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Medicare History – How An Alternative To Private Insurance Was Born

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More than 56.8 million Americans use Medicare today.

While the Medicare you know today runs like a well-oiled machine, it had a rocky start.

Medicare is the nation’s health insurance program, and it now has over 50 years under its belt – giving it time to mature and turn into a health care program that helps the elderly and disabled.

When Did Medicare First Start?

The Medicare program you know today is administered by the Centers for Medicaid and Medicare Services of the U.S., but the program initially started under the Social Security Administration (SSA).

Funding for Medicare comes from a combination of payroll taxes, health insurance premiums, surtaxes from premium paying beneficiaries, and general revenue. Medicare provides government-funded insurance for Americans over the age of 65 along with younger individuals with qualifying illnesses or disabilities.

Medicare has two parts: Part A (hospital insurance coverage with no premiums), and Part B (optional insurance coverage that requires a monthly premium).

Medicare was not always free, and the insurance coverage offered was not always as versatile. However, the program has evolved over the years to be more accommodating to those who need access to health care but cannot afford private insurance premiums.

Examining The Exciting Path Of Medicare’s History

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The actual Medicare program initiated in 1966, but its start occurred a few years earlier under a different name.

Here is how Medicare progressed into what it is known as today:

1. 1945: The Need For Public Health Insurance Was Recognized

In 1945, President Truman stated that a national health insurance program was necessary. While he demanded it, Capitol Hill disagreed, and legislators did not create any programs.

President Truman tried again in 1947 and 1949. Multiple bills were introduced to Congress during his tenure, but again, none succeeded.

2. 1956: The Dependents’ Medical Care Act

Initially, Medicare was a healthcare program that offered health insurance to families and individuals in the military – regardless of age. It started under the Dependents’ Medical Care Act of 1956.

3. 1961: President Kennedy Explores The Need For Health Insurance Coverage For The Elderly

It wasn’t until 1961 when President Kennedy called for health insurance programs for the elderly that Medicare started to migrate to where it is today. While Kennedy pleaded for insurance programs for the elderly, including his televised speech for Medicare in May of 1962, he did not succeed with transforming the program into one specifically for those over the age of 65.

4. 1964: President Johnson Asks Congress To Establish Medicare

In 1964, President Johnson called on Congress to create Medicare. The bills for Medicare and Medicaid both passed in the Senate and the House. It was in 1965 that President Johnson signed into law the Medicare bill under the Social Security Amendments of 1965.

The program specifically stated it was for health insurance for those over the age of 65 regardless of medical history or income. The former President Harry S. Truman and his wife were the first recipients of Medicare after the bill’s signing in the Harry S. Truman Presidential Library.

By 1966, when Medicare services began, more than 19 million Americans over the age of 65 enrolled in the program.

5. 1972: President Nixon Extends Eligibility Options

It wasn’t until 1972 when President Richard M. Nixon extended eligibility that individuals with disabilities, long-term conditions and end-stage renal disease could access Medicare while under the age of 65.

After this change, Medicare went almost two decades before seeing any further changes.

6. 1997: Private Insurance Medicare Options Began

Private insurance plans, like Medicare Choice and Medicare Part C, now known as Medicare Advantage, became an option. These plans allowed beneficiaries to use an HMO-style plan rather than the fee-for-service Medicare plan.

7. 2003: President Bush Expands Medicare Even Further

The Medicare Modernization Act passed in 2003 by and was signed into law by President George W. Bush. The extension allowed for prescription drug benefits in addition to health insurance benefits. The coverage was optional, known as Medicare Part D.

While signed in 2003, Medicare Part D didn’t go into effect until January 1, 2006. Those already enrolled in Medicare could add Part D coverage and receive their subsidized prescription coverage too.

With Medicare Part D, patients received coverage for specific prescriptions based on the tier of coverage they select. They also could receive up to 60-day supplies of each qualifying medicine to save on trips to the pharmacy.

8. 2010: Patient Protection And Affordable Care Act

In 2010, President Obama signed into law the health care legislation known as the “Patient Protection and Affordable Care Act,” which required Medicare to give beneficiaries preventative care services and screenings without charge. The purpose was to provide all health insurance beneficiaries (not just Medicare recipients) with access to preventative care without cost.

The Act reduced Part D enrollee out-of-pocket expenses.

A Few Facts About Medicare’s History And How It Operates Today

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From its inception, Medicare was always designed as something that would help people receive the healthcare services they need. Over the years, it has evolved into not only a government-funded option, but one that allows beneficiaries to customize their coverage further, so they have access to the treatments they need.

If you are new to Medicare, here is what you need to know:

  • Entitlement Program: Medicare is classified as an entitlement program. If you are a U.S. citizen, you are entitled to enroll after paying your taxes for a minimum timeframe. You might not work long enough to pay into Medicare, but you may qualify for coverage regardless depending on your financial and health situations.
  • Medicare Part A: Part A is hospital insurance. It covers your inpatient care, limited time in a nursing home, limited home health, and hospice needs. Part A has no monthly premium, and most citizens qualify for Part A if they have worked over ten years and paid into Medicare through taxes while working. Part A does not cover hospital stays 100 percent.
  • Medicare Part B: Part B is your medical insurance – covering outpatient care, blood tests, diagnostic tests, screenings, and medical supplies. You may pay a portion of your health care costs through Part B.
  • Medicare Part C: Part C is your advantage option that includes all Medicare coverage and additional benefits like prescription drug coverage. It also covers health care events that Part A and B do not, like eye examinations once per year, dental care, and hearing screenings.
  • Medicare Part D: Part D is the optional prescription drug coverage that does not require you to enroll in the other portions of Medicare. Instead, you can use Medicare Part D to supplement private insurance.
  • Enrollment Deadlines Apply: Medicare is automatic if you have Social Security benefits already when you turn 65 years old. However, you must enroll on time. The longer you wait, the more you may pay for your coverage. Enrolling takes under ten minutes on the website at
  • Medicare is Not 100 Percent Coverage: While Medicare covers most health care services you need after retirement, it does not cover everything. You may need a combination of Medicare parts, but also home help, and skilled nursing care are not always covered unless you have a physician’s prescription for those services. Alternative medicine, like chiropractic care or acupressure, are not covered by Medicare either.
  • Medicare is Expensive for Some: Medicare is not free. Part A is the only free insurance option but carries a deductible too that applies to a benefit period rather than an annual deductible like private insurance programs.

Knowing Medicare’s History Can Help In Your Medical Billing Career

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If you have thought about a career in medical billing or coding, understanding the history of the insurance programs you bill is vital. It gives you insight into how these programs work, the patients you are likely to encounter, and the common billing issues.

Furthermore, knowing Medicare’s history keeps you informed – and following legislative changes for Medicare prepares you for what is in store for your career too.

Explore a career in medical billing or read more on the Medicare history and development right here on Best Medical Billing and Coding.