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Medicare History: A Timeline of Critical Events

Written by 
Katee Fletcher

Article at a glance

  • Medicare was conceptualized as far back as 1912 with President Teddy Roosevelt. However, the Medicare program was not fully signed into law until 1965 with President Lyndon B. Johnson.

  • Soon after Medicare was signed into law, changes were made to include individuals under 65 with certain disabilities.

  • More than 30 years later, Medicare Part C, otherwise known as Medicare Advantage (MA) plans were signed into law. This opened up enrollment options for beneficiaries to seek health insurance plans from private insurance companies with larger benefits.

  • After reaching the 2000s, Part D prescription drug coverage was signed into law as an added benefit plan that beneficiaries could enroll in or integrate into their MA plan.

Preface to Medicare

Medicare was conceptualized long before it was fully signed into law. President Teddy Roosevelt included national health insurance on his platform in 1912; President Harry S. Truman wrote to congress to vouch for a national health insurance fund in 1945; President John F. Kennedy wrote to congress about health coverage for older Americans in 1961. Franklin D. Roosevelt’s Social Security Act was signed in 1935, however, Medicare specifically did not gain traction in Congress until the mid-1960s.

1965–1966: Medicare is Signed Into Law

In former President Truman’s hometown of Independence, Missouri, President Lyndon B. Johnson signed H.R. 6675 making Medicare an official law on July 30th, 1965. The budget was set at approximately $10 billion and former President Truman honorarily received the very first Medicare card. Medicare coverage included Part A (hospital insurance) and Part B (physician insurance) for Americans 65 and older. Medicaid coverage monetarily assisted low-income children and their caretakers.

In 1966, Medicare and Medicaid went fully into effect with 19 million individuals signing up for Medicare within its first year of operation.

1972: Eligibility is Altered

President Richard Nixon expanded Medicare’s coverage in 1972 to include individuals under 65 with long-term disabilities or end-stage renal disease (ESRD). During this time, Professional Standards Review Organizations (PSROs) were also established to monitor care appropriateness.

1980: Home Health Services Expanded

In 1980, the Omnibus Reconciliation Act was passed, expanding the home health services covered by Medicare. This bill also introduced supplementary insurance known as Medigap (MedSupp) to Congress’ radar.

1982: Hospice Services Added

In 1982, the Tax Equity and Fiscal Responsibility Act was passed, implementing more changes to the Medicare system such as:

  • Hospice care is included as a benefit under Medicare coverage.

  • Medicare beneficiaries are granted the option of receiving their benefits from a private health insurance plan.

  • Proposes a prospective payment system for inpatient hospital services.

1983: Amendment to Provider Payment System

The Social Security Amendments of 1983 determined a new payment system for inpatient hospital services. These amendments allowed Medicare to establish a fixed price nationwide for inpatient hospital cases. This means that Medicare would pay providers a standard fee that’s set in advance instead of leaving it up to hospitals to decide costs on a case-by-case basis.

1987: Nursing Home Standards Established

Quality standards for nursing homes certified by Medicare and Medicaid were established by the Omnibus Budget Reconciliation Act of 1987. 

1988: Medicare Catastrophic Coverage Act

The Catastrophic Coverage Act of 1988 introduced a cap to Medicare’s out-of-pocket expenses for both Part A and Part B coverage. It also brought about outpatient prescription drug benefits for beneficiaries. However, in less than a year’s time, this act was repealed in 1989 and no cap has been re-established to this very day.

1989: Amendment to Provider Payment System

The Omnibus Reconciliation Act of 1989 altered the way physicians were compensated by Medicare. In an effort to establish more efficient care, Medicare opted to pay physicians for services based on an estimate of what resources were required to complete the services. This amended the prior system that reimbursed physicians based on their usual charges.

1990: Standardization of Medigap (MedSupp) Plans

The Omnibus Budget Reconciliation Act of 1990 formed federal standards for Medigap plans so they were regulated nationwide.

1997: Establishment of Medicare Part C

In 1997, the Balanced Budget Act was created, unfolding full implementation of Medicare Part C for beneficiaries. Medicare Part C granted beneficiaries the option to select from a wider range of healthcare plans offered by private health insurance companies. Not to mention, Part C also offered additional benefits such as prescription drug coverage for new enrollees.

The Balanced Budget Act also introduced a prospective payment system for outpatient services.

2003: Establishment of Medicare Part D

Through the Medicare Prescription Drug Improvement and Modernization Act of 2003, Part D prescription drug coverage is signed into law as a benefit option for all beneficiaries. The prescription drug benefit, known as Part D, was made available solely through private health insurers as stand-alone plans or integrated with Part C, Medicare Advantage plans. As of 2019, 90-percent of Medicare Advantage (MA) plans include Part D coverage in their standard benefits for enrollees.

2010: Establishment of the Affordable Care Act (ACA)

In 2010, President Barack Obama signed the Affordable Care Act (ACA) which implemented a variety of changes to Medicaid and Medicare benefits, including but not limited to:

  • Strengthening Medicare’s coverage for preventive services.

  • Reducing beneficiary liability for Part D prescription drug costs.

  • Instituting reform for payment and delivery systems.

  • Creating the Center for Medicare and Medicaid Innovation.

  • Banning preexisting condition exclusions.

  • Forming affordable health insurance marketplaces for small businesses and individuals.

  • Expanding Medicaid eligibility.

2015: Medicare and CHIP Reauthorization Act (MARCA)

In 2015, the Medicare and CHIP Reauthorization Act (MARCA) was passed, altering how providers were paid by Medicare. MARCA shifted the goal towards payment for value and quality over quantity of services.

Medicare Today

Currently, there are approximately 63.8 million Americans enrolled in Medicare. Medicare continues to offer medical insurance benefits with Part A, Part B, and Part D coverage through Medicare spending by the Federal Government. Medicare supplement insurance plans are also offered, including Part C Medicare Advantage (MA) plans, Medigap (MedSupp) plans, Dual Eligibles (Medicare-Medicaid) plans, and more to assist with Medicare costs.

Note: To learn more about current Medicare and MA plans, visit this source. To learn more about the upcoming 2022 Medicare changes, visit this source.

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