Medicare health coverage was first passed in the United States on July 30, 1965 under the administration of President Lyndon B. Johnson. The legislation was enacted as amendments to existing Social Security laws. Medicare is a government-run program of health insurance coverage administered by a component of the Department of Health and Human Services called the Centers for Medicare and Medicaid Services.

In part, the Medicare program is financed by a system of payroll taxes provided for under the terms of the Federal Insurance Contributions Act and the Self-Employment Contributions Act of 1954. Employees are taxed at a rate of 2.9 percent with 1.45 percent being withheld from the worker's pay and the employer matching the remaining amount. Since 1994 there has been no limit on the maximum amount of wages that can be taxed for Medicare purposes. Self-employed individuals are wholly responsible for the 2.9 percent tax on their net earnings.

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