Medicare and Medicaid Signed Into Law After Defeating Decades of AMA Opposition and Reagan Propaganda Campaign

President Lyndon B. Johnson signs the Social Security Amendments of 1965 into law at the Truman Presidential Library in Independence, Missouri, creating Medicare and Medicaid with former President Harry Truman at his side. The legislation provides federal health insurance for Americans over 65 (Medicare) and for low-income families (Medicaid), fundamentally transforming American healthcare despite fierce opposition from organized medicine.

The American Medical Association vigorously opposes the legislation until enactment, characterizing government health insurance as “socialized medicine” and linking it to communism. President Truman, the first president to publicly advocate for national health insurance in the 1940s, faced staunch opposition from congressional conservatives and the AMA, which labeled his proposals as part of the “Moscow party line.” The AMA mounts a massive publicity campaign successfully linking national health insurance to the communist threat in public consciousness.

The AMA’s most visible propaganda effort features Hollywood actor Ronald Reagan. In 1961, the AMA recruits Reagan to record “Ronald Reagan Speaks Out Against Socialized Medicine,” a 10-minute LP distributed as part of “Operation Coffee Cup.” The recording warns that subsidized medicine will curtail Americans’ freedom and predicts that “pretty soon your son won’t decide when he’s in school, where he will go or what he will do for a living. He will wait for the government to tell him.” Reagan declares: “One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It’s very easy to disguise a medical program as a humanitarian project.”

The AMA organizes hundreds of personnel to spread mail across the country, mobilizing doctors and others to write congressional representatives opposing Medicare. President Kennedy counters with an unusually aggressive outreach campaign, including 33 AFL-CIO rallies, noting that “some organizations have six, seven, and eight hundred people spreading mail across the country, asking doctors and others” to oppose the legislation.

Following Johnson’s landslide 1964 election victory, the AMA belatedly sponsors a counterproposal called “Eldercare,” based on expanding the existing Kerr-Mills program. House Ways and Means Committee Chairman Wilbur Mills incorporates elements of the AMA’s Eldercare proposal into the final legislation as Medicaid—viewed by the administration as a supplement to Medicare rather than a substitute.

To decrease AMA opposition and secure passage, the final bill grants physicians and insurance companies substantial control over fees. Medicare provides no effective controls on physicians’ fees, leaving determination of “reasonable charges” to physicians in conjunction with insurance companies. This concession to organized medicine creates a reimbursement structure that enables decades of healthcare cost inflation.

The bill survives more than 500 amendments before passing both chambers: the House votes 307-116 on July 27, and the Senate votes 70-24 on July 28. The legislation represents a major defeat for the AMA’s decades-long campaign against government health insurance, though the organization’s success in shaping reimbursement mechanisms protects physician income and establishes fee-for-service medicine as the dominant model.

Before Medicare’s creation in 1965, only 54% of Americans over 65 have insurance covering hospital expenses. Within three years of Medicare’s enactment, 96% of people over 65 have hospital insurance. The program provides immediate and dramatic expansion of healthcare access for elderly Americans.

However, the AMA’s success in preventing effective cost controls creates long-term structural problems. The lack of fee regulation, combined with the fee-for-service reimbursement model, incentivizes overtreatment and contributes to healthcare cost escalation that far outpaces general inflation for the next six decades. The compromise that enables Medicare’s passage also embeds the profit motive deeply within public healthcare financing.

The Reagan recording marks the beginning of his political transformation from liberal Democrat to conservative icon, providing the foundation for his eventual California governorship and presidency. The AMA’s campaign demonstrates the power of professional associations to delay social legislation through propaganda, lobbying, and political pressure—tactics later adopted by other industries facing regulation.