Medicare was founded in 1965 as part of President Lyndon B. Johnson's Great Society legislation

Medicare became law on July 30, 1965, when President Johnson signed the Social Security Amendments at the Truman Library in Independence, Missouri. The program was designed to provide health insurance to people aged 65 and older, a group that had struggled to find affordable coverage in the private market. At that time, most insurance companies straightforward would not sell policies to older adults, or charged premiums so high that few could afford them.

The first Medicare cards were mailed out in the spring of 1966, and the program officially began on July 1, 1966. About 19 million people enrolled in that first year. The program was built on the foundation of Social Security, which had been in place since 1935, and it used the same administrative structure to reach beneficiaries.

Key Takeaways

  • Medicare was signed into law on July 30, 1965, and coverage began on July 1, 1966.
  • The program was created because older adults could not buy private health insurance at any price, or only at costs they could not afford.
  • Original Medicare had two parts: Part A covered hospital care, and Part B covered doctor visits and outpatient services.
  • Medicare has expanded since 1966 to include prescription drug coverage (Part D, added in 2006) and managed care options (Part C, added in 1997).

Why Congress created Medicare in the 1960s

Before 1966, most Americans over 65 had no health insurance at all. Private insurers considered older people too risky to insure because they used more medical care and had more chronic illnesses. Even those who could find a policy paid premiums that consumed a large share of their fixed retirement income.

Surveys in the early 1960s showed that older adults were skipping doctor visits, not filling prescriptions, and going without needed care because they could not afford it. Hospital bills could wipe out a lifetime of savings. Congress heard from constituents about elderly parents and grandparents who faced impossible choices between medicine and rent.

The political momentum for a federal program grew through the 1950s and early 1960s. Labor unions, senior advocacy groups, and religious organizations pushed for action. When Johnson won the presidency in 1964 with a large Democratic majority in Congress, the path opened to pass legislation that had been blocked for years.

What the original Medicare program included

The 1965 law created two parts of Medicare. Part A covered inpatient hospital care, skilled nursing facility care, hospice, and some home health services. Part B was optional and covered doctor visits, outpatient hospital services, lab tests, and some equipment and supplies. People who wanted Part B had to pay a monthly premium, which was voluntary.

The original program did not cover prescription drugs, dental care, vision care, or hearing aids. These gaps have remained a source of concern for beneficiaries ever since, though Part D (prescription drug coverage) was added in 2006.

When the program launched, it was administered by the Social Security Administration. The federal government contracted with private insurance companies to process claims and pay providers, a model that continues today.

How Medicare expanded after 1966

In 1972, Congress extended Medicare to people under 65 who had been receiving Social Security disability benefits for at least two years, and to people of any age with end-stage renal disease. This was the first major expansion of who could receive coverage.

In 1997, Congress created Part C, also called Medicare Advantage, which allowed beneficiaries to receive their Medicare benefits through private insurance plans instead of the original fee-for-service model. These plans grew slowly at first but now cover roughly one-third of all Medicare beneficiaries.

In 2006, Part D was added to cover prescription drugs. This was a major change because prescription costs had become a serious burden for many older adults. Part D is also delivered through private insurance plans that contract with Medicare.

The number of people on Medicare has grown steadily

When Medicare began in 1966, about 19 million people were enrolled. By 1980, that number had grown to about 28 million. Today, more than 67 million people receive Medicare benefits, including those over 65, people with disabilities, and people with end-stage renal disease.

The growth reflects both population aging and the expansion of who is covered. The oldest baby boomers began turning 65 in 2011, which accelerated enrollment growth. Projections show that Medicare enrollment will continue to rise as the population ages.

How Medicare funding has worked since the beginning

Medicare Part A is funded through a payroll tax that workers and employers pay during their working years. This tax appears on your pay stub as "Medicare tax" and has been in place since 1966. When you turn 65, you become may be able to access to receive Part A benefits without paying a monthly premium, because you have already paid into the system.

Part B is funded partly by beneficiary premiums and partly by general federal tax revenue. When the program started, the government covered 50 percent of Part B costs and beneficiaries paid the other 50 percent through premiums. That split has changed over time, and today beneficiaries pay about 25 percent of Part B costs through premiums.

Part D premiums vary by plan and are paid by beneficiaries who choose to enroll. Part C premiums also vary and are paid by those who choose a Medicare Advantage plan instead of original Medicare.

What has stayed the same since 1966

Despite decades of changes, some core features of Medicare have remained constant. The program is still universal for people 65 and older — there is no income limit or medical underwriting. You cannot be turned down because of a pre-existing condition. The program is still administered by the federal government, though private insurers still process claims and run the Part C and Part D plans.

The basic structure of Part A and Part B has also remained the same. Part A still covers hospital and skilled nursing care. Part B still covers doctor visits and outpatient services. The deductibles and cost-sharing amounts have changed many times, but the categories of covered services have not shifted dramatically.

Frequently Asked Questions

Did Medicare exist before 1966?

No. Before July 1, 1966, there was no federal health insurance program for older adults. Some states ran small programs, and some employers offered retiree health benefits, but Medicare was the first nationwide program. A few other countries had national health systems before the United States, but Medicare was new when it started.

Why did it take until 1965 to create Medicare?

The idea of federal health insurance for older adults had been discussed since the 1930s, but faced strong opposition from the American Medical Association, insurance companies, and conservative members of Congress who believed it was too expensive or too much government involvement. It took a combination of political will, public pressure, and a large Democratic majority in Congress to overcome that opposition.

Has Medicare changed a lot since 1966?

Yes and no. The basic structure of Part A and Part B has stayed the same, but the program has added Part C (1997) and Part D (2006), expanded to cover people under 65 with disabilities, and changed deductibles and premiums many times. The services covered and the way they are paid for have evolved, but the core idea — universal coverage for people 65 and older — has remained.

What was the first thing Medicare covered?

When Medicare started on July 1, 1966, Part A covered hospital stays, skilled nursing facility care, and some home health services. Part B, which covered doctor visits and outpatient care, was optional and required a monthly premium. Prescription drugs were not covered then and are still not fully covered today, though Part D (added in 2006) covers many medications.