What is the history of Medicare?

Dr. Michael Roizen, MD
Internal Medicine

Medicare evolved 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 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. Since 1965, Medicare has evolved and developed a great deal.

So, to recap, in the mid-1960s, about 40% of seniors lived at or below the poverty level and could not afford basic health care. Most physicians donated a day a week of their time to city hospitals (such as Boston City Hospital, Cook County Hospital, Los Angeles County Hospital, etc.) to help provide this care. After being signed into law, more than 19 million people enrolled in Medicare. Today, Medicare enrollment is up to 46 million with payments from the system rising over 150 fold (from $3.2 billion in 1967 to more than $520 billion in 2009). The 65 and older age group continues to be the only age group with essentially universal coverage in the USA.

The Medicare idea grew out of the movement for government health and retirement insurance that led to Social Security. But some people believed a national health care plan was akin to Communism, so there was resistance to the program initially. Medicare was signed into law by President Lyndon Johnson in 1965. When it went into effect in 1966, more than 19 million people enrolled.

Medicare experienced little change for nearly 20 years. But in 1988, the Medicare Catastrophic Coverage Act made sweeping adjustments that included prescription drug benefits. However, to finance the expansion, higher-income seniors had to pay higher premiums and deductibles. That group was unwilling to subsidize low-income seniors. The next year, Congress repealed the changes.

In 1997, managed-care options were offered as part of a move to privatize parts of Medicare. Then in 2003 came Medicare Prescription Drug, Improvement, and Modernization Act. Along with the drug plan, MMA links premiums to beneficiary income. However, this expansion is financed largely through an increase in government spending.

Medicare has always been controversial, from early disagreements about what if any type of national health care system the U.S. should adopt, to continual struggles with funding, program growth and fraud. Seniors who depend on the system sometimes react harshly to changes.

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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.