The History of Medicare – A Quick Look at How it Got Started

On July 30, 1965, U.S. President Lyndon B. Johnson passed the Medicare Benefit legislation as an amendment to the Social Security Legislation.  Medicare is a health insurance program for U.S. citizens at least 65 years old, or those aged younger than 65 years who suffer from certain disabilities.

U.S. citizens and permanent residents who have worked at least 10 years in employment during which they paid Medicare benefit taxes, and who are at least 65 years old, are eligible to participate in the Medicare benefit coverage. 

In fact, persons meeting these two requirements are automatically enrolled the Medicare program on their 65th birthday.  Those who are not automatically eligible or who are younger than 65 years must apply to participate in the Medicare benefit program.

The original Medicare benefit program was comprised of Part A, the hospital insurance coverage, and Part B, the medical insurance coverage.  Parts C and D have been added to address additional health concerns.

Part A of the Medicare benefit program covers hospital stays of at least 72 hours.  It also will pay for stays in a nursing home provided that the nursing home care is related to the hospital stay, the patient requires skilled nursing supervision in lieu of rehabilitation, and the Medicare benefit received in the nursing home is skilled rather than routine.  Part A coverage part is usually free, having been paid for by the beneficiary’s periodic payroll tax deductions.

Part B of the Medicare benefit package is optional and offers medical insurance.  It covers some of the medical providers and services not covered by Part A.  A Part B Medicare benefit can include a doctor’s visit, a laboratory test, an x-ray, a flu vaccination, and certain outpatient procedures, to name a few. 

The Part B Medicare benefit is not free.  Instead, the person must choose whether or not to pay for Part B when notice of Medicare benefit eligibility is received at age 65.  In 2006, the Part B monthly premium was $88.50.

In 1997, Part C of the Medicare Benefit system gave Medicare members the option to receive their care through private insurance plans.  These private plans were in place of the Part A/B coverage of the original Medicare benefit plan.  Regulations for these private plans were modified in 2003, and they became known as Medicare Advantage or MA plans.

The Part D Medicare benefit became effective on January 1, 2006.  Anyone eligible for Parts A or B were automatically eligible to participate in the Part D prescription drug plan.  Part D added the Medicare benefit of allowing participants to enroll in one of many standalone, Medicare-approved prescription drug plan. 

This Medicare benefit provided reduced-cost prescriptions.  Each prescription drug plan was different and had varying restrictions related to location, participating pharmacies, and drugs covered.

Some people fear that the Medicare benefit system will eventually go bankrupt around the year 2018.  The rationale is that more people are retiring and taking advantage of their Medicare benefit plan than are paying into the system.  Once the Baby Boomer generation is fully enrolled in the Medicare benefit system around 2031, the membership is estimated to be 77 million persons.

One Response to The History of Medicare – A Quick Look at How it Got Started

  • Kerry Bowers says:


    Per the sentence in your description of Medicare …
    “Part A coverage part is usually free, having been paid for by the beneficiary’s periodic payroll tax deductions.”
    Recommend deleting the “free” phrase in the description and rewrite as follows .. “Part A has been paid for through the enrollee’s payroll taxes and the taxes of other Americans contributing to the Medicare program.” To insinuate that any part of medicare or any other government program is “free” is a disregard of the facts, unless the person in receipt of such program has never paid taxes to support the United States.

    I appreciate your attention to this matter.

    Kerry Bowers

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