50 Years of Medicare
How did we get here?
The New Deal
Franklin D. Roosevelt's Social Security Act passes, but without a universal health insurance component because of opposition from Republicans, conservative Democrats, and organized medicine.
Health Care Reformer in Chief
Harry Truman, the ﬁrst president to unreservedly advocate national health insurance, sees his proposal—targeted as socialized medicine—stall on Capitol Hill.
John F. Kennedy’s administration went on to pursue more modest plans to cover older Americans, but they failed to get traction in Congress.
“The greatest gap in our social security structure is the lack of adequate provision for the Nation’s health.…This great Nation cannot afford to allow its citizens to suffer needlessly from the lack of proper medical care.” — Harry TrumanWhite House Central File, Staff Member and Ofﬁce Files, Ca 23, Folder: Health Proposal, Nixon Library. vanaugh Subject File, Box
Medicare is Born
Lyndon Johnson champions and signs the Social Security Amendments of 1965, creating Medicare and Medicaid, in Harry Truman's hometown of Independence, Missouri. Medicare coverage includes hospital (Part A) and physician (Part B) services for people age 65 and older, and Medicaid covers low-income children and their caretaker relatives.
Medicare Eligibility Expanded
The Social Security Amendments of 1972 extend Medicare eligibility to people under age 65 with long-term disabilities and those with end-stage renal disease. They also establish the Professional Standards Review Organizations (PSROs) to review appropriateness of care.
Medicare Hospice benefit added, private plans offered
The Tax Equity and Fiscal Responsibility Act adds a Medicare hospice benefit; establishes a program through which Medicare beneficiaries can choose to obtain their benefits from private health insurance plans; sets limits on Medicare hospital payments per case; and requires the development of a proposed prospective payment system for inpatient hospital services, under which hospitals would receive a fixed payment amount for each type of case. It also replaces the PSROs with Peer Review Organizations (PROs), which were given greater authority to review the appropriateness of hospital care and penalize hospitals for inappropriate care.
A New Payment System
The Social Security Amendments of 1983 establish the prospective payment system for inpatient hospital services, in which Medicare pays hospitals a fixed fee for each type of case, determined in advance and based on the relative average cost of treating that type of case in hospitals nationwide instead of the hospital’s own costs.
Promoting Safe Nursing Homes
The Omnibus Budget Reconciliation Act of 1987 establishes quality standards for Medicare- and Medicaid-certiﬁed nursing homes.
New Benefits Added—
The Medicare Catastrophic Coverage Act of 1988 establishes an outpatient prescription drug benefit and a cap on beneficiaries’ out-of-pocket costs. The major provisions of the law were repealed in 1989.
Cost Containment Efforts
The Omnibus Budget Reconciliation Act of 1989 changes the way physicians are paid by Medicare to encourage more efficient care. The Act replaces the previous system, under which physicians were reimbursed based on their usual charges, with one based on an estimate of the resources required to provide the services.
Expansion of Payment Changes
The Balanced Budget Act of 1997 implements the prospective payment system for outpatient services and establishes Medicare Part C, which expands the types of private plans available to Medicare beneficiaries.
A Lasting Drug Benefit
George W. Bush signs the Medicare Modernization Act, which establishes a prescription drug (Part D) benefit available to all Medicare beneficiaries (beginning in 2006) and replaces the Medicare+Choice program with the Medicare Advantage program, making additional types of private plans available and substantially increasing payments to those plans.
Better Coverage, Better Care, Lower Costs
Barack Obama signs the Affordable Care Act (ACA), which strengthens Medicare coverage of preventive care, reduces beneficiary liability for prescription drug costs, institutes reforms of many payment and delivery systems, and creates the Center for Medicare and Medicaid Innovation.
The ACA also adds many new health insurance protections, such as bans on preexisting condition exclusions; establishes health insurance marketplaces for small businesses and individuals to purchase affordable health insurance; and requires that states expand eligibility for Medicaid (a provision the Supreme Court later makes optional).