What If Medicare and Medicaid Were Never Established?

The Actual History

On July 30, 1965, President Lyndon B. Johnson signed into law the Social Security Amendments that created Medicare and Medicaid, fundamentally transforming healthcare in America. This legislation, a cornerstone of Johnson's "Great Society" initiative, emerged from decades of political struggle over the government's role in healthcare provision. The journey toward these programs began as early as 1912, when Theodore Roosevelt's Progressive Party platform included national health insurance. President Harry S. Truman later proposed a comprehensive national health insurance plan in 1945, but fierce opposition from the American Medical Association (AMA) and concerns about "socialized medicine" during the early Cold War era prevented its passage.

By the early 1960s, the pressing need for elder care had become undeniable. Before Medicare, only about 56% of Americans over 65 had any health insurance coverage. Those who did have insurance often found their policies inadequate, with high premiums and limited benefits. Many elderly Americans faced financial ruin due to medical expenses, with approximately 35% living in poverty. Meanwhile, healthcare for low-income families remained inconsistent and often inaccessible.

The political landscape shifted after Johnson's landslide victory in 1964, which also delivered Democratic supermajorities in both houses of Congress. This political realignment provided the legislative momentum needed to overcome longstanding opposition from the AMA, the insurance industry, and conservative lawmakers. Representative Wilbur Mills, chairman of the Ways and Means Committee, played a crucial role by combining competing proposals into the final legislation.

Medicare was established as a federal program providing health insurance for Americans aged 65 and older, regardless of income or medical history. As originally enacted, Medicare consisted of two parts: Part A covered hospital insurance, while Part B provided supplementary medical insurance for doctor visits and outpatient care. Medicaid, meanwhile, was created as a joint federal-state program to provide healthcare for low-income Americans, with states having considerable flexibility in setting eligibility criteria within federal guidelines.

Over the decades, both programs expanded significantly. Medicare added Part C (Medicare Advantage) in 1997 and Part D (prescription drug coverage) in 2003. Medicaid gradually broadened its scope to cover more low-income categories, with the Affordable Care Act of 2010 attempting to expand it further through incentivizing states to cover all individuals up to 138% of the federal poverty level.

By 2025, Medicare covers approximately 65 million Americans, primarily seniors and people with disabilities, while Medicaid serves over 90 million low-income individuals. Together, these programs account for approximately 25% of the federal budget and have become deeply embedded in the American healthcare system. They have dramatically reduced poverty among the elderly, improved access to care for vulnerable populations, and transformed the healthcare delivery landscape. Despite ongoing debates about their sustainability and structure, Medicare and Medicaid represent one of the most significant expansions of the American welfare state in the 20th century.

The Point of Divergence

What if Medicare and Medicaid were never established? In this alternate timeline, we explore a scenario where the 1965 Social Security Amendments either failed to pass or passed in a dramatically reduced form without the healthcare provisions that created these landmark programs.

Several plausible mechanisms could have derailed the legislation. One possibility centers on the political landscape: had the 1964 election produced a narrower victory for Johnson or more balanced congressional representation, the legislative momentum needed to overcome entrenched opposition might have evaporated. The Democrats' overwhelming congressional majorities (295-140 in the House and 68-32 in the Senate) were crucial to the bill's passage; a few dozen more Republican victories could have significantly altered the calculus.

Alternatively, key political figures might have taken different positions. Representative Wilbur Mills, the powerful Ways and Means Committee chairman who masterfully combined competing proposals into the "three-layer cake" structure of Medicare Part A, Part B, and Medicaid, might have opposed the legislation rather than supporting it. As a fiscal conservative from Arkansas, Mills had initially been skeptical of expansive healthcare proposals. Had he maintained this position, the legislation might have died in committee.

A third possibility involves the relationship between organized medicine and the Johnson administration. The AMA vigorously opposed Medicare, spending millions on campaigns against "socialized medicine." In our timeline, the Johnson administration made key concessions to physicians, ensuring they would be well-compensated under the new system. Had these negotiations broken down—perhaps due to more hardline positions on either side—physician opposition might have proven insurmountable.

Finally, external events could have intervened. An escalation of the Vietnam War earlier in 1965 might have diverted political attention and resources away from domestic programs. Budget constraints or economic concerns could have made ambitious new social programs seem fiscally irresponsible.

In this alternate timeline, we assume that a combination of these factors—narrower Democratic majorities, more effective opposition from the AMA, less support from Chairman Mills, and growing concerns about Vietnam—prevented Medicare and Medicaid from becoming law. Instead, Congress passed only modest amendments to Social Security, perhaps including some limited health insurance demonstration projects, but nothing approaching the comprehensive programs established in our timeline. As 1965 ended, elderly and low-income Americans continued to face the same healthcare challenges they had before, while the American healthcare system developed along a dramatically different trajectory.

Immediate Aftermath

Political Fallout

The failure to enact Medicare and Medicaid would have represented a significant setback for President Johnson's domestic agenda. Having staked considerable political capital on the Great Society programs, Johnson would have faced immediate criticism from liberal Democrats and advocacy groups representing seniors and the poor. The political narrative would likely have shifted from the "can-do" optimism that characterized the early Johnson administration to questions about his legislative effectiveness.

Democratic lawmakers would have been particularly vulnerable in the 1966 midterm elections. In our timeline, these elections already saw significant Republican gains (47 House seats and 3 Senate seats), largely due to backlash against civil rights legislation and growing concerns about the Vietnam War. Without the achievement of Medicare and Medicaid to point to, Democrats might have lost even more seats, potentially crippling Johnson's ability to advance other Great Society initiatives like the Voting Rights Act and federal education funding.

Republicans and conservative Democrats would have been emboldened in their opposition to expansive federal welfare programs. The failure of healthcare reform would have reinforced their narrative that Americans preferred private solutions to social problems rather than government intervention. This could have accelerated the conservative realignment in American politics that eventually led to Richard Nixon's victory in 1968.

Healthcare Industry Response

The private insurance industry would have moved quickly to fill some of the void left by the absence of Medicare and Medicaid, albeit selectively. Without government competition in covering high-risk populations like the elderly, private insurers would have continued offering limited, high-premium policies to healthier seniors while largely excluding those with pre-existing conditions.

Hospitals and healthcare providers would have faced continued financial strain from uncompensated care. Many urban and rural hospitals that became dependent on Medicare and Medicaid reimbursements in our timeline would have struggled financially, with some closing their doors. The healthcare industry would likely have pushed for alternative solutions, possibly including expanded tax incentives for employer-provided insurance or state-level risk pools for uninsurable populations.

The pharmaceutical industry, which experienced significant growth following Medicare's implementation, would have developed differently. Without the guaranteed market that Medicare provided, drug companies might have focused even more heavily on medications targeting the commercially insured population rather than conditions predominantly affecting the elderly.

State-Level Innovations

Without federal programs setting a national floor for healthcare coverage, individual states would have faced increasing pressure to address the needs of their vulnerable populations. Several paths might have emerged:

Blue State Expansionism: Progressive states like New York, California, and Massachusetts might have established their own public health insurance programs for seniors and the poor, creating a patchwork of coverage across the country. These programs would have varied widely in generosity and eligibility.
Limited Conservative Alternatives: More conservative states might have implemented modest high-risk pools or subsidized private insurance options, though likely with strict eligibility requirements and limited benefits.
Public-Private Partnerships: Some states might have experimented with partnerships between government and private insurers, perhaps offering tax incentives or subsidies to companies willing to cover high-risk populations.

Impact on Vulnerable Populations

The most immediate and severe consequences would have fallen on elderly and low-income Americans. Without Medicare, seniors would have continued facing prohibitive healthcare costs, with many forgoing necessary medical care. The poverty rate among the elderly, which dropped dramatically after Medicare's implementation (from about 35% in 1959 to below 15% by 1974 in our timeline), would have remained stubbornly high.

For low-income families who would have been eligible for Medicaid, the lack of a safety net would have meant continued reliance on charity care, public hospitals, and emergency rooms. Preventive care would have remained largely inaccessible, leading to worse health outcomes and more advanced disease progression before treatment. Children in poverty would have been particularly affected, missing out on the early screening and treatment programs that Medicaid made possible.

Disabled Americans, who gained coverage through Medicare and Medicaid expansions in our timeline, would have remained among the most underserved populations. Without these programs, many would have been effectively uninsurable in the private market, leading to increased institutionalization and dependence on family caregivers.

By the end of the 1960s, healthcare access in America would have remained highly stratified by income, employment status, and geography. The absence of Medicare and Medicaid would have preserved and potentially worsened the two-tiered healthcare system that characterized pre-1965 America, with profound implications for the decades to follow.

Long-term Impact

Healthcare System Evolution

Without Medicare and Medicaid as cornerstone programs, the American healthcare system would have evolved along a fundamentally different trajectory over the subsequent decades. By the 1970s and 1980s, the growing crisis of healthcare access would likely have prompted alternative solutions, but these would have developed within a predominantly private-sector framework.

Employer-Based Insurance Dominance

The employer-based insurance system, already established by the 1960s, would have become even more central to American healthcare without the public alternatives of Medicare and Medicaid. Tax incentives for employer coverage would likely have expanded, further cementing the link between employment and insurance. This would have exacerbated healthcare inequality based on employment status, with full-time employees at large companies enjoying comprehensive benefits while part-time, gig, and small business workers faced limited options.

By the 1990s, employers facing rising healthcare costs might have embraced managed care even more aggressively than they did in our timeline. The HMO revolution would potentially have been more extensive, with stricter gatekeeping and more limited provider networks becoming the norm for most Americans.

Privatized Alternatives for Seniors

The absence of Medicare would have created strong market incentives for private insurance products targeting seniors, but these would have developed very differently than Medicare Advantage plans in our timeline. Without Medicare as a benchmark, these plans would have offered less comprehensive coverage at higher costs, likely utilizing age-banding (charging older seniors substantially more) and pre-existing condition exclusions.

A probable scenario would have been the emergence of limited, catastrophic coverage plans for seniors, covering hospitalizations but leaving significant gaps for outpatient care, medications, and long-term care. By 2025, these plans might have evolved into more comprehensive options, but would remain unaffordable for many retirees.

State-Level Programs and Disparities

The absence of federal programs would have accelerated the development of state-level solutions, creating even greater geographical disparities in healthcare access than exist in our timeline. By 2025, a handful of wealthy blue states might have established near-universal coverage systems, while many poorer, more conservative states would offer minimal safety nets.

These state disparities would have affected population migration patterns, with seriously ill individuals sometimes relocating to access care—creating "medical migration" patterns similar to what occurred with AIDS patients moving to states with better HIV care in the 1980s and 1990s.

Economic and Societal Impacts

Delayed Retirement and Family Caregiving

Without Medicare providing health security in retirement, many Americans would have needed to work longer to maintain employer-sponsored insurance. The average retirement age would likely be several years higher than in our timeline, with many seniors working well into their 70s primarily for health benefits.

Family caregiving would have become an even more critical institution, with adult children taking on substantial financial and caregiving responsibilities for elderly parents. This would have disproportionately affected women, who typically shoulder more caregiving duties, potentially reducing their workforce participation and lifetime earnings.

Medical Debt and Bankruptcies

Medical bankruptcy, already common in our timeline despite Medicare and Medicaid, would be significantly more prevalent in this alternate reality. Without these safety net programs, medical debt would be the leading cause of personal bankruptcy by a wide margin, affecting not just low-income families but also middle-class households with serious illnesses.

By 2025, specialized financial products would likely have emerged to address healthcare financing needs, including medical loans, healthcare-specific credit cards with high interest rates, and even healthcare-collateralized reverse mortgages allowing seniors to convert home equity into medical care.

Healthcare Employment and Development

The healthcare sector would still have grown substantially, but with a different composition. Without the stable funding provided by Medicare and Medicaid, hospitals would have developed with greater emphasis on profitable service lines catering to well-insured patients. Concierge medicine and tiered care systems would be more prevalent.

The pharmaceutical and medical device industries would have oriented research and development toward conditions affecting working-age, privately insured patients. Advances in geriatric medicine, treatments for disabilities, and conditions affecting low-income populations might have lagged considerably compared to our timeline.

Political and Policy Evolution

Recurring Reform Efforts

The absence of Medicare and Medicaid would not have eliminated pressure for healthcare reform. Instead, calls for universal coverage would have resurfaced repeatedly, but likely with different approaches and coalitions. Rather than focusing on expanding existing public programs (as with ACA Medicaid expansion), reform efforts might have centered on:

Tax credits and private market subsidies: Conservative policymakers might have expanded tax deductions and credits for medical expenses and insurance premiums.
Catastrophic coverage mandates: Requiring high-deductible coverage for major medical events while leaving routine care to out-of-pocket payment.
Expanded veteran and military healthcare: Using the VA system as a model for limited public healthcare provision rather than the social insurance model of Medicare.

By 2025, the U.S. might have implemented a patchwork system of tax incentives, limited public programs, and state-level initiatives rather than the public-private hybrid system that exists in our timeline.

Public Health Consequences

The absence of consistent healthcare coverage for vulnerable populations would have had profound public health implications. Vaccination rates among low-income children would be lower, preventable disease outbreaks more common, and chronic condition management less effective. Life expectancy disparities between socioeconomic groups would be even wider than they are in our timeline.

The HIV/AIDS crisis of the 1980s and 1990s would have been even more devastating without Medicaid covering treatment costs for many patients. Similarly, the opioid epidemic might have seen fewer treatment options and higher mortality rates without Medicaid-funded addiction services.

The COVID-19 pandemic would have unfolded differently, with lower-income and elderly populations facing even greater barriers to testing, treatment, and vaccination without the coverage guarantees provided by Medicare and Medicaid.

International Comparisons

By 2025, the gap between the U.S. healthcare system and those of other developed nations would be even more pronounced than in our timeline. While countries like Canada, the UK, Germany, and Japan all implemented various forms of universal healthcare through the latter half of the 20th century, the U.S. in this alternate timeline would stand as an extreme outlier in terms of coverage gaps, health disparities, and bankruptcy rates tied to medical expenses.

This exceptionalism would likely have prompted greater comparative policy research and potentially made healthcare reform an even more central political issue, with proponents pointing to the stark international contrasts in outcomes and costs.

Expert Opinions

Dr. Jonathan Oberlander, Professor of Health Policy and Management at the University of North Carolina, offers this perspective: "The absence of Medicare and Medicaid would have fundamentally altered the architecture of the American welfare state. These programs weren't just significant for the populations they directly served—they established precedents and infrastructures that shaped all subsequent healthcare debates. Without them, the policy path of least resistance would have led toward tax incentives and private market solutions rather than direct public provision. By 2025, we'd likely see a healthcare system even more fragmented than our current one, with deeper disparities and more substantial gaps in coverage, particularly for vulnerable populations."

Dr. Rosemary Stevens, historian of American medicine and Professor Emerita at the University of Pennsylvania, suggests: "Medicare and Medicaid represented watershed moments in establishing healthcare as a right, at least for certain populations. Without these programs, the conceptualization of healthcare might have remained firmly in the market-commodity framework rather than evolving toward a social good. The most profound differences would be cultural and ethical—the absence of these programs would have reinforced the notion that healthcare access is primarily an individual responsibility rather than a collective obligation. This would have ripple effects across all aspects of healthcare delivery and financing, from how we train physicians to how we design insurance products."

Dr. Katherine Swartz, Professor of Health Economics and Policy at the Harvard T.H. Chan School of Public Health, notes: "The economics of American healthcare would look radically different without Medicare and Medicaid. These programs not only provided direct coverage but also created pricing benchmarks and administrative standards that private insurers often followed. Without them, we might have seen even greater price variation, higher administrative costs, and more aggressive competition among providers for privately insured patients. The healthcare sector would still be enormous—likely 15-18% of GDP—but with resources distributed even more inequitably and inefficiently than in our current system. The elderly would have borne the greatest burden, with medical expenses causing substantially higher poverty rates among seniors than what we observe today."