Before enactment of Medicare in 1965, few elderly persons had reliable health insurance. When insurance was available, it was expensive and limited, and its renewal was uncertain. As a consequence, nearly 50 percent of the elderly had no health insurance at all, and faced bankruptcy from the costs of serious illness. Medicare provided all elderly Americans 65 or older with health coverage if they or their spouse had worked in a job subject to payroll taxation. As a reliable source of basic health insurance for the elderly, the Medicare program has been a tremendous success. Today, however, Medicare faces formidable challenges: an inadequate benefits package, an inefficient system of delivery, and a long-term budget gap.
