# Medicare and Medicaid Act **Type:** Federal law (P.L. 89-97; Social Security Amendments of 1965) **Signed:** July 30, 1965 by Lyndon B. Johnson (at the Truman Library, with Harry Truman — who had first proposed national health insurance in 1945 — as the first enrollee) **Sponsors:** Rep. Wilbur Mills (D-AR) / Sen. Clinton Anderson (D-NM) **Vote:** Senate 68-21 | House 307-116 ## Summary The legislation that created the two pillars of American public health insurance: **Medicare** (Title XVIII of the Social Security Act — federal health insurance for Americans 65 and older and certain disabled individuals) and **Medicaid** (Title XIX — a joint federal-state program providing health coverage to low-income individuals and families). Together, these programs cover over 150 million Americans — more than any other health insurance arrangement in the country — and constitute approximately 25% of total federal spending. The Act was the crowning achievement of the [[Great Society]] and the final fulfillment of a project that had been pursued since Harry Truman proposed national health insurance in 1945. Its passage required overcoming the American Medical Association's furious opposition (the AMA called Medicare "socialized medicine" and organized "Operation Coffee Cup," starring [[Ronald Reagan]], to lobby against it) and the structural resistance of the Southern committee chairs who controlled the House. Ways and Means Chairman Wilbur Mills — who had blocked Medicare for years — reversed course in 1965 and produced a bill more expansive than what Johnson had proposed, combining the administration's Medicare hospital insurance plan with a physician services benefit and a new Medicaid program for the poor. ## Structure **Medicare Part A** — Hospital Insurance: covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. Funded by payroll taxes (the Medicare tax, which unlike Social Security has no earnings cap). Available to all Americans 65+ and certain disabled individuals regardless of income. **Medicare Part B** — Supplementary Medical Insurance: covers physician services, outpatient care, preventive services, and medical equipment. Funded by general revenue and beneficiary premiums. Enrollment is voluntary but near-universal. **Medicare Part C** — Medicare Advantage (added 1997, expanded 2003): allows beneficiaries to receive Medicare benefits through private insurance plans. The privatization vector: Medicare Advantage plans now cover approximately half of all Medicare beneficiaries, and the program's growth represents a structural shift from public administration to private-sector delivery, often at higher cost to the government than traditional Medicare. **Medicare Part D** — Prescription Drug Coverage (added 2003): provides outpatient prescription drug benefits through private insurance plans. Enacted under George W. Bush with a provision (since partially repealed by the [[Inflation Reduction Act]]) that prohibited Medicare from negotiating drug prices with pharmaceutical companies — a gift to the pharmaceutical industry worth hundreds of billions of dollars. **Medicaid** — A means-tested program providing comprehensive health coverage to low-income individuals, including children, pregnant women, elderly adults, and people with disabilities. Jointly funded by the federal government (which pays 50-90% of costs depending on state income levels) and state governments. The ACA's Medicaid expansion (2010) extended eligibility to all adults up to 138% of the federal poverty level, and 40 states plus DC have adopted the expansion. Medicaid is the single largest source of funding for nursing home care in the United States — a fact that is essential to understanding the human impact of Medicaid cuts. ## KB Significance **1. The reconciliation target.** Medicaid is the program most directly under attack in the current reconciliation package — the "Big Beautiful Bill" that the [[House Energy and Commerce Committee]] and [[Senate Finance Committee]] are processing. The bill's Medicaid provisions — work requirements, eligibility restrictions, reduced federal matching rates, per-capita spending caps — would cause an estimated 10-15 million people to lose coverage. The transfer is explicit: Medicaid cuts offset the revenue loss from extending tax cuts for the wealthy. The [[House Budget Committee]]'s reconciliation instructions are the procedural mechanism; the money committees draft the specifics; but the human impact — elderly nursing home residents, children, people with disabilities, working-poor adults — is concentrated in Medicaid. **2. The "entitlement reform" euphemism.** The right's framing of Medicare and Medicaid cuts as "entitlement reform" or "modernization" performs the same mythological operation as the Social Security "crisis" framing. The political content (reducing healthcare coverage for the poor and elderly to fund tax cuts for the wealthy) is evacuated and replaced by a "natural" concern (fiscal responsibility, program sustainability, "personal responsibility"). Work requirements for Medicaid are the policy embodiment of this myth: they are presented as encouraging "self-sufficiency" when empirical evidence consistently shows they reduce coverage without increasing employment — their actual function is to create bureaucratic barriers that cause eligible people to lose coverage through paperwork failures. **3. The Medicare privatization vector.** Medicare Advantage — the program allowing beneficiaries to receive Medicare through private insurance plans — is the structural mechanism through which Medicare is being privatized incrementally. MA plans now cover roughly half of all beneficiaries, and the program's growth is driven by aggressive marketing, favorable payment rates (the government pays MA plans more per beneficiary than traditional Medicare costs), and the insurance industry's lobbying infrastructure. The endgame: if MA enrollment continues growing, traditional Medicare becomes a residual program serving only the sickest and most expensive beneficiaries, making it vulnerable to the argument that it's "unsustainable" — a self-fulfilling prophecy created by the privatization mechanism itself. **4. The pharmaceutical industry protection.** The original Part D legislation's prohibition on Medicare drug price negotiation — inserted at the pharmaceutical industry's insistence and maintained for nearly two decades — is the most expensive single gift to a lobbying interest in American legislative history. The [[Inflation Reduction Act]] partially reversed this prohibition, allowing Medicare to negotiate prices on a limited number of drugs (10 initially, expanding over time). The pharmaceutical industry's campaign to repeal or limit these negotiation provisions flows through the [[House Energy and Commerce Committee]] and [[Senate Finance Committee]] — the committees where pharmaceutical lobbying is most concentrated. **5. The nursing home reality.** Medicaid pays for approximately 62% of all nursing home care in the United States. This means Medicaid cuts are, in significant part, nursing home funding cuts — a fact that polling shows most Americans do not understand. The reconciliation package's Medicaid reductions will affect not only low-income adults and children but elderly Americans in nursing facilities whose care is funded by Medicaid after they have exhausted their personal savings (which is how most nursing home residents end up on Medicaid). The "welfare" framing of Medicaid obscures this reality; the actual program serves a population that includes millions of middle-class Americans' parents and grandparents. ## See Also - [[Social Security Act]] — the foundational legislation Medicaid and Medicare build upon - [[Inflation Reduction Act]] — partially restored Medicare drug price negotiation - [[House Energy and Commerce Committee]] — committee that drafted the reconciliation Medicaid cuts - [[House Ways and Means Committee]] — committee of jurisdiction for Medicare - [[Senate Finance Committee]] — committee of jurisdiction for both programs - [[Heritage Foundation]] — policy blueprints for "entitlement reform"