Medicare and Medicaid: 60 Years of Health Care Reform

On this day 60 years ago, Medicare and Medicaid were signed into law, creating a national health insurance program for older adults, people with disabilities, and people with limited incomes. In the first three years, Medicare and Medicaid enrolled nearly 20 million beneficiaries; today, Medicare has an enrollment of over 68 million and Medicaid, over 71 million. The programs, established amidst sustained public pressure and organizing by labor unions and older adults, have been and remain very popular: recent polling shows 82% of American adults hold a generally favorable view of Medicare, and 97% consider Medicaid to be important to people in their local communities.

Context and Passage

Following the Industrial Revolution and the country’s urbanization, and especially in the shadow of the Great Depression, Americans increasingly backed public assistance programs to alleviate widespread economic insecurity and support the rising numbers of older adults. The Social Security Act was passed in 1935 as a moderate federal response to these popular demands. It established a federal retirement income program for adults aged 65 and over, funded by their payroll tax contributions. The Act also included provisions for unemployment insurance, assistance for dependent children, and state-level distribution of medical care.

As awareness about the need for affordable health care rose, several precursors to Medicare and Medicaid were introduced in the 1950s and 60s. The Social Security Amendments of 1950 and the Kerr-Mills Act of 1960 provided federal funding to states that covered health care for people receiving social assistance. The latter created a means-tested medical assistance program for older adults, with a lower threshold for eligibility than that of general welfare programs at the time. In 1964, the Supplemental Nutrition Assistance Program (SNAP) was established by the U.S. Department of Agriculture to provide food assistance to low-income families, lowering food insecurity and health care costs.

Medicare and Medicaid were then established with the passage of the Social Security Amendments of 1965. In its original form, Medicare comprised Part A hospital (inpatient) insurance and Part B medical (outpatient) insurance, financed by a combination of payroll taxes and general revenue, for Americans aged 65 and older. Medicaid established health coverage for certain categories of people with low incomes, jointly funded by the state and federal governments. The enactment of Medicare in 1965 helped enforce the previous year’s Civil Rights Act, driving hospital desegregation across the country, and the program continues to reduce racial and ethnic disparities in health care access and coverage.

Expansions and Related Legislation

In the decades since Medicare and Medicaid were established, modifications and related health care legislation updated the programs and expanded their scope. In 1972, Medicare eligibility was expanded to include people with disabilities or end-stage renal disease, regardless of age. The Balanced Budget Act of 1997 (BBA 97) established the Children’s Health Insurance Program (CHIP) as a joint federal-state program extending health coverage to children from lower-income families who are not eligible for Medicaid. Medicare Part C, now known as Medicare Advantage (MA), was also created by the BBA 97, and allowed for private health care plans to contract with the federal government to offer more varied coverage options. Private plans also began providing the Part D prescription drug coverage for both Original Medicare and MA beneficiaries with the passage of the Medicare Modernization Act in 2003.

The landmark Affordable Care Act (ACA), passed in 2010, implemented a sweeping set of health care reforms that expanded coverage across the country. The creation of the Health Insurance Marketplace made health care coverage more accessible to those not previously covered by Medicare, Medicaid, or private insurance. The ACA’s expansion of Medicaid eligibility, which went into effect in 2014, significantly increased health coverage in participating states. Further ACA provisions have improved the quality and coordination of Medicare and Medicaid by strengthening preventive care, drug coverage, and Medicare consumer protections. The Inflation Reduction Act of 2022 further reformed Part D coverage, lowering costs through federal price negotiation, increasing access to vaccines, and expanding eligibility requirements for the Low-Income Subsidy assistance program.

Medicare and Medicaid Today

In the years since the ACA was passed, health care access has been both strengthened and threatened by federal policies. The Inflation Reduction Act’s affordability measures, as well as the increasing number of states adopting Medicaid expansion policies, mark significant and encouraging progress. However, the current administration, through executive actions and the recently passed budget bill, has targeted and undone many recent reforms. Recipients of Deferred Action for Childhood Arrivals (DACA) protections, who just months ago gained ACA coverage, are among the many categories of lawfully present immigrants whose access to health care has been slashed by the bill. The recent legislation also reduces retroactive coverage for traditional and expansion Medicaid, leaving people with unaffordable bills for periods during which they should have been covered.

At the Medicare Rights Center, we hear every day from current and prospective Medicare beneficiaries who are struggling to receive the care and coverage they deserve. Coverage gaps, burdensome bureaucracy, and lack of information keep health care inaccessible and unaffordable for many. Cost-assistance programs, such as Medicare Savings Programs and the Low-Income Subsidy, provide much-needed relief by saving beneficiaries’ out-of-pocket costs, but they are underenrolled and need greater awareness and easier enrollment processes. Medicare must include dental, vision, and hearing coverage in order to provide truly comprehensive coverage for older adults and people with disabilities. And federal policies must regulate Medicare Advantage payments and implement site-neutral reimbursements to prioritize the sustainability of Medicare.

It is the duty of the government to protect and strengthen Medicare and Medicaid, not to dismantle them or limit their reach. Sixty years after the creation of Medicare and Medicaid, we celebrate the progress these programs have achieved but know there is still much work to be done to secure accessible and affordable health care for all older adults and people with disabilities.