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How was Medicare developed?

Dr. Michael Roizen, MD
Internal Medicine

Medicare was developed from a request by Harry Truman for Congress to create a national health plan. As a senator, Truman was shocked by how many average citizens could not afford to have a check-up with a doctor. In 1945, as President, Truman proposed the idea of a government-sponsored health plan for working Americans and their families, but it was shot down.

 In the 1960s, Lyndon Johnson was concerned about the fact that about 40% of seniors lived at or below the poverty level and could not afford basic health care. So with the foundation that Truman had laid, Johnson signed Medicare (and Medicaid) into law in 1965, creating the first iteration of government-sponsored health insurance for the elderly and the poor. It is the nation's second-largest social insurance program, with total 2010 calendar year expenditures estimated to reach over $600 billion. (For comparison, Social Security Old-Age, Survivors, and Disability Insurance (OASDI) expenditures are expected to total $700 billion in 2010.) Medicare was enacted in 1965 as a sweeping compromise among competing proposals. In 1967, its first complete year of operation, the Medicare program expenditures accounted for approximately 9.7% of all health expenditures in the United States. This proportion increased steadily from 1972 to 1983 before stabilizing in the vicinity of 16% for 1984 to 1993. In recent years, the percentage increased further, reaching over 30%.

Since 1965, Medicare has evolved and developed a great deal. Now, it has been expanded to include prescription drug plans and coverage for disabled Americans and people living with HIV/AIDS. Supplemental policies such as Medigap are also available to fill gaps in coverage.

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.