Medicare Revisited


During 1960 health insurance for the aged was a hot enough campaign issue to provoke Republican-sponsored measures. The administration got behind a Senate bill for a federal-state partnership to partially insure senior citizens against long-term illness if they earned less than $2,500 a year and could pay an enrollment fee and the first $250 of costs. This “meanstested” program with a “deductible,” to hold down costs and discourage frivolous use, was one conservative approach. Another, favored by liberal Republicans, was to have Washington help states subsidize individual insurance purchases.

None of these measures, nor any of several Democratic alternatives, got through. But there was a small breach in the wall. In the House, Chairman Mills yielded his approval to a change in Social Security rules that would give federal matching grants to states that would pay bills for medically indigent seniors. Oklahoma’s Robert Kerr embraced this idea in the Senate, and the Southern-flavored package known as Kerr-Mills became the bill of choice for those looking for something not too drastic to vote for prior to election day. It was, after all, only a new form of public charity. Even the AMA gave a tentative blessing.

Kerr-Mills passed both houses of Congress comfortably and took effect on October 1, 1960. Its effect was limited. It helped only those already pauperized and lucky enough to live in states that chose to set up matching programs. Forand called it “a mirage.”

So health insurance remained high on the new Kennedy administration’s agenda. The new President recommended legislation to Congress in February of 1961. He asked for expanded coverage for stays in hospitals or nursing homes of choice, with small déductibles, no coverage for doctors’ fees, and subsidies for new medical research, training, and caredelivery facilities. The billion-dollar program, now beginning to be called Medicare, was wrapped in a legislative package by Sen. Clinton Anderson of New Mexico and Rep. Cecil King of California.

Ike said of the new health bill: “If all that Americans want is security, they can go to prison.”

The King-Anderson bill stirred the old fires, and ignited new ones. But the time wasn’t ripe yet, and the bill went down in the Senate 52-48, a hard blow for the President.

But Kennedy partisans, returning to the issue in 1963, were encouraged by one small yet crucial political change. Wilbur Mills had come on board behind the Medicare principle. His concern was now that stronger funding was needed. He would support a new Medicare bill if the administration would take the political risk of steeper payroll taxes. He had just reached a tentative deal with White House negotiators on November 22, when the President’s assassination ended the sixth year of the great debate.

And so it came down to Johnson, whose unshakable commitment was linked to enormous political savvy. But even he could not prevail in Congress during 1964. It was only his stunning triumph in November that, in the eighth year, opened the gates. Yet even post-landslide politics are not that simple. Coalitions still had to be built. The consensus that finally emerged was for a combination of benefits, plus increased payroll taxes, plus enticements to private insurers, plus concessions to Kerr-Mills backers. The end product was, in David’s words, a threelayer cake: automatic hospital insurance (with déductibles and copayments) through the Social Security Administration; a voluntary option to join a major medical plan to cover doctors’ fees; and an enlarged KerrMills program. The first of these became Part A of Medicare as finally enacted, the second Part B, and the third turned into Medicaid, the state and federally funded medical welfare system. Johnson signed the bill on July 30, 1965.

And so Medicare and Medicaid came to be. Their various failings and shortfalls are the stuff of today’s front pages and talk shows. Yet doctors, hospitals, and patients have learned to live with them, and I doubt that there would be a substantial vote to return to a pre-Medicare era. The 1965 law reinforces the observation that I have heard credited to Bismarck that legislation is like sausage: It is better not to watch it being made. Yet who would deny that in its way, sausage can be nourishing?