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A brief history of Medicare in America

Landmark social program now covers 49.4 million Americans



Discussion about a national health insurance system for Americans goes all the way back to the days of President Teddy Roosevelt, whose platform included health insurance when he ran for president in 1912.But the idea for a national health plan didn’t gain steam until it was pushed by U.S. President Harry S. Truman.

On November 19, 1945, seven months into his presidency, Truman sent a message to Congress, calling for creation of a national health insurance fund, open to all Americans.The plan Truman envisioned would provide health coverage to individuals, paying for such typical expenses as doctor visits, hospital visits, laboratory services, dental care and nursing services. Although Truman fought to get a bill passed during his term, he was unsuccessful and it was another 20 years before some form of national health insurance – Medicare for Americans 65 and older, rather than earlier proposals to cover qualifying Americans of all ages – would become a reality.

President John F. Kennedy made his own unsuccessful push for a national health care program for seniors after a national study showed that 56 percent of Americans over the age of 65 were not covered by health insurance. But it wasn’t until after 1965 – after legislation was signed by President Lyndon B Johnson – that Americans started receiving Medicare health coverage when Medicare’s hospital and medical insurance benefits launched for the following 12 months.

Today, Medicare continues to provide health care for those in need. By 2015, there were 55.5 million people receiving health coverage through a Medicare program, according to the Kaiser Family Foundation. Benefits paid in 2013 amounted to $583, which was about 14 percent of the federal budget. The retirement wave of Baby Boomers was once expected to cause Medicare to become a budget buster, but the Congressional Budget Office is now projecting increases in spending to be much smaller than once thought, thanks in major part to cost savings under Part A that were part of Obamacare.

In addition, the Obama administration has used the Affordable Care Act to push doctors to collaborate on patients’ medical care and purchase certain drugs and other medical services at more sustainable rates, potentially saving the program billions more – this time under Medicare’s Part B medical benefit.

A brief look at Medicare milestones

The ’60s

  • On July 30, 1965 President Lyndon B. Johnson made Medicare law by signing H.R. 6675 in Independence, Missouri. Former President Truman was issued the very first Medicare card during the ceremony. In 1965, the budget for Medicare was around $10 billion and 19 million individuals signed up for Medicare during its first year.
  • In 1966, Medicare’s coverage took effect, as Americans age 65 and older were enrolled in Part A and millions of other seniors signed up for Part B.

The ’70s

    • In 1972, President Richard M. Nixon signed into the law the first major change to Medicare. The legislation expanded coverage to include individuals under the age of 65 with long-term disabilities and individuals with end-stage renal disease (ERSD).

People with disabilities have to wait for Medicare coverage, but Americans with ESRD can get coverage as early as three months after they begin regular hospital dialysis treatments – and don’t have to be approved for disability insurance to qualify. This has served as lifeline for Americans with kidney failure – a devastating and extremely expensive disease.

The ’80s

  • When Congress passed the Omnibus Reconciliation Act of 1980, it expanded home health services. The bill also brought Medigap – or Medicare supplement insurance – under federal oversight.
  • In 1982, hospice services for the terminally ill were added to a growing list of Medicare benefits.
  • In 1988, Congress passed the Medicare Catastrophic Coverage Act, adding a true limit to the Medicare’s total out-of-pocket expenses for Part A and Part B, along with a limited prescription drug benefit. Most of the Catastrophic Care law was repealed less than a year later after opposition from senior groups over the program’s higher premiums.
  • The new law also allowed states to “Buy-In” individuals over 65 or who qualified before than based on disability but hadn’t paid into the Social Security payroll system. These are known as Qualified Medicare Beneficiaries (QMB), and Medicaid pays their premiums. The QMB program provides a lifeline to low-income Medicare beneficiaries and their families, and helps state Medicaid programs by shifting some costs to the federal government. It was one of the only parts of the 1988 law that was not repealed.

The ’90s

  • New legislation required state Medicaid programs to cover premiums of the new Specified Low-Income Medicare Beneficiary (SLMB) elgibility group – those eligible for Medicare with incomes between 100 and 120 percent of the federal poverty level.
  • Congress also passed the Qualified Individual (QI) programs and the remaining program (of two originally enacted) requires Medicaid to pay premiums (through a federal grant) for Part B members with incomes between 120 and 135 percent of poverty. The annual funding for QI is limited and once exhausted, beneficiaries are not entitled to receive the benefit – though states can provide it on their own dime. Unlike QMB and SLMB, the QI program must be reauthorized by Congress every few years, and states generally do not take part in financing it.
  • Other legislation gave those eligible for Medicare coverage more options on the private market through Medicare Part C – Medicare Advantage (MA). Originally known as Medicare HMOs or “Medicare+Choice” (among other names), the new private options ultimately offered add-on benefits such as prescription drug coverage for new enrollees. The Affordable Care Act requires more accountability from these plans, including tying the insurers’ incomes to the star rating system – a measure of several different ways the plan’s are required to provide quality care.

The ’00s

  • Americans younger than age 65 with amyotrophic lateral sclerosis (ALS) are allowed to enroll in Medicare without a waiting period if approved for Social Security Disability Insurance (SSDI) income. (Most SSDI recipients have a 24-month waiting period for Medicare from when their disability cash benefits start.)
  • President George W. Bush signed into law the Medicare Prescription Drug Improvement and Modernization Act of 2003, adding an optional prescription drug benefit known as Part D and which is provided only by private insurers. Until this time, about 25 percent of those receiving Medicare coverage did not have a prescription drug plan.

2010

  • The Patient Protection and Affordable Care Act of 2010 includes a long list of reform provisions intended to contain Medicare costs while increasing revenue, improving and streamlining its delivery systems, and even increasing services to the program.

2015 & 2016

  • At the end of 2014, the Kaiser Family Foundation reported the number of Americans on Medicare as 49,435,610.
  • In early 2015 after years of trying to accomplish reforms, Congress passed the Medicare and CHIP Reauthorization Act (MACRA), repealing a 1990s formula that required an annual “doc fix” from Congress to avoid major cuts to doctor’s payments under Medicare Part B. MACRA served as a catalyst through 2016 and beyond for CMS to push changes to how Medicare pays doctors for care – moving to paying for more value and quality over just how many services doctors provide Medicare beneficiaries.
  • MACRA also extended the QI program for certain low-income members’ Part B premium payments (among other extensions of Medicaid and CHIP – related programs).

For more information, view the Kaiser Family Foundation’s comprehensive Medicare timeline.

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