The History of Medicare


The American Association of Labor Legislation introduced the idea for government insurance in the United States. After assisting in creating a worker's compensation system the AALL turned its interest in developing a government health insurance. Although the AALL was successful in developing a workers compensation plan, the implementation of Medicare was a long hard battle.

The AALL would now focus all of its attention of creating a national health insurance plant to higher the standard of living in the United States. After observing the National Health Insurance Plan in the United Kingdom the AALL became inspired to adopt a National Health Insurance Plan for the United States. To the AALL the need for health insurance for the total population was more important than deferred income benefits such as pension plans. The AALL knew that with the recent success of workers compensation now was the best time to persuade the government and people that National Health Insurance was the next necessary step for the United States.

The first step that the AALL took was developing a bill to present to state legislatures. The state legislatures generally appointed investigation committees to study the matter. The AALL model bill would have applied to all workers who had earnings of less than 100 per month. The standard bill would have provided cash sickness benefits of 66 and two-thirds percent of wage for a maximum benefit period of 26 weeks. The worker and employer would have contributed equally the same percentage of earnings and the state would have contributed an amount equal to 25 percent of the combined employer-worker contribution.

After the introduction of different bills different organizations began opposing National Health insurance. The American Medical Association who at one point supported the bill quickly sides and began opposing the bill. Insurance companies both life and casualty insurers opposed the bill because it would take away from their profits. The American Federation of Labor and its president Samuel Gompers strongly opposed National Health insurance because they believed it would divert workers from the real goal of higher wages and shorter hours. The AFL also believed that National Health insurance would decrease dependency of workers on the union. Foreign policy also took away priority from National Health insurance bills. World War I, World War II, and the rise of the Bolsheviks postponed all talks of National Health insurance.

The Committee on Economic security was started by Franklin D. Roosevelt in an attempt to fight the Great Depression of the 1930's. The Committee of Economic Security was made up of a group of top government officials whose job was to develop an extensive system of social insurance and public assistance. No legislative proposal in health insurance was made due to the controversial nature involved with National Health insurance. The program discussed by the COES would have been financed through payroll taxes with a combined employer-employee rate of about one and a half percent for cash payments and four and a half percent for medical care benefits.

In 1927 the Committee on the Costs of Medical Care was started by a group of individuals who were interested in health and medical problems. The purpose of the Committee on the Costs of Medical Care was to research National Health insurance and then make recommendations on what would be effective for National Health insurance.

In 1935 when President Roosevelt signed the Social Security Act he made it clear that this was just the beginning of a much more extensive program. The Interdepartmental Committee to coordinate health and welfare activities was established by President Roosevelt after Social Security act became a law. This committee appointed a technical committee on medical care composed of different organizations that later created the first formal proposal for a National Health insurance plan. The National Health conference discussed the recommendations of the technical committee on medical care and there was complete agreement on improving the nation's health.

The Wagner Bill was introduced by Senator Wagner in 1939, and was the first major bill outlining a broad federal health program. Federal matching would be on a variable grant basis, ranging from sixteen and a half percent for the wealthiest states to fifty percent for the poorest ones. An extensive report in favor of the bill was filed by Senator Murray, but in view of the opposition the bill was not brought to a vote. The Wagner bill was the first national public legislative sounding on health insurance in the United States. The Wagner bill received national interest in health insurance, which had been set aside during the legislative progress of the Social Security act; and it demonstrated that the compromise of a federal state grant in aid pattern was not accepted. The Wagner Murray Dingell bill was created after the Wagner rejected but was very broad and did not give details regarding benefit provisions. Compulsory coverage under the Wagner Murray Dingel bill would have applied to almost all employee and also Social Security beneficiaries. Financing for the bill would have been on a percentage basis of payroll similar to the Social Security program. Legislation for the bill never reached the floor of either the house or senate for a vote. The Wagner Murray Dingell bill was now modified to try and gain acceptance for the house and the senate. The financing approach was changed from the federal state grant aids to payroll deduction. However, this change was not enough to change the minds of the house or the senate.

In 1957 Congressman Forand introduced a bill under which all OASI eligibles would be entitled to benefits. The Forand bill health benefits included 60 days of hospitalization, skilled nursing home care for a maximum of 120 days, and surgical services. Financing would be provided by an increase of the employer-employee tax rate of percent. The Way and Means Committee during executive sessions on the 1960 amendments rejected the Forand bill. The Way and Means committee was not convinced that the Forand bill was feasible or desirable. The Kerr-Mills bill was followed by the Forand bill and called for an increase in federal matching for medical vendors payments and medical assistance for the aged. The Kerr-Mills bill was created to provide help to elderly people who might not otherwise qualify for welfare and needed help with their medical bills.

After John F. Kennedy was elected he set his focus on getting Medicare enacted. Kennedy promised to give Medicare his highest priority. A Medicare bill was created but was rejected because experts had doubts about the reliability of the cost estimates for the bill. Data released to the public began emphasizing the need for Medicare. The elderly population grew from about 12 million to 17.5 million from 1950 to 1963. The cost of hospital care continued to rise at a rate of 6.7 percent a year. This increase caused insurers to increase premiums making insurance for elderly difficult because they lived on a fixed income. President Kennedy was preoccupied with issues from the Cuban Missile Crisis to the Civil Rights movement of the 1960's. President Kennedy was never able to put his attention back on Medicare because he was later assassinated. The assassination of President Kennedy led to the presidency of Lyndon B. Johnson who later was able to enact Medicare in the United States.

After taking presidency Lyndon B. Johnson sent a message to the public stating the he would fight for Medicare for the aged as long as he had breath in his body. On September 2, 1964, a government Health Insurance plan won approval in the senate by a vote of 49-44. Public support for Medicare rebounded and polls showed that about two thirds of the electorate favored the idea. The Mills bill was an important draft that aided in the enactment of Medicare. The Mills bill would explain who was covered, what was covered, and how it would be financed. On April 9th 1965, the House of Representatives approved the Medicare bill. The public seemed ready to accept the Medicare proposal. The public polls showed that two thirds of the population favored some assistance in the financing of personal health services. On July 10th 1965, the Senate approved the Medicare bill. The final text called for expansion of Social Security to provide hospitalization, nursing home care, home nursing services, and outpatient diagnostic services to all Americans over the age of 65. President Johnson singed the Medicare bill into law in Independence, Missouri, on July 31st in 1965.