Bridging the Gap: Covering What Medicare Doesn’t Pay

Many people assume Medicare pays for all medical expenses of America’s seniors. That isn’t the case and never has been. The program — modified only slightly since being launched more than a half-century ago in 1965 — was intended to cover only minor medical expenses and short-term care.

As medical costs rose (and treatments expanded) in the 1970s and 80s, the dollar gap between how much Medicare paid toward healthcare bills and what patients had to pay grew larger.

To bridge the gap, Congress eventually authorized Medicare Supplemental Insurance or “Medigap” — private insurance plans regulated by the states but with federally standardized benefits. Such plans picked up paying benefits where Medicare left off. Then in 1997, Congress went further. It approved a more flexible approach to additional Medicare-related coverage, leading to what is now known as Medicare Advantage.