between medicine and rent — has remained the same.

How Medicare changed the American healthcare system

Before Medicare, hospitals and doctors had no standard way to get paid for treating older patients. Some seniors paid cash. Some got charity care. Some went without. Medicare created the first large-scale system for paying hospitals and doctors based on the services they provided.

This payment system became a model for other insurance programs. It also changed how hospitals and doctors kept records and billed for care. The forms and codes used in Medicare billing are now used across the entire American healthcare system.

Medicare also changed the politics of healthcare. Once the program existed and millions of people depended on it, it became politically difficult to cut. Both political parties have proposed changes to Medicare, but both have also defended it against cuts. This is why Medicare is sometimes called the "third rail" of American politics — touch it and you lose.

Frequently Asked Questions

Did Medicare cover everyone over 65 when it started?

No. Medicare covered people 65 and older who were may be able to access for Social Security. This included most retired workers, but not everyone. People who had not worked long enough to may have access to for Social Security were not covered. Non-citizens and people with certain immigration statuses were also excluded. Over time, Congress expanded coverage to include more groups.

Why did it take until 2006 to add prescription drug coverage?

When Medicare started in 1966, prescription drugs were much cheaper and less central to treatment than they are today. Antibiotics and basic medications cost a few dollars. As drug prices rose and new expensive medications were developed, the lack of drug coverage became a bigger problem. Congress debated adding drug coverage for decades before finally doing so in 2006.

Could someone refuse Medicare when it started?

Part A was automatic for people receiving Social Security — you could not refuse it. Part B was optional, and about half of may be able to access seniors chose not to sign up at first, usually because they did not think they needed doctor care or could not afford the premium. Over time, more people signed up as they realized how much it helped with costs.

What happened to people over 65 who were not covered by Medicare?

Some had private insurance through a former employer. Some were covered by state programs for poor people, which later became Medicaid. Many had no insurance at all and paid out of pocket or went without care. This is why Medicaid was created the same year as Medicare — to cover poor people of all ages, including those under 65 who were not may be able to access for Medicare.