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History of Medicare


The history of Medicare starts with a law. President Lyndon B. Johnson signed Medicare into law on July 30th, 1965. Since then, many acts continue to help protect beneficiaries. As time progresses, Congress continues to make changes to the national health care program. Millions of Americans depend on the federal Insurance program, as they have for over 50 years.

History of the Federal Insurance Program – Medicare

Many revisions and different acts have impacted Medicare beneficiaries over time; today, we’re witnessing the most positive changes for consumers. The program is beginning to focus on the best interests of its recipients. The name Medicare initially addressed a program that provided medical care for military families as part of the Dependents Medical Care Act in 1956.

In 1961, President Dwight D. Eisenhower held the first White House Conference on Aging. During this meeting, the introduction of a health care program for social security beneficiaries.

Before the establishment of the Medicare program, getting private health insurance was near impossible for people over the age of 65. Since the program became law, in 1965, it’s helped improve the quality and overall lifespan of seniors (and those with disabilities) in America. Today, roughly 64 million American adults use Medicare for healthcare coverage.

Of those Americans, over 52 million are seniors ages 65 and older. The remaining individuals are younger and many with disabilities such as ALS and ESRD.

When Did Medicare Start?

Medicare started in the year 1965. President Lyndon B. Johnson signed the bill that eventually became the Medicare and Medicaid federally funded programs. The term Medicare consists of two parts Part A and Part B. Part A paid for hospital and other inpatient services, and Part B paid for outpatient office visits.

Medicare eligibility extended to people under the age of 65, with long-term disabilities (and those with ESRD) under the Social Security Amendments of 1972. During this time, the program added more coverage for benefits like physical, speech, and chiropractic therapy.

Before Medicare, only 60% of seniors over 65 had health coverage. Due to lack of availability and high prices, seniors often paid three times as much for coverage as younger people.

When Did Medicare Advantage Plans Start?

Medicare Advantage plans are private plans that date back to 1966. Medicare Advantage plans were higher-risk contracts; the policies agreed to take responsibility for their members’ health costs. Part C was to provide healthcare at an affordable rate while offering more benefits than Parts A and B offers. MAPD plans provide coverage for prescription drugs. Stand-alone drug plans weren’t available until the early 2000s.

When Was Medicare Part D Established?

Part D plans weren’t available until 2006 after the Medicare Modernization Act of 2003 created a plan to help pay for the cost of medications. The Act went into effect on January 1, 2006. The drug program funds about 2 billion prescriptions each year, which accounts for almost $90 billion in Medicare costs. Part D is the most abundant federal program that pays for prescription medications.

Since the history of Part D, the plan has become quite popular among beneficiaries. In more recent years, Part D spending has outgrown the rest of the Medicare programs. Medicare Trustees expect this trend to continue to increase over the next decade.

Initially, Part D included a gap between the original coverage and a particular benefit point called catastrophic coverage. The Affordable Care Act of 2010 filled that donut hole. Meaning, brand-name drug manufacturers were ordered to give a 50% discount on any drugs purchased during this phase. Then, the federal government covers an additional part of the drug expense.

The newest update in the History of Part D is now the government covers up to 75% of the costs when beneficiaries spend a specific amount on prescriptions within a year.

When did Medicare Supplement Plans Start?

Medicare Supplements, also known as Medigap, have been part of Medicare history since 1992. As with most things involving Medicare, changes occurred over the years. There have been plans that were eliminated, as well as new plans introduced.

America’s Healthy Future Act (Baucus Amendment)

The “Baucus Amendment” protects consumers and their policies. However, there were people taking advantage of this program from both the consumer and insurance sides.

Medicare and Medicaid Patient and Program Protection Act

To fight this, the government introduced the Medicare and Medicaid Patient and Program Protection Act in 1987; this would make providing false medical information to become a felony crime.

Medicare Catastrophic Coverage Act

One of these acts was the Medicare Catastrophic Coverage Act. This act implements several restrictions to further protect consumers, such as out-of-pocket maximums and premiums. During this time, several voluntary guidelines became mandatory standards by the federal government.

One of the most vital standards was the limits on pre-existing conditions that could cause a person exclusion from a plan. After passing a few acts, the previous rule saw an amendment.

Omnibus Consolidated and Emergency Supplemental Appropriation Act

The last act to be passed in the nineties was the Omnibus Consolidated and Emergency Supplemental Appropriation Act of 1999. The most important part of this act called on the providers that paid for these specific plans. With the passing of this act, they were now subject to civil penalties.

As the 2000s began, this coverage continued to change. In 2001, the government looked to protect those that experienced sudden life changes or other changes to their health insurance policy status.

Consolidated Appropriations Act

Under the Consolidated Appropriations Act of 2001, these users were able to purchase new supplemental coverage. This act made sure any pre-existing conditions that had exclusion from the previous policy were also excluded from the new plan.

Medicare Prescription Drug Improvement and Modernization Act

Prescriptions became a point of discussion for coverage in 2003. The Medicare Prescription Drug Improvement and Modernization Act changed the way Medigap policies treated drugs.

Depending on the plan, some could keep their old policies while others took the option to purchase new coverage. Those that had to buy new insurance had protection from rising premiums.

The federal government made it illegal for the plan provider to take into account the buyer’s past claims, health records, pre-existing conditions, and other issues to calculate the premium.

It was after the passing of the Medicare Prescription Drug Improvement and Modernization Act that the federal government introduced two additional supplement plans.

These new plans offer two features:

  1. Maximum out of pocket limits
  2. Coinsurance

These were the only two plan options that had to include these features. However, there were plenty of Medigap plans available.

As the coverage evolved and new legislation changed the requirements and guidelines, some of these plans became obsolete. After 2010, Plans E, H, I, and J were no longer available.

Genetic Information Nondiscrimination Act

Another turning point for Medicare came in 2008 with the introduction of the Genetic Information Nondiscrimination Act. This act made it illegal for a health insurance plan provider to discriminate against genetic information.

How to Learn More About Medicare History

At MedicareFAQ, our goal is to educate and inform all Medicare beneficiaries to help them find coverage at the most affordable price. We pride ourselves on keeping our clients informed and up to date on any benefit changes. Give us a call today at the number above or fill out our rate comparison form to get the best rates in your area.

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Lindsay Malzone

Lindsay Malzone is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.

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