How It Happens
FYI, here's a brief history of Medicare:
1945 Harry Truman sends a message to Congress asking for
legislation establishing a national health insurance plan.
Two decades of debate ensue, with opponents warning of the
dangers of "socialized medicine."
By the end of Truman's administration, he had backed off
from a plan for universal coverage, but administrators in
the Social Security system and others had begun to focus
on the idea of a program aimed at insuring Social Security
July 30, 1965 Medicare and its companion program Medicaid, (which
insures indigent recipients), are signed into law by
President Lyndon Johnson as part of his "Great Society."
Ex-president Truman is the first to enroll in Medicare.
Medicare Part B premium is $3 per month.
1972 Disabled persons under age 65 and those with end-stage
renal disease become eligible for coverage.
Services expand to include some chiropractic services,
speech therapy and physical therapy.
Payments to HMOs are authorized.
Supplemental Security Income (SSI) program is established
for the elderly and disabled poor. SSI recipients are
automatically eligible for Medicaid.
1982 Hospice benefits are added on a temporary basis.
1983 Change from "reasonable cost" to prospective payment
system based on diagnosis-related groups for hospital
inpatient services begins.
Most federal civilian employees become covered.
1984 Remaining federal employees, including President, members
of Congress and federal judiciary become covered.
1986 Hospice benefits become permanent.
1988 Major overhaul of Medicare benefits is enacted aimed at
providing coverage for catastrophic illness and
Coverage is added for routine mammography.
1989 Catastrophic coverage and prescription drug coverage are
Coverage is added for pap smears.
1992 Physician services payments are based on fee schedule.
1997 Medicare+Choice is enacted under the Balanced Budget Act.
Some provisions prove to be so financially restrictive
when regulations are unveiled that Congress is forced to
revisit the issue in 1999.
1999 Congress "refines" Medicare+Choice and relaxes some
Medicare funding restrictions under the Balanced Budget
Refinement Act of 1999.
2000 Medicare+Choice Final Rule takes effect.
Prospective payment systems for outpatient services and
home health agencies take effect.
Medicare Part B premium is $45.40 per month.
This primer leaves out something very important, however: what happened between Truman's defeat of universal health care and the enactment of Medicare. There were several interim bills introduced to cover the elderly indigent, one of which was signed into law by Eisenhower. (Here's a fascinating debate on the subject captured at Newstalgia.)
At the prospect of taking the next step of covering all the elderly and putting a "foot in the door" of socialized medicine, the AMA and the conservatives went into overdrive to stop it, helped by none other than Ronnie Reagan himself:
Operation Coffeecup was kept deliberately low-key and internal to the AMA, its Woman’s Auxiliary, and the trusted friends and neighbors of the Auxiliary women. Reagan’s efforts against Medicare were revealed, however, in a scoop by Drew Pearson in his Washington Merry-Go-Round column of June 17th. Pearson titled his item on Reagan, “Star vs. JFK,” and he told his readers:
Ronald Reagan of Hollywood has pitted his mellifluous voice against President Kennedy in the battle for medical aid for the elderly. As a result it looks as if the old folks would lose out. He has caused such a deluge of mail to swamp Congress that Congressmen want to postpone action on the medical bill until 1962. What they don’t know, of course, is that Ron Reagan is behind the mail; also that the American Medical Association is paying for it.
Reagan is the handsome TV star for General Electric . . . Just how this background qualifies him as an expert on medical care for the elderly remains a mystery. Nevertheless, thanks to a deal with the AMA, and the acquiescence of General Electric, Ronald may be able to outinfluence the President of the United States with Congress.
Reagan’s recorded remarks are quite extensive, and reveal a determined and in-depth attack on the principles of Medicare (and Social Security), going well beyond opposition to King-Anderson or any other particular piece of legislation.
Now back in 1927 an American socialist, Norman Thomas, six times candidate for president on the Socialist Party ticket, said the American people would never vote for socialism. But he said under the name of liberalism the American people would adopt every fragment of the socialist program. . . .
But at the moment I'd like to talk about another way because this threat is with us and at the moment is more imminent. One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It's very easy to disguise a medical program as a humanitarian project. . . . Now, the American people, if you put it to them about socialized medicine and gave them a chance to choose, would unhesitatingly vote against it. We have an example of this. Under the Truman administration it was proposed that we have a compulsory health insurance program for all people in the United States, and, of course, the American people unhesitatingly rejected this.25
And what was this frightful threat that Reagan perceived as “imminent”?
. . . Congressman Forand introduced the Forand Bill. This was the idea that all people of Social Security age should be brought under a program of compulsory health insurance. Now, this would not only be our senior citizens, this would be the dependents and those who are disabled, this would be young people if they are dependents of someone eligible for Social Security. . . .
First you decide that the doctor can have so many patients. They are equally divided among the various doctors by the government. But then doctors aren’t equally divided geographically. So a doctor decides he wants to practice in one town and the government has to say to him, you can't live in that town. They already have enough doctors. You have to go someplace else. And from here it's only a short step to dictating where he will go. . . . All of us can see what happens once you establish the precedent that the government can determine a man's working place and his working methods, determine his employment. From here it's a short step to all the rest of socialism, to determining his pay. And pretty soon your son won't decide, when he's in school, where he will go or what he will do for a living. He will wait for the government to tell him where he will go to work and what he will do.
Four years later, Lyndon Johnson had a strong mandate and a huge majority and he enacted more progressive legislation than anyone but Roosevelt. But he settled for enacting Medicare, the program Reagan excoriated in that Operation Coffee Cup recording, rather than pushing for universal coverage as Harry Truman had done and potentially losing. Did he do the right thing?
It's a good question in the abstract. And as a matter of strategy, it might well have been better to wait until they got enough support for universal health care. But for the elderly, poor and disabled people who needed health care at that time, it was undoubtedly the right thing to do. Had they simply allowed the earlier, inadequate indigent legislation to stand, which after five years still wasn't enacted in all the states, many fewer people would have been covered. And considering where we now know the country was politically headed, we might not have gotten Medicare at all.
Reagan concluded his album with a pitch to the listeners to call their congressmen and said this:
And if you don't do this and if I don't do it, one of these days you and I are going to spend our sunset years telling our children, and our children's children, what it once was like in America when men were free.
Ah yes, America is so "exceptional" and free that it takes us decades to do common sense things that other countries do all at once. And even then it's two steps forward one step back a good part of the time.
Our political system is terrible, and we should change it. And we should work for candidates who are committed to the specific policies we care about and give them an explicit mandate to enact them. The celebrity politics to which we are so addicted is partly responsible for the fact that it takes decades to enact any change -- we treat politics like "American Idol" or the Super Bowl and don't bother to pressure our leaders to take firm stands on issues we care about when we have the opportunity. Changing that is fundamental to creating better policies.
But right now there is a real chance for the first time in 65 years to enact universal health care, however imperfect the specifics of it may be. I'm sure whatever they pass will be inadequate, just as medicare and social security were inadequate when they were originally passed. It seems to be the American way. But if our political and business elites have finally come to the consensus that America should join the first world and create a system that guarantees coverage to everyone, then I think we have to take the leap while we can. History shows that these chances don't come along every day. In fact, they come along about every couple of decades and we very rarely can even take an incremental step. We need to get universal health care on the books.