Arthur E. Hess, 89, the deputy commissioner of the Social Security Administration who became the first director of the Medicare program, died Nov. 15 of complications from dementia at his home in Charlottesville.

Mr. Hess oversaw the expansion of the government's retirement benefits program into both disability benefits and medical insurance during the middle of the 20th century.

He was awarded the President's Award for Distinguished Federal Civilian Service in 1967. In 1969, he won the Rockefeller Public Service Award from the Woodrow Wilson School at Princeton University.

Mr. Hess, a native of Reading, Pa., graduated from Princeton and received a law degree from the University of Maryland in 1969.

He had worked for the Social Security Administration since 1939, starting in the Wilkes-Barre, Pa., office.

In the late 1940s, Mr. Hess headed up the agency's disability research operation, in anticipation of the eventual passage of a disability benefits law. In 1954, he became director of the Division of Disability Operations, at the start of the disability benefits program.

Just over a decade later, he became the first director of the Bureau of Health Insurance, making him the first executive in charge of the new Medicare program, according to the agency's official history. Within two years, he rose to the post of deputy commissioner and, in 1973, acting commissioner until his retirement from government in 1974.

He then was director of the Commission on Public General Hospitals from 1975 to 1978 and later served on various advisory committees and worked as an independent consultant.

He was a senior member and scholar in residence at the National Academy of Sciences' Institute of Medicine in the early 1980s and was a member of the congressional panel on Social Security reorganization in 1983. He also was a founding member of the National Academy of Social Insurance.

Mr. Hess moved to Charlottesville in 1981.

His first wife, Ann McKeown Davis Hess, died in 1979.

Survivors include his wife of 24 years, Jane Linn Hess of Charlottesville; three daughters from his first marriage, Jean Hess Keller of Knoxville, Tenn., Ann Hess Smith of Gaithersburg and Elizabeth Hess Smith of Hagerstown, Md.; and seven grandchildren.