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Milestone Moments in Medicare's History

How this vital health insurance program has changed since 1965


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July 30, 1965: With former President Harry S. Truman at his side, President Lyndon B. Johnson signs the Medicare bill into law.
Universal History Archive/UIG via Getty Images

On July 30, 1965, at a public ceremony in Independence, Missouri, President Lyndon Baines Johnson signed Medicare into law.

Moments later, the 36th president of the United States presented America's 33rd president, Harry S. Truman — then 81 years old and praised by LBJ as "the real daddy of Medicare" — the nation's first Medicare card.

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Medicare provides health insurance to Americans age 65 and older and to younger people with certain disabilities or health conditions. In 2023, more than 65 million Americans depend on Medicare for their health insurance coverage. With increasing life expectancies and more boomers turning 65 every day, the number of people in Medicare is projected to double between 2000 and 2030, when the youngest of the boomers will have reached Medicare age.

When it started, Medicare consisted of two parts: Medicare Part A hospital insurance coverage, which is financed by payroll deductions and charges no premiums to those who have contributed for at least 10 years; and Medicare Part B, an optional medical insurance program for which enrollees pay a monthly premium.

Medicare's first beneficiaries had a $40 annual deductible for Part A. The monthly premium for Part B — in which Truman did enroll — was $3. In 2023, the Part A deductible is $1,600 for each hospital stay, and a standard monthly premium for Part B is $164.90 (high earners pay more), with a $226 annual deductible.

Before Medicare, individuals over age 65 without access to an employer’s health coverage or a private insurance plan were on their own, or dependent upon their families, when they needed medical care. Efforts to create such a health safety net program were years in the making.

Here is a timeline of several Medicare and insurance-related milestones:

1945: President Truman calls for a national health insurance program for all. Legislators on Capitol Hill don’t act. He asks again in 1947 and 1949. Bills are introduced but die in Congress.

1961: A task force convened by President John F. Kennedy recommends creating a national health insurance program specifically for those over 65. In May 1962, Kennedy gives a televised speech about the need for Medicare.

1964: President Johnson calls on Congress to create Medicare.

1965: Legislation creating Medicare as well as Medicaid (health care services for certain low-income people and others) passes both houses of Congress by votes of 70-24 in the Senate and 307-116 in the House. Johnson signs the Medicare bill into law on July 30 as part of the Social Security Amendments of 1965.

1966: When Medicare services actually begin on July 1, more than 19 million Americans age 65 and older enroll in the program.

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1972: President Richard M. Nixon extends Medicare eligibility to individuals under age 65 who have long-term disabilities or end-stage renal disease.

1997: Private insurance plans — originally called Medicare+Choice or Part C, later renamed Medicare Advantage — begin, giving beneficiaries the option of choosing an HMO-style Medicare plan instead of the traditional fee-for-service Medicare program.

2003: On Dec. 8, President George W. Bush greatly expands Medicare by signing the Medicare Modernization Act, which establishes a prescription drug benefit. This optional coverage, for which beneficiaries pay an additional premium, is called Medicare Part D.

2006: On Jan. 1, Medicare Part D goes into effect and enrolled beneficiaries begin receiving subsidized prescription drug coverage.

2007: Medicare beneficiaries with higher incomes must start paying higher premiums for Part B, called the Income-Related Monthly Adjustment Amount, which was established by the 2003 Medicare Modernization Act.

2010: The Affordable Care Act, the health care law signed by President Barack Obama on March 23, mandates that Medicare beneficiaries receive certain preventive care services and health screenings, such as mammograms, free of charge and starts to reduce the out-of-pocket expenses of Part D enrollees.

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2011: Medicare beneficiaries with high incomes must start paying higher premiums for Part D in addition to Part B.

2018: All enrollees start to receive new Medicare cards; each includes a unique 11-digit combination of numbers and letters rather than a Social Security number to help combat ID theft and Medicare fraud. All Medicare beneficiaries receive new cards between April 2018 and April 2019.

2019: Medicare Advantage plans can offer enrollees with chronic conditions additional medical-related benefits, such as transportation to doctor appointments and over-the-counter medicines. In 2020, they are able to start paying for nonmedical benefits for people with chronic conditions, including meal delivery, home improvements such as wheelchair ramps, and transportation to the grocery store.

2020: The Part D donut hole closes. When Part D prescription drug coverage was introduced, participants had to pay 100 percent of their drug costs out of pocket after their annual spending reached a certain amount and before their expenses reached the catastrophic coverage level. This coverage gap gradually started shrinking in 2011. It closed by 2019 for brand-name drugs and in 2020 for generic drugs. Now Part D beneficiaries pay no more than 25 percent of the cost of their prescription drugs until they reach the catastrophic coverage level, where they pay no more than 5 percent of their drug costs.

2022: On Aug. 16, President Joe Biden signs the Inflation Reduction Act, which makes several major enhancements to Medicare prescription drug coverage, including allowing Medicare to negotiate prices for some medications with drugmakers, penalizing pharmaceutical companies if they raise their prices more than the rate of inflation, making certain vaccines free to enrollees, capping out-of-pocket costs for prescription drugs and other major changes. The provisions take effect over the next few years.

2023: Two key pieces of the Inflation Reduction Act take effect: Vaccines recommended for adults by the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices (ACIP) are now free to Medicare beneficiaries, including the shingles vaccineCopays for insulin covered by Part D plans are capped at $35 per month starting on Jan. 1. The $35 copay cap for insulin taken through a pump, which is covered by Part B, takes effect on July 1.

2024: Three more pieces of the Inflation Reduction Act take effect: The government will expand eligibility for the Extra Help program, which helps people with low incomes pay Part D premiums and out-of-pocket costs. Part D plan members whose drug costs are so high that they enter the catastrophic phase of coverage will not have any more out-of-pocket costs for the rest of the year. Also, from 2024 through 2029, Part D plans will not be able to increase their premiums by more than 6 percent per year.

2025: The maximum amount Part D or Medicare Advantage plan members will have to pay out of pocket for covered prescription drugs will be capped at $2,000. Part D members will also be able to spread out cost-sharing payments throughout the year, so they aren’t hit with a big drug bill in one month.

2026: Part D price negotiations will start to take effect. Negotiated prices for up to 10 drugs will take effect in 2026. More drugs will be added to the negotiations process in subsequent years: up to 15 drugs in 2027 and 2028, and up to 20 drugs in 2029 and later. Price negotiations will take effect in 2028 for Medicare Part B drugs, which are usually administered in a hospital or doctor’s office.

Melissa Stanton, a senior adviser and editor of the AARP Livable Communities initiative, contributed to this article. 

 

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