Medicare

President Lyndon Johnson signed Medicare into law on July 30, 1965, in Independence, Missouri, handing the first card to former President Harry Truman, who had proposed national health insurance two decades earlier. It covers people 65 and older, people under 65 who have received Social Security disability benefits for 24 months, and people with permanent kidney failure or ALS. Nearly 70 million people are enrolled, and the Centers for Medicare and Medicaid Services runs it.

Part A covers hospital stays, skilled nursing, and hospice, and is funded mainly by a 2.9 percent payroll tax split between workers and employers. Part B covers doctor visits and outpatient care, funded about one quarter by premiums, 202.90 dollars a month for most people in 2026, and the rest by general tax revenue. Part C, Medicare Advantage, lets people get their benefits through private plans, and Part D, added in 2006, covers prescription drugs through private plans. Traditional Medicare has no yearly limit on out-of-pocket costs, so many people buy supplemental Medigap policies.

Medicare spent about 1.1 trillion dollars in 2024, roughly one eighth of the federal budget. The 2022 Inflation Reduction Act let Medicare negotiate prices for some high-cost drugs, with the first 10 negotiated prices taking effect on January 1, 2026, and capped yearly out-of-pocket drug costs, at 2,100 dollars in 2026. The 2026 trustees report projected the hospital insurance trust fund would run short in 2033. Debates focus on how to keep it solvent, from raising taxes to cutting payments to providers, the growth of private plans, and proposals to expand it or to let younger people buy in.