Medicare (United States) - Program History

Program History

In 1965, Congress created Medicare under Title XVIII of the Social Security Act to provide health insurance to people age 65 and older, regardless of income or medical history. Before Medicare's creation, only half of older adults had health insurance, with coverage often unavailable or unaffordable to the other half, because older adults had half as much income as younger people and paid nearly three times as much for health insurance. Medicare also spurred the integration of thousands of waiting rooms, hospital floors, and physician practices by making payments to health care providers conditional on desegregation.

In 1972, Congress expanded Medicare eligibility to younger people who have permanent disabilities and receive Social Security Disability Insurance (SSDI) payments and those who have end-stage renal disease (ESRD). Congress further expanded Medicare in 2001 to cover younger people with amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease). Initially Medicare consisted exclusively of Part A, which covers hospital and other inpatient services, and Part B, which covers outpatient care, physician visits, and other “medically necessary services.” Congress then added Medicare Part C (originally called Medicare+Choice, then later changed to Medicare Advantage), which allows enrollees to receive their Medicare benefits through a private plan, under the Balanced Budget Act of 1997, while Medicare Part D was created under the Medicare Modernization Act of 2003.