Medicare and Medicaid

Medicare and Medicaid were created by the Social Security Amendments of 1965. Medicare covers Americans aged 65 and older. Medicaid covers low-income Americans of all ages and is jointly funded by the federal government and the states.

When President Johnson signed the Social Security Amendments of 1965 at the Truman Library in Independence, Missouri, he handed the first Medicare card to former President Truman, who had championed national health insurance two decades earlier. Medicare promised hospital insurance and physician coverage to every American over 65, regardless of income or medical history. It was funded primarily through the payroll tax. Medicaid, passed at the same time, was a joint federal-state program for low-income Americans. Both programs grew quickly. Medicare now covers more than 65 million Americans and is one of the largest single items in the federal budget. Medicaid covers more than 80 million, and the Affordable Care Act expanded eligibility further in states that opted in. The two programs together pay for roughly a third of all American healthcare spending. Both face structural pressures. Medicare's hospital insurance trust fund is projected to run short of money in the coming decade, raising the same kind of solvency questions that hang over Social Security. Medicaid spending strains state budgets and varies enormously in scope from state to state, in keeping with federalism. Both programs are also enormously popular with the people they cover, which is why reform of either is among the hardest political tasks in Washington.