Medicaid began in 1965 as a joint federal and state program

Medicaid was created on July 30, 1965, when President Lyndon B. Johnson signed it into law as part of the Social Security Act amendments. It launched on January 1, 1966. The program was designed to pay for medical care for people with low incomes, and it was built as a partnership between the federal government and individual states — a structure that still exists today.

At the time, there was no national health insurance for poor Americans. Medicaid filled that gap by letting states design their own programs within federal guidelines. Each state decided who would be covered, what services would be paid for, and how much providers would be reimbursed. That is why Medicaid looks different in every state even now.

The program started small. In its first year, about 4 million people were covered. Today, Medicaid covers roughly 70 to 80 million people across the United States, though the exact number changes as people move on and off the program.

Key Takeaways

  • Medicaid was signed into law on July 30, 1965, and began covering people on January 1, 1966.
  • It was created as a federal-state partnership, which is why each state runs its own version with different income limits and covered services.
  • The program started with about 4 million people and has grown to cover tens of millions today.
  • Medicaid was part of the same law that created Medicare, which covers people age 65 and older regardless of income.

Why Medicaid was created in 1965

Before Medicaid, most poor and working-class Americans had no way to pay for hospital care, doctor visits, or prescription drugs. Employer-based health insurance was common for people with steady jobs, but it did not cover the unemployed, the elderly, or people with disabilities who could not work. Medical debt was one of the leading causes of personal bankruptcy.

The 1960s saw a push for social programs to address poverty. Medicaid was paired with Medicare, which launched the same day and covers people age 65 and older. Together, these programs were meant to ensure that the very poor and the very old would not be shut out of the health care system.

States were given flexibility in how they set up their programs because Congress believed states understood their own populations and economies better than a one-size-fits-all federal system could. This flexibility has meant that Medicaid has evolved very differently across the country over the past 60 years.

How Medicaid has changed since 1966

In the early years, Medicaid covered only people receiving cash welfare payments — mainly single mothers and their children, elderly people, and people with disabilities. Over time, Congress expanded the program to cover more groups. In 1972, it added coverage for people with end-stage renal disease. In 1984, it began covering pregnant women and children in families with slightly higher incomes.

The biggest change came in 2014, when the Affordable Care Act allowed states to expand Medicaid to cover all adults under age 65 with incomes up to 138 percent of the federal poverty line. Not all states took this option — some still have not — which is why income limits for Medicaid vary widely by state.

Medicaid has also expanded the services it covers. Originally, it paid for hospital stays and doctor visits. Now it typically covers prescription drugs, mental health care, dental care (in some states), and long-term care in nursing homes. Each state decides which services to cover beyond the federal minimum.

The difference between Medicaid and Medicare

Both programs started on the same day in 1966, but they serve different groups. Medicare is a federal program that covers people age 65 and older, regardless of income. It is funded through payroll taxes that workers pay during their working years. Medicaid is for people with low incomes of any age, and it is funded through general tax revenue split between the federal government and states.

Medicare is the same in every state. Medicaid is different in each state because states have the power to set their own income limits, decide which services to cover, and determine payment rates for doctors and hospitals. A person who qualifies for Medicaid in one state may not may have access to in another state with stricter rules.

State-by-state differences in Medicaid today

Because Medicaid was designed as a federal-state partnership from the start, the program has never been uniform. Some states have very low income limits for adults without children — as low as $0 in a few states, meaning only people receiving cash welfare can get Medicaid. Other states cover adults with incomes up to 138 percent of the federal poverty line.

The services covered also vary. Some states cover dental care and vision care; others do not. Some states cover mental health treatment and substance use disorder treatment broadly; others limit it. Some states pay doctors and hospitals more generously than others, which affects how many providers accept Medicaid.

This variation is one reason why people moving from one state to another may find their Medicaid coverage changes or ends. It is also why the first step in understanding what Medicaid covers for you is to look at your specific state's program, not Medicaid in general.

Frequently Asked Questions

Was Medicaid the first government health program in the United States?

No. The Veterans Health Administration, which serves military veterans, started in 1930. But Medicaid was the first large-scale program designed to cover low-income civilians. Medicare and Medicaid both launched in 1966 and were the first major federal health programs for the general public.

Did Medicaid cover everyone with low income when it started?

No. In 1966, Medicaid only covered people who were already receiving cash welfare payments. That meant it covered some single mothers and their children, elderly people, and people with disabilities, but not all poor people. Over decades, Congress expanded it to cover more groups, but it still does not cover all low-income Americans.

Can I get Medicaid if I move to a different state?

You will need to reapply in your new state because each state runs its own program with its own rules. Your income might may have access to in one state but not another. You should contact your new state's Medicaid office as soon as you move to find out whether you remain covered and what you need to do next.

Why do some states have higher Medicaid income limits than others?

States have the power to set their own income limits within federal guidelines. Some states chose to expand Medicaid under the Affordable Care Act in 2014; others did not. States also make different choices about how much federal funding to match with state money. These decisions reflect each state's budget priorities and political choices.

Is Medicaid the same as Medicare?

No. Medicare is a federal program for people age 65 and older, funded through payroll taxes. Medicaid is a federal-state program for people with low incomes, funded through general tax revenue. They are separate programs with different rules, even though they started on the same day in 1966.