The Centers for Medicare and Medicaid Services CMS

Lyndon Johnson signed Medicare and Medicaid into law on July 30, 1965, at the Truman Library in Independence, Missouri, handing the first Medicare card to Harry Truman, who had proposed national health insurance two decades earlier. Medicare, for people 65 and over, was run by the Social Security Administration. Medicaid, for the poor, was run by a welfare agency through the states. In 1977 the two were combined under a single Health Care Financing Administration, and in 2001 it was renamed the Centers for Medicare and Medicaid Services.

CMS is the largest purchaser of health care on earth. Medicare covers about 68 million people over 65 or with disabilities, paying hospitals, doctors, and drug plans directly and, for more than half of enrollees, through private Medicare Advantage insurers. Medicaid and the Children's Health Insurance Program cover roughly 80 million low-income people through programs the states run under federal rules and with federal money matching their spending. Since 2014 the agency also operates the Affordable Care Act marketplaces where about 24 million people buy subsidized private coverage. Combined outlays exceed 1.5 trillion dollars a year.

The agency's power comes less from its roughly 6,500 employees, most at headquarters in the Baltimore suburb of Woodlawn, than from the rules it writes. The annual payment rules for hospitals, physicians, and nursing homes set prices that private insurers copy. Its conditions of participation determine which providers may bill the programs at all. Its quality ratings and penalties shape how hospitals operate. Since the 2022 Inflation Reduction Act it also negotiates drug prices directly with manufacturers for the first time, a power the pharmaceutical industry had blocked since Medicare's drug benefit was created in 2003.

Medicare's hospital trust fund is projected to run short within the decade, and every budget fight returns to whether to raise taxes, cut payments, or change benefits. Medicaid became the central dispute of 2025, when the budget law enacted that summer imposed work requirements, more frequent eligibility checks, and cuts to the provider taxes states use to fund their share, changes the Congressional Budget Office projected would reduce enrollment by millions over a decade. Supporters called it a return to the program's purpose. Critics called it the largest health coverage rollback in the nation's history.