A History of Medicare: How Medicare Has Changed Since 1965
Medicare has been part of the American healthcare system for more than 60 years, but the program people know today looks considerably different from the one established in 1965.
The original Medicare program was designed primarily to help older Americans access hospital and medical care. Over the decades, Congress expanded eligibility, introduced private health plan options, added prescription drug coverage, and changed Medicare benefits to reflect new approaches to healthcare delivery.
For older adults, caregivers, families, and people approaching Medicare eligibility, understanding the history of Medicare can provide helpful context for a program that now includes multiple parts and coverage options. That history begins with a problem that became increasingly difficult to ignore during the middle of the 20th century: Many older Americans had significant healthcare needs but limited access to affordable health insurance.
What Did Older Americans Do Before Medicare?
Before Medicare, older Americans generally had to rely on private health insurance, employer-sponsored coverage, personal savings, assistance from family members, charitable care, or other available programs to pay for healthcare. Access to those resources was far from uniform.
The problem became especially significant after retirement. Healthcare needs often increased with age at the same time that income declined. Private health insurance could also become particularly expensive for older adults.
The Social Security Administration’s historical account of Medicare describes inadequate protection against healthcare costs as a major gap in the social insurance system of the early 1960s. It notes that the cost of adequate private insurance in retirement was more than many older people could afford.
Efforts to address the issue began well before Medicare became law. In 1945, President Harry S. Truman proposed a comprehensive national health insurance program to Congress. His proposal did not become law, but it helped advance a national debate over the federal government’s role in healthcare.
The issue continued through subsequent presidential administrations. During the 1950s and early 1960s, lawmakers considered different approaches to providing health coverage to older adults. The Kerr-Mills Act of 1960, for example, provided federal assistance to states for medical care for certain older adults with limited financial resources. Policymakers continued debating whether health insurance for older Americans should instead be connected to Social Security.
President John F. Kennedy supported Medicare legislation during his administration, but efforts to enact the program did not succeed before his death in 1963. President Lyndon B. Johnson subsequently made healthcare coverage for older Americans a major legislative priority.
The eventual creation of Medicare therefore cannot be attributed to a single proposal or person. It resulted from decades of debate, changing proposals, congressional negotiations, and efforts by several presidential administrations.
When Was Medicare Created?
After years of debate over healthcare coverage for older Americans, Medicare became law in 1965. On July 30 of that year, President Lyndon B. Johnson signed the Social Security Amendments of 1965, establishing Medicare and Medicaid and creating two programs that would become major parts of the American healthcare system.
Johnson traveled to the Harry S. Truman Library in Independence, Missouri, for the signing ceremony. The location recognized Truman’s earlier efforts to establish national health insurance. At the ceremony, Johnson enrolled former President Truman as the first Medicare beneficiary and presented him with the first Medicare card.
Medicare services began the following year, on July 1, 1966. The program extended health coverage to nearly all Americans age 65 and older, and approximately 19 million people participated during Medicare’s initial implementation.
Who Started Medicare and Why?
President Johnson was the president who signed Medicare into law, but the program developed through the work of many people over several administrations.
Truman had called for national health insurance two decades earlier. Kennedy supported legislation focused on healthcare coverage for older adults. Johnson made the issue a priority after becoming president and signed the legislation passed by Congress in 1965.
The central problem Medicare was intended to address was straightforward: Older Americans frequently faced greater healthcare needs just as retirement reduced their incomes and access to employer-sponsored insurance. Medicare created a federal insurance program intended to provide greater access to hospital and medical coverage for this population.
Medicare and Medicaid Were Created Together, But They Are Different
Medicare and Medicaid were both established by the 1965 Social Security amendments, but they are separate programs.
Today, Medicare is federal health insurance for people age 65 and older as well as certain people under 65 with qualifying disabilities or conditions. Medicaid is a joint federal and state program that provides health coverage to eligible populations according to requirements that include income and other factors. Medicaid programs can differ from state to state.
Some people qualify for both programs. These individuals are often described as “dual eligible,” and Medicaid may help with certain costs and services that Medicare does not cover, depending on the individual’s eligibility and state program.
Understanding the distinction becomes important when looking at how Medicare developed after 1965.
How Original Medicare Began With Parts A and B
When Medicare coverage began in 1966, the program had two primary components: Part A and Part B. These two parts are now collectively known as Original Medicare.
Medicare Part A, or hospital Insurance, was established to help cover hospital and certain related healthcare expenses. Today, Part A helps cover qualifying inpatient hospital care, skilled nursing facility care, hospice care, and home health care.
Medicare Part B, or medical Insurance, was designed to supplement Part A by helping cover physician and other medical services. Today, Part B can help cover services from doctors and other healthcare providers, outpatient care, durable medical equipment, home health care, and many preventive services.
The two parts were also financed differently from the beginning. Part A hospital insurance was funded through payroll taxes. Part B was established as voluntary medical insurance funded through beneficiary premiums and federal funds.
That distinction helps answer a common question about Medicare’s history: What year did people have to start paying for Medicare?
There was not a later year when Medicare suddenly changed from completely free healthcare to a paid program. Cost-sharing and different funding mechanisms were built into Medicare from its beginning. Part B beneficiaries paid monthly premiums when coverage began in 1966. Historical Social Security records indicate that the initial monthly Part B premium was $3.
Premiums, deductibles, coinsurance, and other Medicare costs have changed many times since then. Because these amounts can change from year to year, people looking for current costs should consult Medicare.gov rather than relying on historical figures.
The original two-part structure nevertheless remains recognizable today. Parts A and B still form the foundation of Original Medicare, even as the broader Medicare program has expanded considerably around them.
How Medicare Expanded Beyond Its Original Coverage
Medicare continued to change in the decades after coverage began. Congress expanded who could qualify for the program, while private health plans gradually became another way for beneficiaries to receive Medicare coverage.
Medicare Eligibility Expands in 1972
Medicare initially focused on people age 65 and older. In 1972, Congress expanded eligibility to include additional populations.
The changes extended Medicare to certain people under age 65 with long-term disabilities as well as people with end-stage renal disease (ESRD) who met program requirements. The expansion allowed certain people to qualify for Medicare before age 65 based on disability or end-stage renal disease (ESRD).
Eligibility rules have continued to develop since then. Today, people under age 65 may qualify for Medicare based on certain disabilities or health conditions. Because requirements depend on an individual’s circumstances, current eligibility information should always be confirmed through Medicare or the Social Security Administration.
Private Medicare Plans Emerge
The way beneficiaries receive Medicare coverage has also evolved as private health plans have taken on a larger role in the program. Over several decades, policymakers introduced managed-care approaches and different ways of organizing and paying for healthcare.
A major milestone arrived with the Balanced Budget Act of 1997, which established Medicare+Choice. The program expanded the private-plan options available within Medicare.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 further reshaped private Medicare coverage. Medicare+Choice was reworked into the program now known as Medicare Advantage, or Medicare Part C.
Medicare Advantage provides an alternative way to receive Medicare coverage. Rather than receiving Part A and Part B benefits directly through Original Medicare, beneficiaries who choose Medicare Advantage enroll in Medicare-approved private plans.
Today, Medicare Advantage plans provide Part A and Part B coverage and generally include Part D prescription drug coverage. Plans may also offer additional benefits that Original Medicare does not cover. Plan networks, rules, costs, and benefits can vary.
Medicare Advantage added another way for beneficiaries to receive their Medicare benefits while Original Medicare remained in place.
Medicare Part D Adds Prescription Drug Coverage
Prescription medications became an increasingly important part of healthcare during the decades after Medicare was created, but the original program did not include the comprehensive outpatient prescription drug benefit that Medicare beneficiaries can access today.
That changed with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The law established Medicare Part D, the prescription drug benefit. Part D coverage became available in 2006.
The addition represented one of the largest expansions of Medicare benefits since the program’s creation.
Today, beneficiaries with Original Medicare can obtain prescription drug coverage through a separate Part D plan. Many Medicare Advantage plans combine Part A, Part B, and Part D coverage. Medicare drug plans are offered by private insurance companies that operate under Medicare rules.
Part D has continued to evolve since prescription drug coverage became available in 2006. One prominent feature of the original benefit design was a prescription drug coverage gap that became widely known as the “donut hole.” Beneficiaries who reached certain spending thresholds could face a period of higher prescription drug costs before catastrophic coverage began.
The Affordable Care Act of 2010 introduced changes that gradually reduced beneficiary costs within that coverage gap. Additional reforms followed with the Inflation Reduction Act of 2022, including a new annual limit on beneficiaries’ out-of-pocket spending under Part D beginning in 2025 and the Medicare Drug Price Negotiation Program. Negotiated prices for the first group of selected drugs took effect in 2026.
The Inflation Reduction Act of 2022 introduced another series of prescription drug changes. These included a new annual limit on beneficiaries’ out-of-pocket spending under Part D beginning in 2025 and the Medicare Drug Price Negotiation Program. Negotiated prices for the first group of selected drugs took effect in 2026.
These changes show why Medicare history does not end with the creation of Parts A, B, C, and D. Congress and federal agencies continue to modify how different portions of the program operate.
How Medicare Has Adapted to Changing Healthcare Needs
The healthcare system of the 2020s bears little resemblance to the one that existed when Medicare began in 1966. Medical technology has advanced, more care takes place outside hospitals, people are living longer with chronic conditions, and healthcare teams have new ways to communicate with and monitor patients.
Medicare has changed along with that environment, including a greater emphasis on preventive and primary care. Part B today covers many preventive services, including certain screenings, vaccines, and yearly wellness visits.
Healthcare delivery has also increasingly emphasized coordination among providers, particularly for people managing multiple health conditions. Medicare has introduced and tested different approaches to coordinated and value-based care over the years, including models designed to connect payment more closely with quality and coordination.
Technology has also changed how some Medicare beneficiaries can access care through telehealth. Before March 2020, Medicare payment for telehealth was generally limited by requirements involving factors such as a patient’s location and geographic area. During the COVID-19 public health emergency, the federal government temporarily broadened access to Medicare telehealth, including allowing many beneficiaries to receive eligible services from home.
Some Medicare telehealth policies have continued to evolve since the public health emergency ended in May 2023. Because telehealth requirements can change through legislation and federal rulemaking, patients should check current Medicare guidance when determining whether a particular virtual service is covered.
Remote patient monitoring is another example of healthcare extending beyond a traditional medical office. With remote patient monitoring, certain health information, such as blood pressure, weight, or glucose measurements, can be collected using connected medical devices and transmitted to healthcare providers. Medicare currently covers remote patient monitoring in qualifying circumstances for acute and chronic conditions.
These developments are especially relevant to older adults who may have changing healthcare needs, limited transportation, or several providers involved in their care. They also reflect a larger shift in where healthcare can take place. Depending on a patient’s needs, coverage, and available services, care may involve the home, virtual appointments, remote monitoring, and coordination among primary care and specialty providers rather than taking place exclusively in a hospital or doctor’s office.
What Does Medicare Look Like Today?
After more than six decades of changes, Medicare now has four main parts. Although the terminology can initially seem complicated, each part has a different purpose.
Part A: Hospital Insurance
Part A helps cover qualifying inpatient hospital care, skilled nursing facility care, hospice care, and home health care.
Part B: Medical Insurance
Part B helps cover medically necessary and preventive services, including services from doctors and other healthcare providers, outpatient care, durable medical equipment, and certain home health services.
Together, Parts A and B make up Original Medicare.
Part C: Medicare Advantage
Medicare Advantage is an alternative to Original Medicare offered through Medicare-approved private companies. Medicare Advantage plans include Part A and Part B coverage, and most also include Part D prescription drug coverage.
Plans must cover almost all medically necessary services covered by Original Medicare, but they can have different provider networks, out-of-pocket costs, referral requirements, and prior authorization rules. Many plans also offer benefits beyond those covered by Original Medicare.
Part D: Prescription Drug Coverage
Part D helps cover prescription drugs. People with Original Medicare can enroll in a separate Medicare drug plan, while many Medicare Advantage plans include Part D coverage.
Another term beneficiaries may encounter is Medicare Supplement Insurance, or Medigap. These policies are sold by private insurance companies and can help pay certain out-of-pocket costs associated with Original Medicare. Medigap is different from Medicare Advantage and generally supplements Original Medicare rather than replacing the way a beneficiary receives it.
Medicare coverage and costs depend on several factors, including the type of coverage a person chooses, the healthcare services they receive, and, when applicable, the specific private plan in which they enroll. Coverage rules and costs can also change.
For that reason, a historical understanding of Medicare can provide useful context, but it should not replace current information from Medicare.gov, a person’s insurance plan, or other appropriate resources when making healthcare and coverage decisions.
A Timeline of Medicare History
Looking at several major milestones together shows how much the Medicare program has evolved since the middle of the 20th century.
1945: President Harry S. Truman proposes a comprehensive national health insurance program to Congress. The proposal does not become law, but Truman’s efforts become an important part of the history leading to Medicare.
1960: The Kerr-Mills Act establishes a federal-state approach to helping certain older adults with medical costs.
1965: President Lyndon B. Johnson signs the Social Security Amendments into law on July 30, establishing Medicare and Medicaid. Former President Truman receives the first Medicare card.
1966: Medicare coverage begins on July 1. Approximately 19 million older Americans participate during the program’s initial implementation.
1972: Medicare eligibility expands to include certain people under 65 with long-term disabilities and people with end-stage renal disease who meet program requirements.
1980s: Private health plans take on a growing role within Medicare as the program develops new approaches to managed care.
1997: The Balanced Budget Act establishes Medicare+Choice, expanding private-plan options within Medicare.
2003: The Medicare Prescription Drug, Improvement, and Modernization Act establishes Part D and transforms Medicare+Choice into the program that becomes known as Medicare Advantage.
2006: Medicare Part D prescription drug coverage becomes available to beneficiaries.
2010: The Affordable Care Act makes several changes affecting Medicare, including changes involving preventive healthcare and the Part D prescription drug coverage gap.
2020: Medicare telehealth access expands substantially in response to the COVID-19 public health emergency, allowing many more beneficiaries to receive eligible care remotely.
2022: The Inflation Reduction Act introduces a series of changes to Medicare prescription drug policy, including reforms affecting Part D out-of-pocket spending and the creation of the Medicare Drug Price Negotiation Program.
2025: A new annual out-of-pocket limit takes effect for Medicare Part D prescription drug costs.
2026: Negotiated prices for the first group of prescription drugs selected under the Medicare Drug Price Negotiation Program take effect.
The timeline is extensive, but the pattern is clear. Medicare has repeatedly changed as policymakers have expanded eligibility, added benefits, introduced new coverage options, and responded to changes in medicine and healthcare delivery.
Understanding Medicare as the Program Continues to Evolve
Medicare began with a relatively simple structure: hospital and medical insurance intended primarily for Americans age 65 and older. Since then, eligibility has expanded, prescription drug coverage has been added, Medicare Advantage has created another way to receive benefits, and new forms of healthcare delivery have become part of the Medicare landscape.
Healthcare needs often change with age. A person who once needed only routine primary care may later need specialty care, help managing multiple health conditions, follow-up care after a hospital stay, or healthcare that can be provided closer to home. Understanding the basics of Medicare can help patients and families ask informed questions about how their coverage relates to those changing needs.
Medicare will continue to evolve as healthcare changes. Coverage requirements, costs, benefits, and policies can be updated from year to year, which makes current information particularly important.
Patients and caregivers can use Medicare.gov and the Centers for Medicare & Medicaid Services for up-to-date information about Medicare coverage and benefits. They can also talk with their healthcare providers about the care they need and whether particular services may be covered.
For more than 60 years, Medicare has changed alongside the people and healthcare system it serves. Understanding where the program started can make its structure today easier to understand and provide useful context as Medicare continues to change.