History of Medicare

By June 29, 2020Newsletter

History of Medicare

This month we are not only celebrating Independence Day, but also the 55th Anniversary of Medicare! Prior to 1965 when Medicare began, most private healthinsurers either did not have insurance for elderly Americans or their premiums were so high that they were simply unaffordable. Thus, more than half the population of elderly Americans did not have health insurance. With the Social Security Amendments of 1965, Medicare came into play to provide insurance geared towards a growing elderly population. As of 2019, more than 61.3 million Americans are enrolled in Medicare!

History of medicare

Medicare Timeline

July 30, 1965President Lyndon B. Johnson signed the Social Security Amendments of 1965 that led to Medicare and Medicaid. Medicare was initially designed for people 65+ and
included only two parts.
These parts are now referred to as “Original Medicare” and include Part A (hospital coverage) and Part B (doctor coverage). This was also the start of the Centers for Medicare & Medicaid Services (CMS).
July 1, 1972Through the Social Security Amendments of 1972, Medicare began to cover people under 65 with a long-term disability such as end-stage renal disease (ESRD).
June 9, 1980The Social Security Disability Amendments of 1980 (aka Baucus Amendment) implemented Medicare Supplement Plans, also referred to as Medigap plans.
September 3, 1982The Tax Equity and Fiscal Responsibility Act added hospice benefits to Medicare and allowed beneficiaries to receive their benefits from private health insurance plans in hopes of reducing costs for the government.
April 20, 1983Social Security Amendments of 1983 began to establish fixed fees that Medicare would pay hospitals based on the average cost of various services throughout the country.
December 12, 1987Quality standards are established for Medicare-certified nursing homes via the Omnibus Budget Reconciliation Act of 1987.
December 19, 1989The Omnibus Budget Reconciliation Act of 1989 established fixed fees that Medicare would pay doctors based on an estimate of the resources required to provide services.
November 11, 1990The Omnibus Budget Reconciliation Act of 1990 provided 10 standardized Medicare Supplement Plans A-J in all but 3 states and guaranteed renewability of the plans. Later, High Deductible Plans F (HDF) and J (HDJ) were added along with Plans K, L, M, and N within the following two decades. The Act also introduced Medicare SELECT Supplement Plans.
August 5, 1997The Balanced Budget Act of 1997 established Part C, thus expanding the type of private plans available to beneficiaries. At the time, these options were referred to as “Medicare+Choice” plans.
December 8, 2003The Medicare Prescription Drug Improvement and Modernization Act of 2003 introduced two new parts into Medicare. Medicare Advantage plans were introduced, effectively removing the Medicare+Choice plans. Also, the optional prescription drug plans (aka Part D) were introduced, but they did not go into effect until a later date.
January 1, 2006Part D goes into effect. These stand-alone plans are immensely popular and are typically paired with Original Medicare and a Medicare Supplement plan. The greatest benefit of these plans is they are not exposed to increasing health care costs beyond retail drug costs. Currently, Medicare can not interfere in the pricing of prescription drugs. The Part D can also be added onto Medicare Advantage plans and are referred to as MA-PD.
March 30, 2010The Affordable Care Act of 2010 strengthened coverage for preventative care and required manufactures to cover part of the cost for prescriptions during the “donut hole”. Previously, Part D policyholders would pay the full cost of medications during the donut hole, so this Act provided much needed benefits to those using expensive medications. This Act also created the Center for Medicare and Medicaid Innovation in order to better coordinate benefits for beneficiaries of both programs.
June 1, 2010Medicare Supplement Plans E, H, I, and J are removed. Policyholders are able to keep these plans and benefits as long as the premium is paid.
April 16, 2015Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 states that all Medicare beneficiaries must be subjected to a deductible. Thus, Plans C, F, and High Deductible F (HDF) were slated to be removed at a later date. The Act also required that Social Security Numbers be removed from all Medicare cards.
April 2019New Medicare cards are rolled out using the 11-digit identification numbers in place of an individual’s Social Security Number.
January 1, 2020Medicare Supplement Plans C, F, and HDF are removed for new Medicare beneficiaries. For beneficiaries with Medicare start dates prior to January 1, 2020 will still be able to apply for these plans.