A Brief History of Medicare: How It Began and How It Has Changed

Medicare has been part of American life for more than 60 years, but the program we know today looks quite different from the one that began in the 1960s.

Medicare Begins: 1965

Medicare was signed into law on July 30, 1965, by President Lyndon B. Johnson as part of the Social Security Amendments of 1965.

At the time, many older Americans had difficulty obtaining affordable private health insurance. Medicare was created to provide health coverage for Americans age 65 and older.

The first two parts of Medicare were:

Medicare Part A – Hospital Insurance
Part A was created to help cover inpatient hospital care and certain other services, including skilled nursing facility care and hospice care.

Medicare Part B – Medical Insurance
Part B was created to help cover physician services, outpatient care, and other medically necessary services.

Medicare coverage officially began on July 1, 1966.

Medicare Expands in 1972

In 1972, President Richard Nixon signed legislation expanding Medicare eligibility beyond people age 65.

Medicare was extended to certain people under age 65 who had received Social Security disability benefits for the required period, as well as people with end-stage renal disease (ESRD) who met certain requirements.

The Beginning of Medicare Advantage

Private health plans have participated in Medicare in different forms for decades, but a major change occurred with the Balanced Budget Act of 1997.

The law created Medicare+Choice, or Part C, giving beneficiaries additional opportunities to receive their Medicare benefits through private health plans.

In 2003, Medicare+Choice was renamed Medicare Advantage, the name we use today.

Medicare Advantage plans provide Part A and Part B benefits through private insurance companies approved by Medicare. Many plans may also include additional benefits and prescription drug coverage.

Medicare Part D Arrives

Another major change came in 2003, when President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act.

This created Medicare Part D, Medicare’s outpatient prescription drug benefit.

Part D coverage officially became available in 2006, giving Medicare beneficiaries access to prescription drug coverage through private insurance companies.

Medicare Continues to Change

Today, Medicare covers more than just hospital and physician services, and the program continues to evolve as laws, healthcare needs, technology, and prescription drug coverage change.

Understanding how Medicare developed also helps explain why there are so many different “parts” and choices today.

Need help understanding your Medicare options?

At Mindful Medicare Solutions, I help people throughout the Miami Valley understand Medicare and make informed decisions about their coverage. Whether you’re approaching 65, retiring, or already enrolled in Medicare, I’m here to provide local, year-round guidance.