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Medicare Revisited

June 2024
5min read

The arguments raging in the current health-care debate have all been heard before

Whenever the debate now in progress about a national health-care bill heats up, I remind myself of how lucky I am as a senior citizen (a euphemism that, like the flabby word elderly , I dislike) to have the issue at least partly settled in my case. As a Social Security recipient automatically in the Medicare program, I am insured for a good part of my medical expenses. It seems so natural that I have a hard time realizing that Medicare is young enough to be practically an innovation. It was enacted in 1965—but not without long and hot debate.

My memory of said debate not beine clear. I decided to review it recently to see if it shed any light on the current prospects for Clinton’s health care package. The job was made easy thanks to a small book by Sheri I. David entitled With Dignity: The Search for Medicare and Medicaid (Greenwood Press, 1985) that tells the tale concisely and clearly. David’s book emboldens me to say with confidence that the battle will continue long and loudly for four basic reasons. It involves long-standing opposed philosophies. The antagonists include powerful and semipermanent interest groups. The law will be written by politicians looking for short-run election advantages. And public opinion is persuaded that the problem is too urgent to be altogether ignored. The result will be a bill full of compromises only partially effective. All the same it will move society untidily but peacefully down the road to the next crisis. That is what happened with Medicare.

David begins her story in 1958, when the problem of medical indigence, especially among the aged, was getting a sharper edge even in the supposedly prosperous fifties. Men and women past working age were increasingly squeezed between growing health needs and shrinking incomes, only a fraction of them could afford the novelty of private health insurance.

Wherefore, on a spring day in the last weeks of the Eighty-fifth Congress, the Democratic representative Aime Forand of Rhode Island dropped a bill into the hopper providing simply for medical benefits—up to sixty days of hospitalization and sixty days of nursing-home care—to be available to Social Security recipients, financed and administered through the existing machinery. Forand little knew what a long road lay ahead. Hearings in the House Ways and Means Committee began an ongoing argument over taxpayer-financed health care, introduced the principal players—and produced no legislation.

Liberals testifying before the committee defended the principle of mandatory social insurance against the calamities of old age already embodied in the Social Security law. Everyone had to pay into the trust fund to keep the system viable, but everyone benefited by being spared the burden of supporting impoverished elders—and by anticipating an anxiety-free and dignified retirement for themselves.

Conservatives countered that Social Security was basically a scheme that forced prudent and thrifty workers and their employers to contribute to the support of the lazy and shortsighted. They still believed that hard-up old people could be cared for, as always, by the charity of their families, churches, and local communities. A typical spokesman was Elsenhower’s Secretary of Health, Education, and Welfare, Arthur Flemming, who said that a national health-insurance program “would become frozen in a vast and unfair government system.” Ike himself had recorded a crisper summation: “If all that Americans want is security, they can go to prison.”

Most physicians, too, lined up against Forand. Dr. Leonard Larson, of the American Medical Association, warned that federal intervention into health-care delivery would “undermine or destroy” medical progress. The Ways and Means chairman, WiIbur Mills, a conservative Arkansas Democrat extremely well informed about the Social Security’s fiscal integrity, worried about where the dollars would come from. Armed with seniority and power, he never let Forand’s bill get to a vote.

In the Senate the issue was taken up by liberal Democrats. A “Subcommittee on Aging” of the liberal-dominated Labor Committee held hearings in six cities and found thousands of “elderly” citizens too poor to afford health care—part of the general “rediscovery” of poverty publicized in Michael Harrington’s 1962 book The Other America . The subcommittee’s chairman, Pat McNamara of Michigan, reported that there was “simply no human justification for any American” to suffer illness or neglect preventive care “because of his fear of hospital bills and of the exorbitant prices of medicine.”

The ball was grabbed by the Massachusetts senator John F. Kennedy, already running hard for the Democratic presidential nomination. He sponsored a health-care bill that wound up in the Senate Finance Committee. Unfortunately for him it was chaired by Virginia’s Harry Byrd, who, like Mills, distrusted the basic concept, as did another member, Louisiana’s Russell Long, who thought that with “free” health care, the aged would flock to hospitals as vacation spots.

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?

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