The Politics of Medicare: Second Edition (Social Institutions and Social Change)

An A ~ d ~ de n eGruyter Series of Texts and ~ u n u ~ r a ~ ~ s EDITED BY James D. Wright V.L, Bengtson and W. A. Achenbaum,The Changin~Contract Across Generations (eds.), Punishmentand Social Control: ger Stress: Causes and~ o n § e ~ u e n c e s Rand D. Conger and Glen H. Elder, Jr., Families in TroubledTimes: Ada~tingto Change in Rural America Devine and James D. Wright, The ~ r e a t e §of t Evils: Urban Pove merican Underclass G. William Dornhoff,The Power Elite and the State: How Policy is ~ a d ine America Domhoff, State Autonomy or Class ~ominance:Case Studies on Policy :Theories

and Evidence Feminism on Theory R, G. Evans, M.L. Barer, and T.R. Marm ot? The termin in ants of

nd Wolfgang Bielefeld, fit Or~anizationsin an Age of Unce~ainty:A Study in Organizational Davita Silfen Glasbergand Dan Skidmo ank ~eregulationand the Ronald F,Inglehart, Neil Nevitte, Miguel Basaiiez, The North American Trajectory: Cultu~al,Economic,an Political Ties among the UniteStates,Canada,and :Guns and Violence in America uns: Firearms andTheir Control (paperback) S. Mason, and Bernd Wegener(eds.), Social Justice and PoliticalChange:PublicOpinion i pitalist andPost-Communist States Theodore R. Marmor,The Politics icare (Second Edition) rker ~ i s ~ l a c e m eand n t EmployThomas S. Moore, The ~ i § ~ o s a b l ment I n s t a b i l i ~in America Clark McPhail,The Myth of the Madding Crowd James T. Richardson,JoelBest, and David G. (eds.), The SatanismSca Alice S. Rossi and Peter H. Rossi, Of Human :Parent-~hildRelation§ the LifeCourse Peter H. Rossi and Richard A.Berk, Just Punis~ments:Federal Gui Views Compared Joseph F,Sheley and James D. Wright,In the Line of Fire: Youth, G ~ n sand , Violence in Urban America The Politics of Reform where to Grow: Homeless and

gerous: A Suwey of

eco

itio

OR teaches politics and public policy in Yale University’s mana ~ e m eand ~ t law schools as well as in itspolitical science department. Educated at Haward andOxford, armo or has written widely about the politics of the modern welfare state, and has sewed on a number of g o v e ~ m e n t a l c o ~ § s i oand n§ ~ h o l ~ editorial ly boards. Among his num~rous publica~ons, he is the author of ~ ~ ~ e ~ s~ te aa Z~tCare ~~ i ~~r~ ~ g (1994) andthecoauthorof ~ ~ e r ~ ~ ~ s ~ ~ ~ ~e re s ~tState or o (1992). e~

~ o p ~ i g0 h 1970,1973,2000 t by meodore R. All rights reserved.N o part of this publicationmay be reproducedor ~ a n s m i ~ e d in any form or by any means, electronic or mechanical, including photocopy in^, recording, or any informa~onstorage or retrieval system, without prior permission in w r i ~ from g the publisher.

ublica~on printed is onacid free paper 63 Marmor, TheodoreR. The politicsof ~ e d i c a ~ / T h e o R. d oM~ a ~ o r . - ~ed. d p. cm.-(Social institutions and social change) Includesb i b l i o ~ a p ~ creferences al and index. ISBN 0-202-30399-3 (cloth:a&. paperb”SBN 0-202-30425-6 (paper :a&. paper) 1. ~ e d i c a ~ r o ~ t iaspects. cal I. Title. 11. Series. RA412.3.M371999 368.4’26‘00973-4~21 99-052361

anufac~redin theUnited States of Ameri~a 1098765432

~ u ’ s

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Preface to the Second Edition

xi xv

Preface to the First Edition Introduction

Twentieth-Century Medicine: The Paradoxesof Progress Origins of the Government Health Insurance Issue Universal Health Insurance Proposals in the Fair Deal The Politicsof Incrementalism: Turning toward the Aged The Appealof Focusing on the Aged Focusing on Social Security Contributors Pressure Groupsand Medicare: The Lobbyingof Millions

xix

xxiii

3 4 6

10 11 15

17

e ForandBill versus theWelfare Approach err-Mills Bill of 1960

Medicare, 1961

31

Contents

.I.

vlll

The Obstacle Course in Congress: First Try with Ways and Means The Southern Democrats The Kennedy Admi~strationversus the AMA Medicare’s Near Miss, 1964 olitics of L e ~ i § l ~ t i ~ e ~ e r t a i ~ ~ The Impact of the Election of 1964 The Admi~stration’sProposal: H.R. 1 and S. 1 The Ways and Means C o ~ m i t t e eand the House Take Action: January-April H.R. 6675 Passes the Senate: April-July Medicare Comes out of the Conference Committee: July 26,1965 The Outcome of 1965: Explanation and Issues

Case Studies and Cumulative Knowledge Conceptual Models and the Medicare Case The Origins of Medicare: The Rational Actor Model The Responses of Medicare, 1952-64: The ~rganizationalProcess Model The 1965 Legislation: The Bureaucratic Politics Model Processes and Policy in American Politics: The Case of Medicare Medicare and the Character of American Social Policy

T

LIT

The Origins of Medicare Revisited

32 35 38 41

45 46 47 53 55 56

63

63 64

64

67 69 71

0

93

95

95

~ont@nts

1966

ogress

The Politics of Accom~odation: edicare’s Implementation and Subsequent Evolution from to 1970 96 The 1970s: Ineffectual Reforms and Intermittent The 1980s: The Challenge of the Reagan Era 107 Conclusion 115

Introduction: The Changing Context of Medicare’s Politics in the 1990s Medicare and the 1992 Elections: The Reawakening of Concerns A Negative Consensus on Health Reform The 1995 Trustees’ Report and Claimsof Insolvency From Legislative Impasse 1995-96 to Medicare ”Reform” in 1997 ”%e Medicare Reforms of 1997: Understanding the Politics of Balancing Budgets Medicare Flip-Flop

Introduction Medicare’s Philosop~calRoots: Social Insurance Presumption the and of Expansion 152 TheRise of ProcompetitiveIdeasaboutMedicalCare 10

ix

123 124 126 135 137 141 147

1

151

157

uzzles and ~ a t t ~ r n § 17 Introduction ~n~erstandin Medicare’s g Politics: Patterns, Puzzles, and Explanatory Approaches 171 Puzzle One: Structural Explanations 173 Evolution Medicare’s Limited and Puzzle Two: Insider Politics, Medicare’s Price Controls, and Puzzles theReagan/Bush the of Era 175

171

ont tents

x

Puzzle Three: Medicare 1995-99"-Macro Politics and the Emergence of Unexpected Remedies Conclusion

176 179

edicare Scholarship: A Selective Review Essay

183

Glossary

193

References to Part I

207

~eferencesto Part I1

213

Index

21

nderstandi~ dicare’s origins was the central subject of the first edition S book. Part I is a s t r a i ~ h t f o ~ a reprinti rd of the 1973 edition except for some minor adjustments in t order of what was initially the epilogue and the conclusion. I decided to leave the original study as itwas for two reasons. First, therehas been relatively little new scholarship on medic are,^ enactment since the flurry of books in the late1960s and early1970s.m a t scholarship has emerged is discussed in this edition’s expanded biblio~aphicalessay. But the limited volume of this commentary on Medicare does not fully explain why I was so disinclined to rewrite the early chapters.The fundamental rationaleis really quite simple. The scholarship publishe~on medic are,^ enactment politics has not challenged any major interpretation of the book and, accordin~ly, it seemed needless to change what was a settled narrative. Part 1’s Medicare story answersone set of questions. How could the h e r i c a n political system yield a policy that simultaneously appeased widely held antigovernment biases and yet used the federal governmajor social insurance entitlement? How was one arinterest group-the ~ A - o v e r c o m e legislatively ugh to participate inMedi~are?Most of all, how di edicare law emerge so enlarged from the earlier proposals that themselves had occasioned such controversy? The second edition’s Part I1 tells a different kind of story. It deals with what happened to Medicare politicallyas it turned from a legislative act in 1965-66 to a major program of American ~overnment in the three decades since. Part I1 both characterizes the trends and shocks that have markedMedicare’s operational politics, and reflects on what explains them.Its subject, then, isthe politics of Medicare since enactment, emphasizing the form, salience, andsignificance of those polities over time.

xii

to

Preface

the Second Edition

edicare’s anniversaries illustrate the changing place of the pro-

eth anniversa

care was celebrated as a Re~ublican rican political leaders) steered clear of the of national health ins~rance.By 1996”-the ws, the object of a are’splace in the

lection of 1964.

e in the e~traordinaril~ c erican medicine? What w

*

economic nd world the 14 ~ ~ r c e of nt

refa ace to the Second ~ d i t i o n

...

x111

prospective hospital payment method introduced in 1983. explore how elderly and disabled Americans actually nistration. Thisis a topic few scholars hav ates for the elderly understand quite well. does. not review the topics that dominate the pages of he journals-questions such as theeffects of one oranother policy innovation on access, costs, or quality.This edition also does notaddress two of the topics that have been icare’s internal reform aspirasis on combat tin^ fraud both in tions inthe 1990s:the pro rhetoric and practice, and a1 restructuring Bruc launched whenFinancing heading e Agency. worthy topics of undoubted political importance, the antifraud campaign because it became such akey feature of public attention, and the reorganization because it illustrated themicropolitics of how an a responds to efforts to reduce its role. The process of producing the new book was both extended in time and indirect.I considered revising the original edition at many points 73. Though the firste ned inprint, its subject obview more distant and continued t o use it in ed me to update the stud ecting over time on icare’s policy disputes and political struggles, I continued to on v a ~ o u topics. s ~ h a p t e r s7 through 10 i n ~ o ~ o r asubsta te of these articles,which is acknowledged in theendnotes. r development crucially aided the completion of this second ed to be a visitingprofessor at the Kennedy Schoolof e fall of 1996, but had not worked out what I would teach. A chance conversation with Graham Allison, an old friend from days, revealed that he too was revising a book S. ~e agreed to give a seminaron both the ~ u b a n sile crisis and the politics of edicare, using that format to present what we wanted t o include in the revised second editions of our Allison, with his coauthor Philip Zelikow, finished his revision in e move for which I have only recently forgiven him. I want aham warmly, reflecting with pleasure on that colle one that is as rare asis the revisions of books pub1 t w e n t y - ~ vyears ~ earlier.

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XVi

A~knowle~~ments

millennium. I gratefully acknowledge her decisive assistance. Camille Costelli, myoffice assistant, created in 1998-99 an environment in which this writing-and much other work-could be accomplished with more civility and reliability than could be accurately described as the norm. She deserves and has my gratitude. most profounddebts, however, are to the circle of colleagues who een my intellectual companions overthe pastdecades in thefield of health politics, policy, and law. Mostlybut not exclusivelyformer students, they constitute the audience likely to care most about what I write and, inthat sense, havebeen the most powerful stimulant t o finishing work like this second edition. I have already mentioned Jon ~berlander,who is himself a member of this seminar without walls. Professor James Morone of Brown University, long agoa graduate student of mine at the University of Chicago, has for a quarter century been a leader in this seminar. He has both written works that advanced theunde~standingof Medicare and prome to continue myown scholarship on the topic. Professor Josete, not a former student and a relative newcomer to the field, has contribute cation about the politics of budgets andthe mix: of in contemporary fiscal debates. I am delighted to a as I am in connection with the reading of this manuscrip Peterson, Professor of Politics and Public Policy at IJ T h e ~ o ~ r nofa ~l e a l t hpolitic^, Policy & Law. He, lik drafts of what became chapters 8 and 9 with a degree of care, candor, and concise criticism that was remarkable andmuch appreciated. Jerry Mashaw, my Yalecolleague and coauthor on so many works, limited his contributions on T h e Politics of ~ e d i c a r eto reading early draftsof the new chapters. But,if the scope of his review was bordered, the clarity and force of his critical observations were considerable. The revisions’ would have stopped sooner had it not been for the stimulus of his reac-, tions. In this, as inmany other ways, he remainsmy closest intellectual. com~anion,someone I have been very lucky to have hadso near for two decades. Two others inthe “seminar withoutwalls’’ have been terribly helpful. in recent years anddeserve thanks, even though their assistance haE; been concentrated less on dicare revisions than on other tasks that might have deflected me from finishing this edition, t u r ~ e dfrom graduate student to coauthor and colle that is remarkable and withbenefits to me that h siderable. While finishin this revision, he took the lead in completing another assignmentwe had takenon-a dissection of the fads and fashions of managerial commentary in contempora~American medical

olitics that both in~uence ,because of his efforts, di not r e ~ u i r efrom me as muc d. I thank him for that he1 and for the delight his own intellectual development has brought to me, his former teacher. Lastly, there is LarryJacobs, whose work onpublic opinion has stimulated my thinking eatly, as thebibliographical essay for this book was to take the ut his greatestcont~bution ng ourcommon project on the political parado~es that lth plan-and its reception-illustrate. Here, too, the “seminar”participantswere at work, with Jacobs and ~berlander my as coauthors in a scholarly essay that was finished in 1998 and freed me up to complete this book. ~ y o n who e has lived a busy schol~rlylife knows that one’s work is never as ind ualistic as title pages suggest. It is not false modesty to say that my olarly career would have been very much less “productive7’ without the intellectual exchan emotional support of these semina~ans. ce has been very valuable and much rk Goldberg was willing to read the last drafts of chapters in Part I1 and saved them from a number of rors. For that, and other comradely efforts, I am very grateful to ark. Eliot Fishman and John Pakutkahelped in final reviews of the .book’s documentation and in prepa~ng the charts that appear in Pa 11. I am thankful for their assistance and especially g e s cartoonist, for Conrad, the Los A ~ ~ e Z e~ s i ~regular mission to use his work in my work. For financial help at a crucial time Iam muchindebted to Jim Knickman of the Robert ~ o o Johnson d Fo~ndation.He found a flexible and timely form of a grant to an” andto begin the process of revising this 1990s and, though the time this process is and my imagination, the grant was in fact crucial. Lastly, there isRichard offler to thank, theeditor ofAldine de ~ r u y t e rwhose , participation has been essential to the ~roductionof this second edition. Richard has displayed a degree of patience in waiting for this manuscript that calls Job t o mind. To say that he has retainedfaithin the project’scomp is to engage in considerabl understatement. OnApril 24,1992, r warned me that “if nothin can bedone [to complete the book] ash our teethand postpone publi~ation until‘ .” That was, no doubt, one of the least prescient the p u b l i s h i ~comm ~ made. However, I am fortunate one and. want to th for bearing with this project while 1990s wecouldonlydimly e-and my life-took turnsin in 1992.I am both gratified an ateful that he appears genuinely pleased with the result of w h ~could t be called “the long wait.”

~ckno~le~~ments

xviii

ea1 c o ~ ~ t h of o rt

relieved herself of ts com~letiom. She mg exhibited. of the “semi-

and the ~ ~ e c the i~c,

*Now Chapter 5 for the present edition.

xx

Edition

FirstPreface to the

cepts analogous, and inference patterns similar can social scientists “sum up” the descriptions, explanations, andpredictions of a numberof case studies. Hence, the first respect in which a case study has general relevance (for cumulative efl’ort) is in theexplicit discussion of its conceptual framework and the difference such a framework makes in the particular study. Second, case studies can illustrate some of the problems and prospects of procedural generalizations about political behavior.’We have no lack of assertions about how the American political system operates, how public opinion is formed, how concerns become political issues, how legislatures and legislators, executive agencies and executive officials operate in their environments. What we need in many instances is the detailed explication of‘the connection between such summary generalizations and the innumerable studies of individual instances of political action. A. monograph on Medicare-one of the most i m p o ~ a npost-World t War 11 social policy issues-can be used to illustrate explicitly what seem to be promising generalizations. Third, case studies can offer i m p o ~ a ninstances t of who gets whatin the U.S. political system. They can, in short,be used to illustrate generalizations about the substantive content (thebenefits and burdens) of U.S. domestic policy. It should perhaps be stressed that Medicare’s dist~butionof ~ e n e f i ~ and s burdens need not be typical of domestic, social welfare, or even health policies in theUnited States. Butone can review the Medicare outcome from this substantive-policy standpoint and thus begin to extend the si~ificance of this particular occurrence in ~ e r i c a public n policy. l of this can be done without falsely claiming a case study ismore than a detailed analysis of how a government behaves in a particular instance. Cumulation of knowledge about U.S. politics Will not proceed unless analysts explicitly discuss the conceptual, procedural, and substantive implications of‘the cases they study. This book, though not a full history, ranges over the history of edicare disputes. Three central questionsguide its organization and selection of detail. First, why did Medicare arise as a political issue at the time and in the form it did (chapl)? The problem is to account for the timin and characterof the public policyinitiatives we have come to care. The second problem is to describe and account for the responses to Medicare initiatives over time. The threetypes of responses include: the natureof the public debate over governmental insurance for the aged; the kind of group conflict that characteredicare; and thesequence of bureaucratic proposals and congressional reactions in the 1952-64 period (chap. 2 and 3). Thirdly, I am

11

Preface to the First E

icare legislation, andobserved ssage ofthis bill ...but that it

xxiv

Introduction

eneral hospitals grew with the support of local tax funds. ani it at ion measures9 disease control through mass inoculation, state re hospitals-all commanded increasing public atte~tion as~ e ~ c a n ~ the countryside to congregate in large urban centers after the Civil that medical care problems9always of concern to national olitics. That interest em of medical care:

of medical research ( p ~ m a ~t l y h, the research armof the Public

support for researchandhospital faci ies. The inactionpersisted te public sentiment to the contra^. indicated a relatively stable twoernment assistance i less favorable response t allup pollsters reported, sory medical insurance pr esd’ (Gallup, 1965). The l e ~ s l a t i ~ activity e of the U ss, howeve~9isnever sim ply amatter of r a t i f ~ n g public opi .For controversial legislation to be enacted, proponents mustbe suf~cientlyorganized to make their views felt. There mustbe some agreement remedies”to bolster the public acknowledgment of hea yond that, the support of executive a encies is no

f obstacles: committee hearings, placement on the

ules ~ommittee, votes in both houses, and ifsuc-

Preface to the First ~ ~ i t i o ~

xxi

interested inexplaining the outcome of this intense social,policy struggle. The output of the Congress-the Medicare statute of 1965“s the subject of chapter 4. In addition, Iset out some of the lessons and issues surrounding the enactment of Medicare, and conclude the narrativeby discussing some of the operational problems which arose the first year, and subsequent issues-most prominently the cost increases-bring the book up to the presentdebate over national health insurance. The chapter on “Medicareand the Analysis of Social Policy”departs from the seq~ential organi~ation and reviews the conceptual, procedural, and substantive significance of the Medicare case. Those primarily interested in thepolicymaking process might benefit by beginning with this chapter andthen referring back to the preceding text. This American edition carries over the form of documentation used in theEnglish edition (Routledge and Kegan Paul, London, 1970). Citations in the text, indicated by author’s name and yearof publication, are fully documented in the~ i b l i o ~ a p h i ccitations al section. Following the Citations there is more a general discussion of sources for the study and suggestions for further reading. The Glossary provides further explanation of unfamiliar termsused to describe the legislative process and the medical care andhealth insurance industries and aoflist institutional namesused. Three institutions have provided support for initial research and forums for criticism of earlier drafts:The Harvard University program in the Economics and Administrationof ~ e d i c aCare; l Harvard’s John Fitzgerald Kennedy School of Government; and theUniversity of consin’s Institute for Research on Poverty. I want to express my tude for such support without in any way holding these institutions responsible for my conclusions. Full a c ~ n o w l e d ~ eto n tthose who provided valuable and appreciated assistance can be found in thediscussion of sources. Jan was as much coauthor of this book as chief research assistant. Her editing hasguided the final form of the text and, in many places, her writing has supplied the final version. I wantto thank especially the former r This study Secretary of Health, Education, andelfa are, ~ i l b u Cohen. could not have been written without the extraordinary access to primary materials enjoyed I as his special assistant in the summer of 1966. Few young scholars are permitted t o investigate the files of political leaders still in the midst of public life. Evenfewer are given the freedom I was givento publish the conclusions they drawfrom such encounters. No one who reads this book will find a slavish devotion to any of my sources, but I feel particularly appreciative to former Secretary ohe en for extending to me the kind of educational opportunity his own

cessfully passed, aconference committee in which difl'erences between House and Senateversions are ironed out. It was not until 1965 that a health insurance bill for the agedemergedfrom the c o n ~ e s ~ i o n a l process to become public law. Understanding how that bill became law illustrates some of the typical patterns by which divisive public issues run the course in erican politics from initial demand to s t a t u t o ~ enactment.

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professor called attention t o the science, techno lo^, and therapy k forward to enjoying. That ear, Professor constituted a “Great a random patient w ease consulting a doctor chosen at random stands a ‘ng from the encounter’’ (Harris, 1966,s). Twentiethents have fully borne out this prediction that the uld have much to offer the consumers of its services. iseases-T.B., cholera, d i p h t h e ~ a 7 pneumonia, been controlled. Surgical and drug therapy have the impact of diseases and maladiesthat prevenhas not conquered.These changes, along with substantial of living, have not eneral ~ e ~ c standard a n illness, but they have startlingly altered mororn child in 1900 had a life expectancy of years; by L965 the average se improvements are, however, just one side of what rogress” (1961,4,7). tion of old peoplein the ge levels there is more end ulation as a whole” (ibid.). nd €or medical care has increased both through improved heightened expectations among longer-livingpopulations, Changes in the organizatio of medical care have accompanied the rapid increase inutilization. ince 1930,the average number ofpatient visits to the doctor has more than doubled, increasin~from 2.6 to 5.3

professor called attention t o the science, techno lo^, and therapy k forward to enjoying. That ear, Professor constituted a “Great a random patient w ease consulting a doctor chosen at random stands a ‘ng from the encounter’’ (Harris, 1966,s). Twentiethents have fully borne out this prediction that the uld have much to offer the consumers of its services. iseases-T.B., cholera, d i p h t h e ~ a 7 pneumonia, been controlled. Surgical and drug therapy have the impact of diseases and maladiesthat prevenhas not conquered.These changes, along with substantial of living, have not eneral ~ e ~ c standard a n illness, but they have startlingly altered mororn child in 1900 had a life expectancy of years; by L965 the average se improvements are, however, just one side of what rogress” (1961,4,7). tion of old peoplein the ge levels there is more end ulation as a whole” (ibid.). nd €or medical care has increased both through improved heightened expectations among longer-livingpopulations, Changes in the organizatio of medical care have accompanied the rapid increase inutilization. ince 1930,the average number ofpatient visits to the doctor has more than doubled, increasin~from 2.6 to 5.3

The Origins Medicare of the

4

Strate

ns visit has changed in the rican physicians were genrs,three decades 1,ater two-thirds were specialists 29). The site of the most complicated medicalactivity *

activitieshavesteadily

serious illnessepisodes”;people with illness “requiring hospital~zation account for one-half of all private exp ercent of the population” ( ~ d e r s o n sumer expectations and U environment for public pol

xperiences, common

for industria ated health insurance in 1911 incorporated health insurance for low-income workers into a social security program provid tion, and sickness benefits. By without a government health income workers, though there were substan

emands in America for overnment i~volvement in healthi n s ~ r ance date back to the first d cade of the twentiet~ century; The impetus in these early efforts came from academics, lawyers, and other nized in the ~ e r i ~ ~as sno c i a ~ i ofor n Labor Legisring the years 1915-18, this group made a concerted

~ r i ~ i of n sthe ~ o v e r n ~ eInsurance nIssue talth

5

its opposition to the institution of any plan e ~ b o d the ~ nsystem ~ of CO pulsory contributory insurance against illness,or any other plan o f CO i n s ~ r a n c ewhich provides for medicalservice to be rendered contributors or their dependents, ovided, controlled, orregulated by any state or Federal government. (

ben in 1934 t h e ~ o m m i t t e eon Economic Security announced that it was studying health insurance, it was at once subjected to is rep re sentationand ~ l i ~ c a t i oIn n the , original S security bill there was one line to the ef3'ect that the Social Security d should study the p r o b l e ~

the The Origins of

6

and make a report to Con~ress. That little line was res~onsiblefor so many telegrams to themembers of Congress that the entire social security program seemed endangered until the ~ a y and s Means Committee u ~ a ~ i m o u sstruck ly it out of the bill. (Feingold, 1966,91)

oosevelt’s fears that the controversia ssue of gover~menthealth curitybill and,later, his rance would jeopardize the Social

forestall federal

the~overnmenthealthinsuranceissue was origi raised in conjunction with social s e c u ~ t yincome ~ r o t ~ c t i o n , ea1 cham.pions of m e ~ i c a care l proposals did not view it a measure to furtherincome security but as a remedy for the i n e ~ u i t a ~ l e d i s t r i ~ u toi o nedical services. The proponents of’I’ru.gram. took for granted that financial man’s c o ~ p ~ l s o insurance ry m e ~ should ~ s not determi~e qualityand quantity of me to the means of a t t a i n ~ e nat vices a citizen received. ‘‘~ccess vation of health,” the 1 report of Truman’s C o ~ m i s s i o non the

~

~in the a Fair l Deal ~

7

The ~~~~s

8

of the ~ e ~ i c aStrategy re

ping with his recentc essional a ~ t i o non m

which would not be re were made for Federal

o the plan and their de~titute~ i n o ~ t y

ciation, The or~anization had been roused to a nationwide p r o p a ~ a n d ~

alth ~ n s u r ~ n~roposals ce in the Fair Deal

9

n a noteof hysteria, holding out

was one

~~~

o

The ~

10

~of the ~

i

~

ollars spent on pro can politics, the n socialism and “the volu nally ~indictive battlebetw ed o~position-these compris 1th insurance and provided the setting for the emer-

pare down Presid st hospitalization

did not needfinancial ~ssistance; (3) it would swell utilization of exist-

s

TheoA~p~poec~u ls i n ~

on the Aged

11

ing medical services beyond their capacity; and (4) it would produce excessive federal control of physicians, constituting a precedent for socialism in America. In connection with the latterobjection, there was the widespread fear, grounded in the bitter, hostile propaganda of the ,that physicians would refuse t o provide services under a nationa~ health insurance program. To meet these objections, the proponents of “peripheral programs” turned from the health problems of the general population to those of the aged. As a group, the aged could be presumedto be both needy and deserving because, through no fault of their own, they hadlower earning capacity and higher medical expenses than any other adult age oup. Since the proponents wished to avoid imposition of a meanstest determine eligibility within the ranks of the aged, they limited the ne~ciariesto those persons over 65 (and theirspouses) who had contributed to the social security system during their working life. As an additional advance concession to spike the guns of those opponents who could be counted on to assault the program as a “give-away,”benefits were limited t o 60 days of hospital care. Finally,physician services were excluded fromthe plan in hopes of sofiening the hostility of the medical profession. What had begun in the1930s as a movement to redistribute t o help medical services for the entirepopulation turned into proposal a defray some of the hospital costs of social security pensioners.

The selection of the aged as theproblem group is comprehensible in the context of American politics, howeverdistinctive it appears incomparative perspective. Unlike America, no other industrial country in the world has begun its government health insuranceprogram with the aged. The typical pattern h been the initial coverage of low-income workers, with subse~uente nsions to dependents andthen to higherincome groups. Insuring low-income workers, however, involves use of means tests, and the cardinal assumption of social security advocates in America has been that thestigma of such tests must be avoided. In having t o avoid both general insurance and humiliating means tests, the Federal Security Agency strategists were left with finding a socioeconomic group whose average member could be presumed to be in need. The aged passed this test easily; everyone intuitively knew the ed wereworst off, Cohen was later to say that thesubsequent massing of statistical data to prove the aged were sicker, poorer, and less insured than other adult groups was like using a steamrollerto crush an antof opposition.

The Origins of the

12

health insurance was a

ill. The hospital benefit was designed, however, not so much to cope

e elderly as to reduce their most onernd his advisers were well awa~e that

expenses and personal income, In 1960, it was estimated that

cans. One in six aged persons entered a hospital in a given year, an they stayed in hos~italstwice as long as those under65, facing an average daily charge per patient bed in 1961of $35. Hospitalization insu ance was, according to this informati a necessity that the to have to avoid financial catastroph ut what the advocat point out was that financial catastro could easily overtake 60 days of~ospitalinsurance. Such a catastr is defined by the ga medical bills and available resource icare’s protection a

14

x413

€43

The Origins of the

unit costs of hospital caredrew attention away fromthe financial costs of ~ n u s ~ a lextensive ly utili~ationof health s e ~ i c e swhether , high or low in average prices. of the aged was a The concentr~ti~n on the ~urdens th The d i s a ~ o ~ofa laims t o chan~e fundamenta~~y the the exclusion of physici~n A hysteria. Thefocus onthe ical care world, and stressed the iss availa~leservices within that world. amental but politic all^ sensitive

16

The Strategy Origins Medicare of the

mass public support and to shield the aged from the indignity of a means test. The contributory re~uirementof social secu~ty-the limito those having paid social security taxes ance to private insurance. Thussocial sec r to have paid for hospital insurance. In fact, social security beneficiaries are entitled to pensions exceeding those whic a strict actuarial sense, they have “earned”throu~h cont~butions. lly lost in theavalanche of words about how concia1 ~ecurity,Robert e ~ e e Z they i ~ ~have earned their 32). The notion that contributions confer rights ich premiums entail meated the advocacy The publiclegitimacy surround in^ the SOC the s t i g ~ aattache^ t o most public between public assi~tancefor the a1 security rights for contributors is, infact, less clear in re le~slation-for anyclass of persons-confers rights in those who insist on the distinction between publicass’ a1 security focus less on the legal basis of rights th on the di~erent ways in which these programs are viewed and admin~ curity manuals insist on treating b e n e ~ c i a ~ e s a s stress that the government “owes” claimants their otype of welfare is comprise Poor Laws, a combination ith intrusive investigation citi~enshiprights. The unfavorable stereotype of rts the contention that social security instrument for providing benefits while ere concerned about sec elites as well as or~anizedinterest ial security ~nancingp red a president sympatheticto health insurnce, but concerned about levels of ad~inistrativespending. Social m s were financed out of separate trustfunds that were ~ e n ~ i t u r ethe s ; billions of dollars spent stration were until 1967 not included in esident presented to ~ o n g r ~ sas ,political ratic presidentsworried about perennial charge of reckle spending. hese structural featuresof the politics of social welfare in ~ e strate largely account for the type of “incremental” health insurance

~

~

~ r e s s u r e~ ~ o and u ~ ~ e sd i ~ a rThe e : ~ o b b ~ i no~~ ~ i l l i o n s

e ay to a proposal t o help defray

ofthe i n ~ r e ~ e n ~ ~ a tofi less o ~d

1

1

Origins

The

of the

typical ~ t r ~ coft c~o nr ~~i c ~ ~

~ 1.1, ~ Alignment Z e of Groups for and against

rican rican Insur ational Association of Workers ational Association of Social ~or~ers A ~ e r i c a nGeriatrics Society

National Association of Blue Shiel lans rm Bureau F e ~ e r a t i o ~ The Chamber of ~ o ~ m e ~ c e The A m e ~ c a nLegion.

ress sur^ ~ r o u p and s ~ e d i ~ ~ The r e~ :o b b ~ofi ànill~ ions

19

over “redistributive’,*issues in America; the sides, in tonean sition, resembled the contestants in an economic class CO framed issues in what Lowi (1964, 707) calls the terms ublic dispute continued to be dominated by the ,l o ~ b ~ i norganizations g capable of expending o shape the scope of debate and t o influence legislative results. he 1940s these two chief adversaries have engaged in what the ~ i characte~zed ~ ~ sas‘ ‘as l u g ~match,” ~g a contest of invecron ~i1davsk~’s desc~ption of the conflict between power advocates in America is just as aptfor the c

[They] have little usefor one another. Theydistrust eachother’s motives; they ~uestioneach other’s integrity; they doubt eachother’s devotion to the nationalgood. Each side expects the other to play dirty, and eachcan produce substantiating evidence from the long history of their dispute.

S

a scienti~corganization

and to some extent confusing the issues ~ c i e n t i ~ c a u t h o ~ and t i e s as se~f-interested prof~ssionals. Itsbroad lobbying aim has been to c o n ~ n c ethe ublic that ~hysicians are the sole authority that can pr on the or~anization,financing, and r e ~ l a t i o nof med care practice. its major tactic has been to frame the dispute over issues n tfederal s actio dicare so t h a t ~ r o ~ o n eof range of ideolo~calobjections.The lcare behind the slogans of freedo taste for ~ureaucracy,and hatredof the welfare higher taxes. Under such banners trooped have related to healthinsurancelegislation: ~rofessional business and fraternal oups, farm organizations, and vario~sri wing protest groups. The mixture of trade unionism and profes

0

The Origins Medicare of the

~ t r a t e ~

Notes

21

that purport to change thed i ~ t r i ~ u -

go officially unrecorded.

This Page Intentionally Left Blank

ain either ~ n i n t e r e s t eor~ hos~ile.

4

The Polities of Legislative I m ~ o s s i ~ i l i t y

were too smallto force a recons

6

The Politics of Legislative Impossibilit~

between the financialresources and the needs of e m ~ a n of s financing the benefits are either, in the or, in the case of S of the federal

to federal actionis the

ial s e c u ~ t yadmi

critics f r e ~ ~ e n tcontes ly these and similarstatistics who enjoye their main theme was ~ ~ m b eofr aged s cure i ~ c o ~ eans ,private health i~surancepolicies. d health and financial problems did exist es of a welfare approach arguedthat theFo ctively to those“who re

(2) The problem towhich Forand directed attention was the catastrophic effects of large hospital and surgical bills; hence his benefits were limited t o those expenses associated with expensive hospitalization and in-hospitalmedical care. Welfare approach opponents emphasized the inadequacy of sur~cal-hospitalinsurance for those whose means had been exhausted and who required outpatient care and drugs. They stressed the need for comprehensive benefits for those aged whocould not deal with health expenses through savings, private insurance, medical charity, or state andlocal assistance. (3) On the question of a~ministration and ~ n a n c i nthe ~ , Forand bill called for a federal program financed by social security taxes, emphasizing the contributory nature of OASDI and the desirability of not forcing the elderly to submit to the humiliation of a means test. Many conservative critics, who conceded that federal funds might be necessary to assist the medically indigent aged, nonetheless argued that expansion of federal power wasundesirable. A more palatable alternative, t o their way of thinking, was to share thefinancing of any medical assistance program with the states, resewingto the latter therole of a~ministrationand of setting standardsaccording to local needs. Hence, the irony of the dispute: the Forand backers focusing on all social security beneficiaries among the aged, proposing Zimited hospitalsurgical insurance for them, to be paid for by regressive social security taxes; the more conservative welfare advocates proposing b~oaderbenefits for a smallclass among the aged-the destituteand arguing that pro~ressiuefederal tax revenues should be used, with the administrative organization in the handsof state andlocal officials.What led liberals to support the Forand bill was a skepticism that a means-tested, state-administered assistance program would actually be utilized or implemented. Table 2.1 illustrates themajor differences in approach.

The welfare perspective on healthand financial problems was reflected in threestages. An initial skepticism about the extent of the crisis among the aged subsequently gave way to hope that the substantial health costs of the aged could be coped with by the private insurance industry. Finally, there was a tacticalacceptance of the need for federal action. The Kerr-Mills bill of 1960 reflected the conception of appropriate federal responses that conservative congressional leaders felt compelled t o offer as a substitute for Medicare proposals. The beneficiaries would be limited to those in severe financial need, but the benefits were subject to few federal limits. Standardsof need and ben-

egislative ~ m ~ o s s i ~ i l i t y

r ~ ~ o ~were r c e ~ i n s ~ ~ f i c ito ~ nmeet t

n ~ r s i n ghome care sive social s e c ~ r i t y

officials

29

this contrast: ills program provides greater benefits to those over 65 who need those benefits, The benefits include doctors, surgeons, hospitalization, nurses and nursingcare, m e d i c i ~ eand ~ drugs, dentists and dental benefits-even false teeth. Each statecan provide what isneeded by the people within the state. The .. social security approach for aged care would provide mainly hospital and nursing home payments. ( ~ ~ t i o ~ ~ ~ ~ s i1962) ~ ~ ~ s , I

Few states were in fact to provide such broad benefits; by 19633, only four states were providi~ thefull range of careallowed for in the most programs imposed strict limitations on the Lions for care and the ~ x t e n of t care reen en field, 1966; US. ~ o n g r e s s , 1963). But the program satisfied both those who genuinely believed in the desirability of state rather than uniform national administration and those who hoped ev an unsuccessful 1s program would

S

11s bill, soon came political virtues. In 1961, PresidentE. Vincent Askey, err-Mills program) for the ny of the state medical soci-

promote enactment of a compulsory health insurancelaw for aged social securitybeneficiaries, ha returnedMedicare proposals tothe front pages of thenation’s newspapers,In late 1960, Kennedy recalledCohen to ~ a s h i ~ to ~ head o n a health taskforce asked to drafta Medicare bill

30

The Politics of Legislative Im~ossibilits

ction in the firstsession of th ntial sponsorship and favo polls, and the partisan a l i ~ m e n tin s theCO dent, the chances of legislativeadopti thus ~ a r ~ aepronounced d shift for ~ e d i c a r efrom the politics of ity characte~stic of the previous eightyears to the

lbur J. Cohen, a lifelong advocate of health insura~ce under soci security, wrote much of what became t erts like Cohen were so familiar the with localistic, m social problems that Kerr andMills, who both had hadlong experience with Cohen, rather naturally called him from the University of ~ i c h i ~ School an of help draft theirbill. 2. M c ~ a m a r a ’ special s committee was created inl961 to “makea full and mplete study[of] the problems of older people.” It re~arded the enactment of edicare as the aged’s most vital c o n c e ~and wasa central clearinghouse for pro-~edicareinformation in theCongress inya yard, 1972).

ennedy had labeled his platform the “New Fro included within it a variety of proposals for dome ,which he promised “would get this country movin cluded a hospital insurance i n a u ~ r a t i o nas pr ricans over 65l to cover hosp to the Forand bill, roposal and forecast a “stiff e narrowing of benefits was sident and his advisers were aware of the stro

~ a r a n t e e d Every . person will choose his owndoctor and hospita~ York ~ ~F e b ~r u ~ 10,1961). e~ ~ , nator Clinton Anderson of New CO andRepresentative Cecil atic m e ~ b e r sof theSenate ng of Califo~ia-hi~h-rank in^ D Finance Committee and the Hou S and Means Committee, respectively-si~ultaneously andenthusiasticallyintroduced the president’s bill the second week in February. Neither, however, was

32

The Politics of Legislative Possibility

regarded as the preeminent Democrat on his committee, and dents typic all^ try to have controversial bills introduced by do eans Committee chairsponsors, coupled with S in its first year of operation no one in doubt th bstacles to the president’s The ideological compositionof the tax committees provided additional basis for Skepticism about likely enactment. That the skepticism was well-founded was illustrated by the way in which ~ a y and s Means dealt withthe ~ n g - ~ d e r s bill. on

emocratic majority in the Congress presaged no clear majority favorable to ~ e d i c a r eand ? o Ouse could extract the bill from a h ee. Legislative liaison officials within lfare counted only 196 ers certain to vote 1961-23 votes short of a simple ted majority would even consider isc charging a bill from co~mittee.The House thus would rest with Ways a The composition, style, a ample grounds for predict formal le~slativeprocess. indi~ated thecombined st

“two out of three persons interviewed would be in favor of raZd ~

i ~June~ 9,1961, ~ ep. 11) , provided little comfort to President nnedy. Four votes-either southern Democrats or northern Republicans-would have to change for the president to have a Medicar~ majority within the committee, and the prospects were not good. The sharp limits on the president’s ability t o secure the necessar~ votes are evident in the geographical and ideological character of the Ouse ~ommitteeon Ways and Means. Of the 25 committeemen, 15

~~e ~ ~ s t a c~l eo ~ rins ~ e o n ~ r e s s : ~ ilzty r s twith ~ a y and s ~eans

tion of Ways and l0 0 a~v e r ~ a~pe ~ r o v ~ l

60% a p ~ ~ o vor a lless

arrison ( V i r ~ n i a ) Frazier (Tennessee) Watts ( K e n t ~ c ~ y )

33

34

The Politics of L e ~ i ~ l a tPi o v ~~s i ~ i l i t y

bility to report it. hen, however, a controversial bill faces a bitterand close floor fight, the H0 ently depends on the commit “save it from i t s e 1 ~ ” ~ h i s S and Means the option of not r the bill at all or if it chooses to report the measure, of writing par-, n comp~omises into it firs The success that chairm~ ills had in satisfying re~entatives reflected is in thereception there. The bills reported by ~ a y and s under a “closed rule,” that is, no amend~ents are per~itted, only lim-

35

3

The Politics of Legislative Po~sibility

seemed reason an excessive role for the federal governmentinsocial

~ e l ~ a ~ e

on r e c ~ l c i t r a n ~

ker himselfwas in failing he easingly took on many of the

The ~ ~ u t hDemocrats e r ~

37

ayburn in the past had exercised so skillfully. The chusetts Democrat, though thoroughly schooled in the norms a ents of House veterans, cou not be expected to have Rayburn’s eaker’s office nor the n, had with southern and Ikard type. sence of Rayburn’s highly personal legislative ~ a n a g e m e n t , ith the pastreluctance of the six: “swing”Democrats to suphealthinsuranceunder social security, meant that chairman S’S position was unli to be challenged withinhis com The New York T i ~ e s ’ s hington correspondent, Russell y only days after the~ n g - ~ d e r s bill o n was intront’smedical program, orted Baker, “despised by rty inside the House and Means Committee, was in greattrouble” (New York Times, February 19, 1961). Times had emphasized the equally imporns faced a “heavy schedule of high priority edicare bill unlikely to be disssion. The certain opposition of the probable opposition of the four remaining hern group, held out dim hopes for members of the conservati those late session h e a ~ n g s rrtz Times, 11February 1961).Inthe meantime, the problem fa president was not only to secure these south er^ votes on medicalcare legislation, but to have this group follow party leadership on the foreign aid, depressed areas, tax,housing, and trade bills. ~ h ~asnwith , the ~ n g - ~ d e r s bill o n of 1961,it appears that a committee will not report favorably on a presidential proposal, the president and his allies have alternative strategies. The question facing President ~ e n n e d ywas whether~anythingcould be gained by any of possible offensive strategies. ennedy couldconcentrate his bargainingresources on medicalcare, ty taking the chance of alienating s u p p o ~on other h i g h - p ~ o ~ bills. ince the outlook for Kennedy’s trade and tax legislation was o t h e ~ i s e vorable,both the president and his advisers agreed it would be unwise S and Means Committee too forcefully. use (263-174) didnot assure passage of the t were somehow to get to a floor vote: 60or ocrats appearedunwilling to pass Medicare in 1961, Hence a determined bid for House action was rejected by the president. The second possibility was to try bypassing the House of Represenedicare rider to another bill. rider is a bill that is attached as anamendment to another bill that hasalready passed one house. In April 1961, an increasi~g~ u ~ b ofe reports r suggested the

The PoliticsPossibility o f Legislative

3

ration was preparingfor a move in that ssed “ d i s ~ a at y reports that t

f liberal Republican senators, coupled W dicare among some ~ e m o c r a t i csenator ponsor, to deny late in April t rity bill thenbefore

cia1 c o n s e ~ ~ e n c e .

n i s t r ~ t i o ~fire. ’s

The ~ e n n e ~d~inistration ~y us. The

~~

39

sit down and negotiate’, ( ~ e w ~ w e 8e k ~ay 1961,p. 103). Instead, sponsored newspaperadvertisement nd radioand television spots indicting the ~ng-Andersonbill began appearing throu the nation. Waving the red flag of socialism, these messages out visions of a “new bureaucratic task force” entering “theprivacy of the e~aminationroom,” depriving ericanpatients of the “freedom to choose their own doctor” and doctor of the freedom “to treat his unched less publici~edefl’orts to mobiagainst the Kennedy-suppo~edbill. ~ o n ~ r e s sional speeches criticizing H.R. 4222 were reproduced and dist~buted to n e ~ s ~ a p eand r s voluntary organizations. h“Operation Hometawn” ing county medical societies in a varietyof lobequipped local medical leaders with a rosterof phlets,sample news announceio tapes and scripts, and a oflist st effectively in tea n p b l i c through every possible m to let his~ongressmanknow that y concoction of bureaucracy, bad in criticism, the administration’s dicated the legislative frustration n su~porterscould do little to men in Ways and inordinately powerful interest that was successfully thwa public would cause congressional critics of ~ e d i c a r eto suffe association. In April, Health, Education and Welfare Secretary Abraham Ribico~debated Senator enneth Keating (R., X+.)on television -Anderson bill, and used the opportunity t are tactics” of “organi~edmedicine’s’’ campa compulso~health insurance for the aged ( N e w York Ti eans h e a ~ n g of s July and~ u ~provided s t another prominent occasion for continuing the bid for publicsupport. The testiof representatives from HEWlinked the well-known case for the -Anderson billto a bliste~ngattack on the pressure groups o ing it. The administration spokesmen, along with those of the CIO, diverted their attention from the speci~cationsof the bill to the methods and interestsof their medical, busine tal critics. The testimon~of Secretary Ribicoff attempte re dictions of creeping socialism and the end of freedom by out-

40

The Legislative Politics of

said,

Possibility

ain themodest character of ~ e ~ i c a r"e .

only to take care of the aged. It is not my intention to advocate that we take care of the medical needs and hospital needs of our entire population, and the reason is that insurance is available for younger people. and it can be paid for by the working population.

ealth care from are of'a group with special ven the insurance was

mittee outcome, were rela took a domi~antrole in

men generally, a relucso concrete as a yes or die an anonymo~sdeath. If future events should force a reconsidera-

41

tion of the committee’s position on edicare-and Mills was aware of ight prove an embarrassment. theossibilit -a telltale 1961 vot

edy administration.

are defeats

amended, upon the thus pictured as a S zation that could ma proves)those and they produce. ing i n ~ i v i ~ u a l c o n ~ e s s mtoe n utonomous figures

esources for coerc-

~ i s p o s i t i ~ shoul ns votes.

e t ~ e e the n defeat of President ennedy’s initial Medicare proposal in 1961 and the national elections of 1964, none of the majorcongressional obstacles to its enactme~twere fully removed. T h e ~ e m o c r a t s maintained control of‘ the Con ess after the 1962, elections, but the ~ r o a d ~ i n i s t r a t i obloc n was, as usual, never as large as thenumber o f

The Politics of Legislative ~ o s s i ~ i l i t y

42 'S

con~essionalliaison st approximately 23 vo

the ~ o m ~ i t twith e e rider strat

he was in themidst

have raised social securityLases to 10 percent, widely accepted within

43

upper social insur are in the future. f their number were at the ed to have a winning marruce Mger, an archconserm Dallas. Unwilling t o play the game, explaining later that“since em, consistency would not permit him to ex pan^ it,”even to u n d e r ~ i n ethe chances of edicare (Harris, 1~66, 164). Having observed their House brethren come close to catastrophe, to attach the~ e ~ i c arider r e to t controlover the conten

edicare bill, hadtakensteps to th Democrats on his committ~e

October 4, the conference announced its deadlock overthe entiresocial S p o s t ~ o n i n ~ ~the 0 t hsocial security cash icare until thefollowing year, The circu~stancesof edicare’s defeat in thefall of 1964 illustrate^ ntially the possibilities of enactment had increased since nedy eRortin 1961. TheSenate was on record favoringthe son bill and the key bottleneck of 1961, the ~ a y and s ittee, was within one voteof a health insurance majo~ty. promises for 1965 evidenced the weakened position of are coalition. In September andDecember of l diences in Little Rock that asoundly financed his supportin the next session of the Congre already stated that medical care insurance would be the first order of business for his co~mitteethe following Janua 1s expressed his erns a ~ o u tthe disc icare and the content S warned in his Little lusion regarding the does not refer to doctor Is’s worry was not ~ e p a r t ~ e nwas t , a misleading slogan for the picare” would have been a more a p p r o ~ ~ a t e

4

The Politics of Legislative Possibility

espite the accretion of support betwee erson bills had changed only sli tered to include non-social security beneficiaries for a limited and here and therechanges were made in thelevel of benefits. 11over which the conference committee deadloc~ed in1964 ~emainedbasically a hospital insurance measure observers, taking their cue fro ng-Anderson proposal WO ntime, the election ical consideration; ber about the unrealistic concepti0 sign that anyone read the stri ts to mean anythingmore than S spitalization and nursing horn ~ ~ (1965d) e ~ soberly Z ~ observed that “some type of am for the aged is expected to be enacted by Con-

1. The 14 million figure was an estimate for 1963, the first full year in which the Kennedy Medicare program could have operated. The projection of 14 million social security beneficiaries, out of a total aged population of 17.75 million in 1963, leftan estimated3.75 million aged uncovered by the Kennedy proposal, The proportionof the aged ineligiblefor social insurance benefits had been sharply declining since the original edicare bill. Between 1950 and 1960 the numberof aged receiving social insurance benefits more than quadrupled, from 2.7 million to 11.6 million.

on medical care for the icare was left standing. I al. In addition, Pr uld be read as a

tives of state, local, and private initiative. Within the Congress, immediate action was taken to prevent of delay in^ tactics previously employe^ against both federal aid cation and medical care bills. Liberal Democratic members cha rules so as to reduce the power of R e p ~ b l i c a ~ - ~ coalitions on committees to delay legislative pro day rule was reinstated, making itpossible to dislodg se Rules Committee aftera m ~ i m u of hree weeks. t the same time changes a ~ e c t i n ~t h Means Committee were made that reduced the likelihoo er efforts to delay onal ratio of three members of the rity party was abandoned for a ratio trength of the parties in theHouse as a whole (two-toco~positionof Ways and Means shifte ~emocratsand 8 gislative possibili derson program had become a statur e ~ a ~ n was i n ~the precise form the health insurancelegislation would take.

46

Politics

The

of Legislative Certainty

Administration leaders assumed after the election that the eans Committee would report abill similar to the one rejec conference in 1964.Hence Andersonand King introduced on January 4, 1965, in the Senate and House, respectively, the standard Medicare package: coverage of the aged, limited hospitalization and nursing home insurance benefits, and social security financing. The HEW staff prepared a background guide on the bill that continued to emphasize its modest aims. The guide included assurances that thebill’s coverage of hospitalization benefits “left a substantial place for private insurance for nonbudgetable health costs, [particularly for] physicians’ services.” described H.R. 1as “Hospital Insurance for the Aged through Social ecurity,”and no doubt would have encouraged the substitutionof “Hospicare” for “Medicare”as itspopular name, hadthis been still possible by 1965 (HEW 1965a). Social security experts within EW, with a rich history of sponsoring unsuccessful health insurancebills, were doubly cautious now that success seemed so near at hand. Wilbur Cohen, for instance, busied himself, with President Johnson’s blessings, convincing the congressional leadership to give Medicare the numerical symbol of highest priority among the president7s Great Society proposals: hence Medicare became H.R. 1 and S. 1. Its content, however, remained essentially unchanged. The HEW leaders, like everyone else, could read the newspapers and find criticisms that Medicare’s benefits were insufficient, and that theaged mistakenly thought the bill covered physicians’ services. Thestrategists believed, however, that broader benefits-such as coverage of physicians’ care-could wait: the reformers’ fundamental premise had always been that Medicare was only “a beginning,’?with increments of change set for the future. The election of 1964 had a vastly different impact on critics of edicare than on promoters of the administration bill, H.R. 1.If the ction promoted satisfaction among H.R. l’sbackers with their cus.. n, itprovoked significant reactions among its opponents. an and AM[A spokesmen shifted to discussions of what clal, Dr. Ernest Howard, called “more positive progra~s.,’ These alternatives grew out of the familiar criticisms that the EngAnderson bills had “inadequate”benefits, would betoo costly, and made no distinction between the poor and wealthy among the aged. The AiMA ave the slogan “Eldercare”to its bill, and had it introduced as H.R. 737 by Thomas Curtis (R., MO.)and A. Sydney Herlong (D., Fla.) Ways and Means members. In comparing its bill and H.R. 1,the earnestly stressed the disappointingly limited benefits of the latter:

ans and the House Take Action: J ~ n u a ~ - A p ~ i l

47

ldercare, implemented by the states would provide a wide spectrum of enefits,includingphysicians’care,surgical and drug costs, nursing home charges, diagnostic services, x-ray and laboratory fees and other dicare’s benefits would be far more limited, covering about (25 percent) of the total yearly health care costs of the average person. ...Medicare would not cover physicians’ services or surgical charges. Neither would it cover drugs outside the hospital or nursing or other laboratory services notconnected with hospital1965)

~laimingtheir “program offered more benefits for the elderly at less cost to the taxpayers ” the public had been connotations of thet. Seventy-two percent of those questio~ed in an he firsttwo months of 1965agreed that doctors’ bills sho in a government health plan, Sixtyrespondents preferred aselective welfare pro~ram elderly person’s medical bill only if he were in need of financial help” to a uni~ersalsocial security plan $hatwould “pay the medical e~penses of everyone over65, regardless of their income.” Armedwith th once again launched a full-scale assault on the to an ext oping to head it offwith what amounted ary, the issue was once again before the ~ a y as hospital, and or~anizations prima~ly-continued to make public a the mass media and made certain their viewpoints were presented to the committee*~ a y and s Means had b e it three legislative possibilities: the administration’s H.R. l,the S Eldercare proposal, and a new billsponsored by the senior Republican committee member, John yrnes.

.Pressure groups-medical, labor,

For more than a month ~ a y and s witnesses, requesting detailed expla trying to estimate its costs and benefits. Executive S press and one mark of serious legislative intent, began in Jan The atmosphere was businesslike and deliberate; members assu the administration bill would pass, perhaps with minor changes, an there was little disposition to argue the broad philosophical issues that

The PoliticsCertainty of Legislative

48

in thepreceding decade. When spokesmenfor fears of socialized medicine, they irritated cam‘ out practical matters, and chairman sentatives in further sessions of the

S

his committee through practically every S tinued reference to the exclusions and limitsof he charges of i n a d e ~ u a coming c~ most1 2, announcing his concern for findi [that] results in the majority of U yrnes t o explain his bill t o the committee. nes bill was ready for discussion because the Republicans on ed to prevent the *

ed this point in a confidential memorandu Republican comhad t o “face political realities.” Those realities session assage of health insurancele~slation that

efforts from those of the posed benefits similar to those oEered in the Aetna Life Insurance ~ompany’shealth plan for the federal ~ o v e r n ~ e n temployees, ’s would coverthe major risks overcosts of doctors’ services and drugs. looked by H.R. 1, parti~ularly the also stressed the v01 ntary nature of his proposal; the aged would free to join or not, an their share ofthe ~nancing would be “scaled to the a ~ ~ u noft the s p icipa~ts’social s e c u ~ t y cash bene~ts,” while ernment’s share would be drawn from general revenues (Cohen he discussion of the Byrnes bill was spirited and ~ldercarealternative, not promoted v i ~ o r ~ u sby ly even its c o ~ ~ i t tsponsors, ee was scarcely ~ e n t i o n e d ,

~ a y and s ~ e aand ~ the s ~ o u s Take e Action: J a n u a ~ - A p r i ~

49

erson bills were presented a s ~ u t u a l l y officials were exhausted from weeks of

~ i l ~ Cohen u r and c

to prompt the exp~nsion 0fH.R. 1.

Politics

50

The

of Legislative ~ e r t a i n t y

1 insurance would cost about $5 per month,but d that a $6 monthly payment would make c for medical benefits were balanced by contri~utions eport 1965a, 61-62). rse vitally interested in the uses to which S one of the chief S

stein, explained: any features of the Byrnes Bill which had been objectionable were changed to be sure to keep a~ministration support although some objections remained-including inadequate protectionof beneficiaries against over-char~ng, absence of quality standards, and carrier responsibility for policy. The issueto the ~ e p a ~ m e was n t whether thebenefit advantages Insurance] o v e ~ e i ~ the ~ed istration was yes. (personal

n its transformation into the “first layer’’ of the new “le~slative ically altered, Levels of articular benefits d, reducing, among other things,the le h of insured hos1 deductible and d increasing the amount of the hos ment beneficia~es would have to pay. ( ~ e d u c t i ~ lare es ients must make before their insurance takes over, ontributions are theproportion. of the remain are responsible.) The continuing debateover these the divergent goals of those involved in res uctibles but no limit on the number of insur those anxious to provide protection a ~ a i n s t llness. Others insisted on coinsurance and deductibles so that patientswould begiven a stake inavoiding overuse of hospital facilities, ut the most contested chan es made in the methods of paying hospital- bas^ s~ecialists(radi,anesthetists, patholo~sts,and phys and the level of ~ncrease in social security taxes requiredto pay for the hospitalization The john so^ administration recommende vices like radiology and a n e s t h e ~ i o l obe~ l-specialist arrangem ,however, insisted th interns and residents unde a i d under H.R. 1, now 675, His provision requ e of most hospitals, and became the subject of bitter disagreement. Such an arrangement,hospital officials quickly

ans and the House ~ a ~ c~t i oenJ: a n ~ a ~ - ~ p r i ~

51

52

The Politics of Legislative Certainty

1.Part B represented the modified Byrnes proposal of voluntary doctors’ insurance. And Title 19 (now known as Medicaid) offereda liberintentions, was an err-Mills program that, contrary to to ratherthana substitution for th r proposals. Essentially, the program provides for the unification of all medical vendor payments under state programs and uniform coverage for recipients. The provision in Title 19 that enables a state at itsoption to elect to cover individuals (regardlessof age) not on public assistance, butwhose incomes are close to the public assistance level, could also extend coverage to a significantly large portion of oor population. On the final vote of the committee, th publicans held their ranks, .6675 was reported out on a straight partyvote of 17-8. W e n se met on April 8 to vote on what had become known as the 1s bill, they gave the ~ a y and s Means chairman a standingovation. In a masterly explanationof the complicated measure (now 296pages long), Millsdemonstrated the thoroughness with whi had done its work. The health insurance program in explained, was to cost about $3 billion. Byrnes presented his alternative bill after Mills had finished, a a vote was taken on whether to recommit H.R. 6675 in favor of the publican alternative. The motion to recommit was defeated by 45 votes; 63 emocrats defected to the Republican measure, and only 10 Republicans voted with the Democratic majority. Onceit was clear that H.R. 6675 wouldpass, party lines re-formed and the House sent the Mills bill to the Senate by an overwhelming margin of 315-115. What had changed Mills froma Medicare obstructionist to an expansion-minded innovator? Critics speculatedon whether the shift sented“rationality” or rationalization^ but none doubted central role in shaping the contents of the new legislative propos puzzle includes two distinct issues: why did Mills seek to expand the administration’s bill, and what explains the form of the expansio~ he helped to engineer? By changing from opponent to manager, ills assured himself control of the content of H.R. 1 at a time when it could have been pushe through the Congress despite him. By encoura~ngin incorporating more generous benefits into the legislatio cut claims that his committee had pro both respects, Mills became what Tom termed the “architect of victoryfor another devoted but defeated suppo~er”of th e Times, ~ 1965).Mills’s conceptionof himself as the approach ( ~ ~0~~ active head of an autonomous, technically expert committee helps explain.his interest in shaping legislation he could nolonger block, and

.€€.R. 6675 Passes the ~ e n a t @ : ~ ~ r i l ~ u l y

53

his preoccupation with cautiousfinancing of the social security system made him willin to combine benefit and ~nancingarrangements that had bee ented as mutually exclusive alternatives. The use of general rev and beneficiary premiums in the financing of physicians’ service insurance made certain the aged and the federal treasury, not the social security trust funds, would have to finance any benefit changes. Tn an interview during the summer of 1965, Mills explained that inclusion of medical insurance would “build a fence around the ” and forestall subse~uent demands for liberalizaa burden on the economy and the social security 11s may have meant, as one government official explained off-the-record,was that ~ a y and s Means could avoid“physician coverage in the future under social security by ~rovidingit now under the ~ ~ u ~ p l e m ~ nMedical t a r y Insurance] approach.” In sharp contrast t o Mills’s ~exibility,HEW cautiously had settled for proposing its familiar ~ng-Andersonplan. Incompa~sonwith the committed Medicare advocates, Mills was the more astute in realizing how much the ~ohnsonlandslide of 1964 had changed the constraints and incentives facing the 89thCongress. President Johnson,busy with the demandsof a massive set of executive proposals, was willingto settle for the hospitalization insurancethat the election had ~ a r a n t e e d . ers of‘ the ~ohnsonadministration were astounded by eans ~ommittee’s improvement of Medicare and befud~ Z captured i c the mood of this dled by its causes. The ~e~ ~ e ~ ~(1965) public at thetime of the House vote, suggesting that theMills bill could “only bediscussed in superlatives”: Fantastically enough, there was a tendency to expand [the administ~ation’s bill] in the House Committee. Republicans and theAmerican Medical Association complained that Medicare “did not go far enou~h.”Trying t o kill the bill they offered an alternative-a voluntary insurance plan covering doctor’s fees, drugs, and similar services. What did the House Ways and MeansCommittee do? It added [these features]t o its own bill. Will this pass? We don’t know,but some bill will pass,

There was really no doubt that the e~pansion of Medicare would be e, sustained by the more liberal Senate and its Finance ~ o ~ m i t t eBut the precise levels of benefits and form of ad~inistrationwere byno means certain. The Finance Co~mitteechairman, Russell Long (D., La.), held extended hearings during April and ay, and the ~ommittee

4

Politics

The

Certainty o f Legislative

ialists on which with the income of‘

~ i t h i the n medical care industry. The told the Finance C ~ ~ m i t t ethat e ts sep~ratelywould

Cohen su~plied in ialists as specifie~ ointed out, “nor-

t financial catastrophe there was the s ell-int~ntioned mistake hadbeen made.

ut of the ~ o ~ f e r~eo~~~~ ei t July t e e 26, : 1965

55

ore than 500 di~erenceswere resolved in conference b e t ~ e e nthe

ministration b e ~ ~ n initiation, July l, 1966,

The bulk o f the decisions were compromises between diver ent benefit .The c h ~ n ~oef sdurationandtype of ~ e n e f i inv t acc one o f the two c o n ~ e s s i o ~versions al or combini provisions. The decisions on the five basic ~ e n e in~ the t ~ hos~ital plan aptly i ~ l u s t r ~these te patterns of ~ccommodation:

56

The PoliticsCertainty of Legislative 1. Benefit duration-House provided 60 days of hospital care after a deductible of $40, Senate provided unlimited duration but with $10 coinsurance payments for each day inexcess of 60. Conference provided 60 days with the $40 House deductible, and an additional 30 days with the Senate’s $10 co-insurance provision. 2. ~ o s ~ h o s p i t extended al care ~ s ~ i l l enursing d home)-House provided 20 days of such care with2 additional daysfor each unused hospitalday, but a maximum of 100 days. Senate provided 100 days butimposed a $5 a day co-insurance for each day in excess of 20. Conference adopted Senate version. 3. ~ o s t h o s ~ i t a l h o ~ e - h e auisits-House lth authorized 100 visits after hospitalization. Senate increased the number of visits to175, and deleted requirements of hospitalization. Con~erence adopted House version. 4. ~ ~ t p a t i e n t ~ i a g n o s t seruices-House ic imposed a $20 deductible withthisamount credited againstaninpatienthospital deductible imposed at the same hospital within 20 days. Senate imposed a 20 percent co-insurance on such services, removed the credit against the inpatient hospital deductible but allowed a credit for the deductible as an incurredexpenseunder the voluntarysupplementaryprogram (for deductible and reimbursementpurposes). Conference adopted Senate version. 5. ~ s ~ c h i u tfacilities-House ~ic provided for 60 days of hospital care with a 180-day lifetime limit in the voluntary supplementary program. Senate moved these services over intobasichospital insurance and increased the lifetime limit to 210 days, Conference accepted the Senate, version but reduced the lifetime limit to 190 days.(CongressionuZReport 1965b, 4)

None of these compromises satisfied the pro-Med~carepressure oups, which had been anxious to make the law administratively less complicated. By late July, the conference committee had finished its report. On July 27, the House passed the revised bill by a margin of 307-116 and the Senate followed suit two days later with a 70-24 vote. On July 30,1965, President Johnson signed the Medicare billinto Public Law 89-97, at theceremony in Independence, Missouri, described at the b e ~ n n i n gof this study.

One of the most important lessons of Medicare’s enactment is that the events surrounding its passage were atypical. The massive Democratic electoral victories in 1964 created asolid majority in Con~ressfor the president’s social welfare bills, including federal aid to education,

The O u t c o ~ eof 1965:~ ~ ~ Z u n uand t ~ oIssues n

57

,and the doublin of the “war on poverty” effort. To find the most recent precedent, we ust go back almost 30 years, t o ~ r a n k l i n Congresses. In the inte~ening years, we find a ocratic majorities in theCongress have not been ly the partisan mar ns have been sufficiently closeonmany issues to give the of power t o minority within the party. Underthese ci nces, states’rights so con~ressmen in coalition with Re ublicans have often been successful of fadera1 control. in block in^ or delaying bills that The f r a ~ e n t a t i o nof auth S compounds the opportunities for minoritiesmust to b be subjected to committees, subcommittees, procedural formalities, and conference groups. To be sure, overwhelming majority support for a given bill can ensure that will it emerge, more or less intact, law7 as even though it may of hostile congressmen in theprocess. Howpass under the juris~iction xtraordinarily difficult to create a congr o an issue outof De ocratic congression avoided a major confrontati other programs. Congressmen must frequent1 for example,many representatives who suppo were nonetheless unwilling to launch a maj ans. Like the president, theyoften needed the support of onents for other legislation that they believed was more important or had a betterchance of successful enactment. ithin this context, backers of controversial legislation generally adopt a strategy that looks t o the gradual accretion of support. They frame the issue so that opponents will findthem difficult t o attack, then set out to accumulate both mass public support andthe necessary con~ e s s i o n avotes. l Particular attention is given to crucial committee bottlenecks. The executive relies heavily on the influence of the House and enate lea~ership in this effort, and acts on the assumption that althou~h is it seldom possible to change the mind of a congressman on the merits of an issue, it issometimes possibleto change his vote. ~ i l e the congressional leaders lack formal means for enforcing party discipline, they have a variety of other resources. Their personal influence with the regional caucuses who selected Ways and Means committeemen, for example, allowed them to deny assignments to ~ e d i c a r e oppo~entsand thereby to alter gradually the voting margin on the committee. y 1964,the use of this accretionist strate y by Medicare s u ~ p ~ r t e r s seemed on the verge of success; and had the elections of that year

58

Politics

The

Certainty of Legislative

in the usual relatively close partisan margins in the ~ongress, care Act of 1965 would have been much narrower inscope, and its passage would stand as vindication a of In fact, the 1964 elections returned a Con usual patterns of bargaining were less rele finally emerged as law must be analyzed in terms of responses to the highly unusual circumstancesin thatCO nswers as to why the le the administration’s input, three separable issues are did the traditional hospitali~ation insurance proposal pass as one part of the composite legislation? The con realignment afterthe elections of 1964 providesthe ready ans the le~slationtook the composite form it did is partly answ this way as well. The certainty that someMedicarebillwouldbe ntivesanddisincentives facing former sting a physicians’ insurance alternative publicans to cut theirlosses in the face of certain Democraticvictory and to coun ract ublic identification of n opposition with intransige lls’s motives are fully compr ngressional con~entions,especially the relationship of the ~ a y and s eans ~ommitteet o tbe House, and the committee’s tradition of restrained, consensual bar aining among its partisan blocs. However, if the political needs of the minority party and the ~ a y and s members account for the Republican alternative bill and the committee’s expansion of Medicare, the limits of that expansion require further explanation. The context of the debate over government health insurance sharply delimited the range of alternatives open to innovators.That long debate-focusedon the ag the problem group, social security vs. generalrevenues as financ echanisms,andpartial vs. sive benefits for either a1 aged or only the very PO the a~ed-structured the content of the innovations. T circumstances of 1965 account for why in by Republicans and conse~ativeDemocrats was sensible a The character of more than a decade of dispute over ealth insurance programs for the ains the programmatic features of the combination 11s engineered, President Johnson took credit for, an epu~licansand erica^ Medical Association inadvertently to ensure. The outcome of 1965 was, t o be sure, a model of unintended consequences. The final legislative package incorporated features that no one had fully foreseen, and aligned supporters and opponents in ways

59

The ~ u t c o of ~ 1965: e ~ x p l ~ n a t i and o n Issues

that surprised many of the leading actors. Yet the eleventh-hour expansion of Medicare should not draw one’s attention away from the conof change. e ere a European to reflect licyma~ingin America, his attention directed t o the na W range within which government health proposals operated.He would emphasize that no European nation restricted its health insurancep r o ~ a m to s one agegroup; and he would point out that special health ‘‘as~istance,~ programs, like that incorporated in e 19, had been superseded in European countriesfor more tha eration. The E~ropeanperspective is useful, if only to highli e featuresof the 1965 Medicarelegislation that were not chan Although the new law was broader than the ~ng-Anderson bill in structure, itdid not provide payment for all medical expenses, -97 continued to reflect an “insurance”as opposed to a “prepaycost is sufficient; the ‘n. The latter view seeks to separate finan ations. Its advocates of the aged’s expected medical expenses (one e’s eflects); only full payment and the total rs to access to health s e ~ i c e will s satisfy f deductibles9exclusions, and coinsurance provisions, the “ins~rance9’ approach was followed,illustrating thecontinuity between the first Ewing proposals in 1952 of 60 days of hospital care andthe much-expanded benefits of the 1965 le Norwere major ch made inthe group designated as beneficiariesunder the insu program. The administrationhad singlemindedly focused onthe aged and the legi~~ation provided that “every ho has attained the age of 65”was entitled to hospital benefits. represented an expansion over the limitation to S in bills of the 1950s and early 1960s, the legisy 1968, the beneficiaries under Part A would be narrowed again to include only social security participants. [This vision “applied only to persons first attaining age 65 in 1968 after-only a very small fraction of the current aged-and the test of ‘ty eligibility is less strict than is e test for cash benefits” tein,personal communication, cember 11, 1968),]The persistent efforts to provide edicare benefits as a matter of “earned rompted this focus on socialsecurity and,as aresult, on the the social security systemwas not the only way to convey asense of entitlement (payroll taxesin the Trumanplans were , politics of more than a decade of included for the same p u ~ o s e )the

60

Politics

The

Certainty o f Legislative

incremental efforts had effectively undercut the broad coverage of the Truman proposals. Title 19, establishing the medical assistance program popularly nown as “Medicaid,” madeexception to the age restrictions, Thisbottom layer of the “legislative cake’’ authorized comprehensive coverage for all those, regardless of age, who qualified for public assistance and whose medical expenses threatened to produce future indiin the Kerr-Mills bill that it succeeded, financing was to be by federal government general revenues and state funds. The id program, too, owed much to the past debates, growing as it the welfare public assistance approach to social problems. Its 5 did not rest on its charitable attraction to the expansionists in ills, it was yet another means of features alone. In theeyes of Wilbu “building a fence’’ around Medicare undercutting future demands to expand the social securityinsurance program to cover all income groups. The voluntary insurance scheme for physicians’ services, Part B of resented a return to the breadth of benefits suggested in plans (although, unlikethe Trumanproposals, it was neier compulsory nor available to all age groups). Since the adoption of n accretionist strategy in the wake of the Truman healthinsurance efeats, coverage of physicians, costs has been largely dropped from proposals. Throughout the 1950s reformers had focused on rising hospital costs and the role that the federal government should play in meeting those costs. Except for the Forand bills, proposals for health insurance between 1952 and 1964 fastidiously avoided the issue of covering doctors’ care, Even when the election of‘ 19 cated the close congressional margin that had prompted the accretionist strategy in the first place, the administration continued to follow it. ills, and not the presidential advisers,who most fully a~preciated the changed possibilities. Once again acting to build a fence around the program and insure against later expansion of the social security program to include physicians’ coverage, he preempted the Byrnes proposal with a general r e v e n u ~ i n d i ~ d ucontribution al payment scheme. For a decade and more, the American edical Association had been able to dictate many of the termsof debate, particularlyon physicians’ coverage.And although the 1964 election revealed howmuch the A opposition t o block legislation d ~ ~ e n d on e d the alleged power of akeup of Congress, the provisions for paying doctors under Part B of edicare reflected the legislators’ fears that the doctors would act on ~ e ~ i c a rTo e. their repeatedthreats of noncooperation in implementi~g enlist the support of the medical profession, the law avoi

The ~

u

t of ~ 1 9 ~~~ ~ ~x :p ~ e a n aand t i ~Issues n

61

fee schedule for physicians, and directed instead that thedocto dicare patients be paid their “usual andcustomary fee,” provide the feewas also “reasonable.” over, it was not required that the doctor directly charge the insu company intermediarie~who were t o handle the government payments; he could bill the patient, who, after paying his debt,would be reimbursed by the insurance co~pany. This left doctor a the option uf charging the patientmore than thegovernment would be willing to reimburse. But congressional sympathy with the doctors’ distastnment control, andfear that~uctors would elect not to treat patients under more restrictive fee schedules, made “reaso ges” appear a sensible standard of bility re~uirements,benefits, and financing of the program represent acomplex political outcome, a mixtureof c and surprise not typica the legislative histories of other social welfare measures.The long cess of building support for a hospitalization program covering thehad not prepared the Johnsonadministra“ tion for the unpredictable opportu~tiesof 1965. Instead of th of the 196Os, HEW had the Mills bill to turn dicare p r o ~ by a ~July 1966. The politics of g hadproduced a considerably larger (andmany felt a better) bill than theJohnson a d ~ i n ~ s t r a t i ohad n proposed in the first weeks of 1965.

This Page Intentionally Left Blank

ase studiescannot by their natureprove anything. They can only illustrate theplausibility (or implausibility) of other conceptual, procedural, or substantive generalizations. This final chapter d e p a ~ from s the s e ~ ~ e n t iorganization al of the earlier part of the book to explore the s i ~ i ~ c a n of c ethe icare case and t o attempt t o out some o f theseother evalu First, I discuss the underly framewor~of analysis that guided the way I posed and triedto answer interest in analytic frameworks arises from a conc be more cumulative than they have been. Only S ies that employ compara~leanalytic models can be cumulated, an part of this chapter discusses both some representative analytic els and the use put to them inthe bulk of the Medicare analysis. econd, I compare the political processes and policyoutcomes of e of other issuesto show howthe processes that charcare dispute are general to the r ~ d i s t ~ b u t i arena ve S. In policy content, Medicare exemplifies the social insurance model of welfare policy. Its beneficiaries, benefits, financing, and a d ~ i n i s t r a t i v e s t r ~conform c t ~ r e strikingly t o this patternand are in equally striking contrastwith those of public assistance programs. Third, this concluding chapter addressesitself t o some of the d i ~ e r egislative and administrative politics. Theearly impleedicare illustrates the transformationof controversial, statutory proposals into operational programs that quickly becomeroutinized, stripped of earlier ideological conflict, and beset by the comand intense claims of groups materially concerned with their burdens and benefits.

64

edicare and the Analysis of Social Policy in American Polities

The discussion of Medicare litics earlier in this book was organized with self-consciousconce about how its conceptual structure could be adapted t o cumulative policy analysis. This meant a continuconcern with how the problems of analysis were framed, what units nalysis were used, what focal concepts,and what patterns of inference. I want to make these underlying concerns explicit at this point and consider the explanatory effects of alternative analytic frameworks. Conceptual frameworks give structure to the complex political universe for the analyst and in that sense are like lenses,that is, instruments that shape the field of vision, determine the level of detail, color the objects viewed, and limit the ran e of consideration. In reviewing edicare analysis from this standpoint, one is led to ask, framework was implicit in itsvarious parts, and whatdifference didit make in the analysis offered?

edicare, the question was whygovIn dealing with the ori ernment elites chose the early 1950s to narrow the focus of federal health insurance bills from the general popula restrict benefits to partial hospitalization coverage. the Truman administration decide to adopt th The unit of analysis used in the textwas sion. The explanation given forthe strategic c set of reasons why sensible men e on a new butless dramatic: should be distinguished from1 course of action. Thistype of exp an account of why the shift in str k place. Useless debate is furthered without care for such distinctions. The reasons men give for a1 course of action may differ widely from the fundamental causes for a course of action-in this case, a shift inpolitical strategy. The fate of the Truman health insurance proposals provide immediate backdrop for strategic choice. were more acceptable to the general pu were the chosen t e benefits to soci bservation that social i siderable legitimacy while public assistance p r o ~ a m sthat use the means test do not. The principal patternof inference was to show what

culation”is so

its

atare users

not

a1 occ~rrencesmay varied ac ments, to summari~e the

a~tionof the rational decision-~aker. The choices and actions of the lated to achieve national goals eted as solutio~sto d o ~ e ~ t i c

ortant policy decisions have big causes, that nd which

ur oses are associated with

66

edicare and

the Analysis of Social Policy in ~

~

e

~

~

ad the ~uestiono icare’s origins been raised in or rgaining terms, the formulation and solution pe di~erent.From an or~ani~ational are’s origins would have focused on the ance for the aged arose as a ~olitical

Id have been notso much

h the Truman staff, and its ~ e ~ linsurance th advocates. It is precisely that sort of evidence that per gaining game out of which a s t r a t e ~ cchoice esses political victors and losers, but gle. The shift to a

~ u c ha view not

a

n

ain the availability of' a social i n s u r a n c ~ ~ l t e r n a ttoi ~ e lan. (It should be r~membered thatboth these offici

~ ~ t t of'e organiz r ~ i

rk less useful. The

,22). T h r o u ~ ~ o uour t , c ~ n t r conce~n ~l is

68

Medicare andtheAnalysis

of Social Policy

in American Politics

Chapters 2 and 3 stress that both the contest and the contestant^^ edicare remained remarkably stable in theperiod 1952-64, “two well-defined camps with o~posingviews, camps with few i n d i ~ d u a l ! ~ itted” (cf. ~ildavsky,1962, 304). Thc who were impartial or un th of the conflictover are was illustrated by the large number of concerned groups (often otherwise not involvedwi issues) and their ideological pola~zation.The disputes over had recurring, predictable features even as the specific pr question changed substantially. The disputants-like adversaries in open class conflict-calledupon crystallized attitudes and positions and expressed them in distinctive ways t o identify problems and frame remedies. The stability in mands and reactions permitte~~ a relatively static descript conflict on this issue. The stereotypical and of the fight over Medicare is more readily understan~ablewhen one considers the size and charac:of the partiest o it.1 Large national associations like the L-CIO have widely dispersed component parts; they functi interests of widely dishington lobbyists for issues affect members. Hence, theymust seek on denominators of sentimentthat will satisfy the organization’s leadingactorswithout antagonizing large bodies of more passive members. Suchlarge organizations are specialized, with full-tim~staffs devoted to p r e p a ~ n ~ responses to public policyquestions when the occasion arises and in the direction dictated by past or~anizational attitudes. These attitudes slow to change and help accou t for the predictable way in which sides were taken on various Medic e proposals over time. Intelli~ence research were weapons in a long struggle between groups that trusted each other. Hence, it is not surprisin~ that the debate was stable; mutually incompatible positions on health insurancearose in part from the maintenance needs of large-scale orga~izations (and their or~anizationalperspective was appropriate for analyzing thepaticare debates an ters. In dealing with thatpattern :it was useful to concentrate on the able behavior of the large pressure groups involved. S t ~ d e n t os izations know that such collet:tivities do not behave like individuals. Organizations filter information in ways persons o not. They seek means to maintain themselves O V E ! ~ time not charac ristic of i n d i ~ d u a behavior, l The conjunction of the r o u t i ~ ebehavior of ma y individuals in organizational sett results inpublic policy for which onecannot account by looki the activities of isolated individuals. ther questions could have been raised about the long fight over edicare. Had one concentrated on explain in^ a p a ~ i c u l a response r to

ueratie The

Polities ~ o d e l

69

a p a ~ i c u l a rproposal (the 1961 con~essionalbattle, for instance), it would have been more appropriate to stress individual actions andthe i n d i ~ d u a bargaining l that characterized that episode. That was precisely the approach used in discussin 1961 events and, in pa~icular, the 1965legislative outcome.

The enactment of Medicare wastreated in earlier chapters primarily as theresult of a bargaininggame in which none of the relevant executive, legislative, or pressure-~oupplayers could fully controlthe outcome. The keyactors-Mills andByrnes of the Ways and HEW, Long and h d e r s o n of th ,and thelabor leaders-all had t hand. They had different stakes in the outcome of the legislative struggle and different terms on whichthey were willrgaining stressed-both explicit and tacit-but also ature of the American political process. It was never in thelegislative process major alterations were or he s t a t u t o ~result could not be interpreted solely as theproduct of the administration’s intentions. Rather, it eme the outcome of a long, complicatedstruggle andthe law in its fi was not onethat any of the major actors intendedat theoutset. The bureaucratic politics framewor~considers “domestic policy” to consist of o ~ ~ c ofo a~series e ~ of overlapping “bargaining arranged hierar~hicallywithin the national government. Two tive emphases are involved: that governments are made up of disparate, decentralized organization~headed by leaders with power, and that such leaders, inthe course of policymaking, e These players, operating with different perspectives and orities, strugglefor preferred o u t c o ~ e swith the power at their disposal. Explanations in this third model proceed from descriptions of the “position and power of the principal players” andconcentrate on the “understandings and misunderstandingswhich determine the outcome of the game” (Allison, 1968,3). The basic unit of analysis is the decentralized bargaini played by relatively autono~ousactors. The focal conceptsinc gaining strategies,roles, moves, stakes, trade-offs, tactics, andconventions (or rules of the ame). Explanationsthat employ this framework typically draw upon the stakes and interests the actors bring to dis-

70

edicare and the Analysis

o f Social Policy in American

cular policy issues. The decisions and actions of te outcomes in the “sense that what hap a solution to a problem’, but is rather the resultof “political a number of independent players, of compromise, on, and confusi~namong overnment of~cialsmany of whom are focusing on different faces of the issue.’’The actions of government-the sum of the “behavior of represen Lives of a government'^ involved in a policyissue-“is rarelyintend by anyindividual or’ ” From this characterization of policymakin come distinctive f explanation such as ‘where you stand reover, important government decisione wed as the result of a singlegame, Rather, whatthe governis a“collage of individual acts,outcomes of minor and major ames, and foul-ups.’’ The understanding of that cumulative procesEl iece-by-piece disaggration of the policymaking. rocess, in any event, not simply the 66reasonswhich sup-, of‘action, nor the routines of or anizations which enact an. a l t e ~ ~ t ithe vbut e, power and opponents of the! action in ~uestion”(Allison, 19 statues as barg tcomes requires t

nursing home insur uch was a fore d thebehavior of an adaptive committee stander or an adroit tion that in another setting he would have prefe always adjusted t o legislative certainty and triedt form that the inevitable takes. Cutting back on the administration'^; oposal in 1965 was an extraordina difficult altern~tive, the aged had been was at best aparti e ~ s l a t i o nwas i m ~ i n e nwas t more d i f ~ c ~than l t predicare action whatsoever in the period before 1965. types of‘ considerations that dominated the resentation of Chapter 4: evidence about the rules of thel me, the kes involved, and the radically altered nature setting. e bargaining that took place should not be allowed to obscure the fact that the election of 1964 had given all the actors lessto barhave thus far concentrated on showing how d i ~ e r e n tanalytic approaches lead to distin~ishable sets of questions aboutpublic policy

Policy and Processes

in ~ ~ e r i c Politics an

71

developments like edicare legislation. It should be added that they also make a differ e in the evaluations, recommendations, and predictions one makes aboutpublic policy. Consider some of the predictive and prescriptive differences that would emerge from alternative aproaches to the explanation of the Medicare statute. The analyst who dicare legislation as thenational solution to a press o ~ l expect d (and predict) that periodic adjustments made to make the p r o ~ a ma more efficientinstrument to cope with the ancial problems of the aged. He would expect rnonit ffort to increase the level of achieve Contrast these predictions with those a bargaining make on the basis of Chapter 4. He would expect futu vary with what one might callthe deal of the electoral innovations of 1965 were so much the result of the atypical partisan makeup of the 88thCongress, he would predict less innovati typical Con~esses.He would not expect the ~ommitteeon Means, for instance, to preoccupy itself with improving the program, or g~ressively alternative meansto meet the health needs of ricans not assisted by Medicare. recommendationswould be equally different. Onecould oblem-solverstrying to convince the congressional committee that new difficulties,such as higher medical prices, have arisen for the aged, or that more serious health andfinancial problems are being felt by the disadvanta~ed andpoor. The emphasis here would b i d e n t i f ~ nthe ~ social ills for which national action is required. dents of b a r ~ a i n i nwould ~ offer different recommendations. They Id stress continued efforts to reshape the Committee on Ways and ns, taking cues from the “packing” of the committee after 1961. They would advise political investments of this kind, rather than a search for problems, as the best means of insuring action problems we are already well aware of. Viewed from the anti perspective, b~rgaining students would firmly recommend prevention of these long-term investments. These illustrations-admittedly brief and elliptical-are examples of the differences that analytic lenses may make inswhat we see, predict, and recommend about public policy.

The preceding analytic discussion raisedissuesaboutstudying American public policy that were not explicitly discussed in the case

72

edicare and the Analysis of Social Policy in American

study itself. In turning to the relation between ~ e d i c a r epolitics and erican political life, I will try t a d considerable e ~ d e n c eof what is

ons; its aim is to present evidence! are thesubstance o locative and redist

Lowi characterizes three patternsof conflict, but identifies them by It is clear that actual policies utative cause-the type of PO are never so distinct. Allpublic pr ms redistribute resources, but most are not rimarily attempts to do so. Likewise, all ~overnmentpro,upon an ultimatecapacity to regulate the conduct o ‘ t do not make such regulation their prime object. rnment p r o ~ a m involve s the distribution of different groups, though the question. of wh or which social class should receive them is not always S whatever the cause of the patternof conflict, one ca tern is illustrated b ndividual policy conflicts lik The conflict over dicare mirrors the political tifies with redistributive policies. The the es of that conflict-the threat of “big g o v e ~ m e n the t ~ interests of the have-nots vs. the

Processes and Policy in ~ ~ e r i e Polities an

73

haves-illustrate the cluster of issues that arisewhen a policy ~uestion “involves the issueof whether broad categories of persons are to be bet).The debate over ~ e d i c a r was e in fact ter or worse off” (Lowi, 19 medicine vs. the volunoca1 control against “the octopus of the federal govern most immediately a~fected th strata of the opulation W all present social security contributors, andthe entire he conflict, but the antagonists and their te what might be called “class reenacted the polarizatio tionalhealthinsurance. The leadin versaries-national business, health, and labororganizations-paron (though not to their mutual enlightopposing campsa large number whose interests were not directly affected by the the process, i ~ e o l o ~ ccharges al and countercha discussion, and each side seemed to regard compromise as the electoral changes of 1964 reallocated power in such e overruled. Compromise was involvedin the detailed fea dicare program, but the enactment itself did not constit e outcome for the adversaries. In all CS diff‘ered from the discrete and localefits or the shifting coalitions and comght inpublic but settled in private. The ned made enormous and costly efforts are in ways acceptable to their members. But within the government bureaucracy, there were continuing efforts to articulate and balance these rival claims in the le proposed t o the Congress.The consultation was sometimes explicit and the AF’L-CIO and theBlue Cross Association metregofficials during the early 1960s. In other cases, connterest was tacit andintermitt~nt,particularly in .Overall, the executive proposals sent to ss ttern: major compromiseswere builtintore bills proposed by the executive branch, anticipatingthe pressure group claims that would otherwise have to be balanced in theC Therole of Congress in dealing with policy problems 11. icare is to “ratify the agreement” that arisesout of “the bureaucracy and the class agents represented there” (Lowi, 1964,171).Had Medicare passed

74

/

Medicare and the Analysis

of Social Policy in American Politics

in 1964, this characterization of executive preeminence would have been fullywarranted; thebill of that year was a hesitantly redistributive version of hospital insurance for the aged, designed to assist the ed but shapedto serve andmeet the economic demands of insurance companies and the hospitals as well. The fact that Congress unexpectedly added physician insurance to the program enacted in 1965 reprents a departurefrom the modal processesof redistributive politics, a parture thatcan be explained by the extraordina~electoral context of 1965. The significant changes in the administr almost exclusively in committee deliberations, arose from Senate debate, none from the Hous edicare took place without amendment. The executive branch was througho~t the locus of legislative planning and drafting; the peculiarities of the 1965 ~ongressshould not obscure the patterns of the preceding decade. The polarization elicited by iss dicare shapes the behavior of all the interested pressur dicare was one of those nd “se~ice-demanding” ser than any other along motes cohesionamong to disagree about;the existence of a nited front. So, for instance, the conHospital A~sociation (certainto be assisted by Medicare’s u n d e ~ ~ t i nofgthe hospital expenses of the d the American MedicalAssociation (violently opposed to ,despite its members’ short-run economic inte rough most of the fight over Medicare. Hospital cials felt constrained to take the “health in dust^,^" position against dicare, though in private (and in meetings with HE^), their willalong with the legislation was apparent. The health blicoppositionwas fused with that of a l ~ o s tevery national commercial, industrial, and right-wing group in American politics. The united front of “se~ce-demanders” was equally apparent in dicare fight. The ultimate consumers-the aged and their s-were sometimes overshadowed in the procession of “l rofessional, labor, and service organizations championing their cause. Finally, the processes of Medicare politics involved stabilizing and centralizing conflict in ways charact stic of redistributive disputes (Lowi, 1964, 715). The initiation of dicare demandsintheearly 1950s-when the issue was simply whether the social security system wouldprovide 60 days of hospital insurance for its beneficiariesrevealed the pattern of conflict that wouldfollow. Specters of the future-fearful or hopeful-dominated the ideological charges of the national pressure groups. The liberal-conservative split that emerged

Processes and Policy in A ~~eor~i ci tainc s

75

remained stablethroughout, with few defectors asthe proposals shifted. The ~ e p a r t m e nof t Health, Education and Welfare centralized much of the battle. ~ongress,whose fiscalcommittees are shortof staff and une~uippedto conduct indepe~dentresearch on health affairs, “listened” to the repetitive debates and, in the end,ratified the administration’s bill, adding its own special imprint. not propose massive redistri~ution of association of Medicare with Lowi’s redistributive politics may appear problematic. But the central feature the Medicare dispute was whether theral government shou engage in whatever limited redistribution centered on whether the redist~bution was warranted (were needy enough?), the i n s t ~ m e n of t change (charity or insurd the sources of financing (general revenues or social security taxes?). This redistributive frameof reference determin the conflict, not the scale of redistribution that WO involved, ars to be an instance of a much larger class of olitics associated o-sum political conflicts. ,however, to illustrate more than classificatory generalizageneral question nvolving the s t ~ c t u r of e power in the es-are relevant. at was the role of public opinion in this major public policy choice? How in~uentialwere pressure groups an they seek to pressure? dicare case illustrates the comparative irrelevance of mass ‘ opinion in federal policymaking (Key, 1961; ~ ~Public ~ support ) . for health insurance undersocial secued sli~htly as remedial proposals weremore s esssupport as t probabilities of le~slative eranto’s ( 1 9 ~in~ )thecase ith more general conclusions about the natureof mass opinion. W e n pollsters shift from askinggeneral ~uestionsabout the need for social action to specific ~uestionsabout particular remedies, support seems t o fra any event,the architects of edicare never sought public views on legislative details, butrather were after (inV.0. Key’s memorable term) a “permissive consensus99(1961). They soughtand discoveredoverwhelming majorities of respondents readyto acknowledge the com atively severe health and financial problems of the aged. They found substantial majorities willing to support a “ssoluti~n~~ to these difficulties throughthe social security system. In short, theyfound their “problem” t o be credible and theirremedial instrument “legitimate.”But as onewould expect, the polls revealed substantial ignorance of the

76

Medicare andthe Analysis of Social Policy in American

Politics

details of the standardMedicare proposals, and an important and mistaken tendency to assume that Medicare referred to comprehensive medical and hospital insurance (see Chapter4). The discrepancy betweenpublic understandingandtheactual edicare proposal highlights the limited role of mass opinion in this policy area. Public support for “doingsomething”about the healthproblems of the aged declined as the question became more specific, from nearly ‘70percent support for federal action in generalto about 55 percent support for specific Kennedy and Johnson bills. But support, at either level of specificity, didnot substantial~yvary with the prospects ressional action. N o change in public attitude accompanied the enactment of the Kerr-Mills program in 1960. Likewise in 1965 there was no noticeable change in public attitude once electoral changes ensured some sort of Medicare legislation. It might beargued that massive public sympathy with the problems of the aged and mass approval of the social security system were the n e c e s s a ~but not sufficient conditions for the enactment of Medicare. pecifying the impact of such opinion on the policymaking process is, onetheless, extremely difficult. Those who assume government leaders arelimited by what theythink thepublic will buyare perhaps confusing an efl‘ort to avoidconflict with groups like the with an attempt to “get around alleged public preferences. (See the exclusion of surgical benefits from the Medicare proposals from 1958 on, Chapter 3.) In the end,public opinion of Medicare’s benefits played an indirect and unanticipated role in the expansion of the program. standings about the meaning of Medicare-the impressio physician’s and hospitalbills would be covered-provided advocates of broader benefits with unexpected political resources. But the way in which this informational discrepancy was taken intoaccount was haphazard a process of social choice in which critics of Medicare’s mispublic it^ were used for purposes quite unlike thosethey The long, expensive, and extensive efforts of pressure groups to affect the Medicare outcome should not lead us t o confuse the volume or intensity of their publicity with influence. The failure to d i s t i n ~ i s h oup participation from group influence has infact been a conceptual weakness of the pluralist model of pressure group politics. Lowi points out that the “proof‘ of a pluralistic American political structure is all too often entailed by the definitional and conceptual assumptions of the analyst: Issues are chosen for research because conflict made them public; group influence is found because groups so often share indefinition of the issue

77

Processes and Policy in American Politics

and have taken positions that are more or less congruent with the outcomes. An indulged group was influential, and a deprived group was unin~uential; but that leaves noroom for group irrelevance.(1964,681)

a t t ~ ~ u t i o fnin e defeats duringt victories, even thou icare debate. The st vivid illustration of this

involves “inter- reaction with

people on the same side’’ o f an issue

into l e ~ s l a t i v eproposals, particularly in the nal stageso f enactment. officials like Cohen and Ball consulte labor organizations and

7

~ e d i c a r eand the Analysis of Social Policy in

A ~ e ~ c Politics an

the health professions in ways public debate did not allow. The opponents investigate on its meritsvery little of what each other claimed; there was an overwhelmin tendency to bifurcate t friends and enemies and to learn” only from fkiends. (or real) power of their opponent used the i m a ~ n e d e propaganda efforts of both d by their actual effects on cr side indicated the need for of the conflict by the propaganda e~penditures

t redistributive social welfare issues kind of polarized ideolo~cal butive issues may well not comprise the class, the political processes evide public power conflicts zed the latterconflict in d illustrated by edicare. The obvious difference r public power (the public role in elect~city, etc.) and federal health insuranceshould not obscure either thesi issues 0th involve tyle of conflict or their commo the le~timacyof fe by implication, l i ~ i t on s private initiative, In this r from pork barrel disputes over how much one area another receives in public expenditures and s e r ~ c e sThey . 11 from re~ulatoryissues in which, once slation iseff‘ective,the conflicts focus onthe burdens andbenefits of particular governmental .The most bitter fight over ~ e d i c a r and e such public power issues S is at the level of p~nciple,not particular burdens and b estion whether the ~overnment at all is central, and in turn calls forth the ideolo~cal nationalpressure group act p r ~ ~ o u sdiscussed. ly sky’s generalizations about alongside the political processes that charac very large percentage of the active participants inth into well-defined camps with opposing views (t led opposition versus th led proponents). Active in or who dissented fro who were impartial ed or major views wererare. 2. ssional bureaucracies developed with full-time staffs who werepublic figures ade er out of fighting on the issueande who made their reputations in this field (e.g., ur Cohen, with lo term social security experts like Ball and ~ o l k s t e i njoine ,

~rocessesand ~ o l i c in y A ~~e or il ci tai ~c s

79

ever theoccasion demanded (e.g., the res to the notion o f need, and the familiar

initi~tives in1965).

aged, the “welfare state,” collectivism, etc.). The issues that gene~atesuch broad i d e o l o ~ c a l p o l a ~ ~ a t i o n beyond health insurance and public ownership of power plants. ies o f the legislative dispute over federal aid to education have re documented similar features ( unger and Fenno, 196

dicare and the Analysis

0

of Social Policy in American Politics

ority) that the quest for ocesseS of ~ o l a ~ z a t i o n " nsively covered by th are ~ r o u ~out h t in c

S

slation). ~ i t h i nC and subst~ntiala

edicare and the Analysis of

82

Social Policy in American Politics

~ a ~5.l1.e American Housing Policy Classified by Beneficiary Criteria

~ i d d l e - C l a s~s r o ~ r a ~ ~ h a r i t ~ y r o ~ r a ~

Beneficiaries Broad Earned, enefits Financin~ Administration

“Needy” persons selected demographic unit, not by test of means selected by test of means Given, not earned, and noncomprehensive more compre~ensive for given problem General revenues, more Regressive, as with progressive source earmarked Social Security taxes Centralized, nondis~retionar~~iscretionary, decentralized and clerklike,with highly developed rules of entitlement

proposals would support the interpretation that thesetwo of approp~atesocial policywere at stake. The extent t o which other social policies fall into this dichotomou~ pattern can only be answered through investigation,Exceptions come immediately to mind, The old-age assistance program in ~alifornia,for instance, is widely known for the di ified way in which beneficia~e~ are selected and for the clerklike character of program administration, The inco~e-testedveterans pension is, likewise, a means-tested proam thathaslittle of the degradinand discretiona~characters with public assistance, andis anexample of cen. rams for “needy” persons. But the issue is not, xist, but what constit~te the general patterns oY study attests only to the plausibility of the FriedS

sted as well in the d e t e ~ i n a n t sof each type oj’ on. Public assistance-particularly general relief atthe local lefederal-stateassistance to families with depen )“-typify what have been termed “charity” pro., S. That is not meant to su est thatsuch programs are c h a ~ t a b l ~ ~ ,but that means-testedams are associated with local discre., tion and general tax funds. man s~ggests that theeffort t o elicii; wide support for programs that avoid the connotations of “welfare” middle-classl e ~ s l a t i v ~ ! almost inevitabln ~ e ~ c politics, a n p models. The de ated clientele (need S rather than a demo,! graphicunit) isthe causal key. Progra the rich and the pool* ke means tests less relevant, and istration less crucial s t i t u t i o n a ~programs are legiti st acts, not presenl; income; they avoid the moral choices between d e s e ~ i and n ~ unde ing recipientsby designating recipients in termsof past co~tribution~~

~ e d i e a r and e the ~huraeterof A ~ e r ~ e a Social n Policy

83

or neutral demo~aphic attributes. Finally, the clientele theory assumes that the particular type of benefit (cash or kind) does not determine the form of the policy, or its likely character over time. There are, Friedman would argue, two major types of “social welfare policy,” not distinctive health, housing, education, and cash-transferpolicies. The forego in^ remarks apply primarily to types of social welfare laws, not patterns of policy conse~uences.Not only may implementation deviate from statutory intention, but statutes andprograms may distribute difYerent types of benefits. Edelman (1964) has rightly disuished between the symbolic burdens and benefits that statutes may provide and thet a n ~ ~assistance le (anddeprivation) that operating programs in fact distribute, Not all statutes are strictly enforced, and “preambles to legislation’, can be used to “symbolize concern and hoodwink people with symbolic reassurance that all will ,be well once is on the books” (Mitchell and ell, 1969,162).The passage care unquestionably involved symbolic reassurance. But e~lentationdistributed intended ~ n a n c i a l b e n e t~ot the s aged even though all mi not be wellonce the law was on the books. In addition, however, re were substantialunintended beneficiaries from the programmatic practices of the Social Security Administration and the healthinsurance industry. The most s t ~ k i n gdevelopment wa he extent t o which Medicare dicare was advocated as an benefited those whoopposed it most. of reform in the organization insurance measure,not as an instrument and delivery of personal health services. Though physici were typically excludedfrom Medicare proposals, the dicare’s mosthostile critic and the most serious symbolic loser from enactment.But icians have received substantial income supplements from the care program thus far, as have critics inthe nursing home and hospital industries. Thecooperation of health businesses was required, and Medicare was clearly intended to assist hospitals (throughthe improved capacity of their aged patients to pay) and insurance companies (relieved of the financially onerous task of insuring the aged at low premiums). But the scale of such assistance (andits extension to physicians) was unappreci~tedby most of those who participated in the legislative process. Those who think health groups wrung such conc@ssionsas a price of legislative cooperation confuse intended with unintended consequences, and explicit with tacit bargaining. Most of the generous features of Medicare were attempts to forestall dif~culties,not respond to them. And the price of such generosity, four years later,prompted the Department of Health, Education and elfa are t o warn about the “extreme urgency of the [healthcost] situation, [and]to encourage steps to arrest thein~ation that paralyzis

84

edicare and the Analysis of Social Policy in American Politics

ents in the health industry. re, the prices of hospital and physiThe arrangements for p a ~ n physig

ysician incomes, ne hese increases have mad

atory, and physiadminist~ati~~

S

to deal,”said one o f ~ c i a l t the administrative level.” cash directly, for the most p a ~ - h a s never had to rely on the coo~era tionofhostileindustriesin t tax collection. It isinadmir ive politics that wellroducers an are at interest in sym~olic i S over t o practical one does notpredict of gene 1 reformgroups an ~ i n i s t r a t i o nwas thus unpre izations. TheSocialSecurity oups, especially those whic2 ., to deal with economic pressu ideolo~callyopposed to social insurance, were nonethelessdes -

-

*

-

Notes

85

er ate^^ i n t e ~ ~ins tthe ~ ~~ e n e ~~t s~ t ~ a ~ l y whose i n i t ~ ~ tthey i o ~ in other contextsstron

1. I t might be object that stereotypes and simpli~ed images of opponents are characteristic of m0 olitical disputes. But anyone who has, for example, surveyed the hearings of re latory bodies will recognize a n ~ t t e n t i o nto evidential canons antagonists re never pr aired their views, 1 hearings. Part of the reason, of g their remarks to a much wider relied on compelling symbols w h e ~ ecomplex factual presentations would have been confusing o 2. This folollows from the assumption t h ity of the aged to manage their healthcosts. If the ' ' as coping with the demandby unions, the care assistance,t h e l e ~ s l a t i oofn 1965 mightwell nearly complete) solution. 3 . Thisformulation of the Lowi scheme owes paper by Paul Peterson of t h e ~ n i v e r s i tofy Chicago. 1969.

This Page Intentionally Left Blank

he Medicare program began July 1, 1966. In the year between enactment and the eligibility for benefits, the Social Security A~ministrationitself engaged in massive preparatory tasks.The most important of these was to contact the aged and inform them of their rights to coverage and the scope of their benefits under the program. Enrollmentof the aged in thevoluntary medical insurance proeatest publicity p r o b l e ~Aged . citizens were required to sign up and begin payment of the $3 monthly premiums in orderto partici~ate.The success of this Supplementary Medical Insurance Program form all^ Part B of Title 18 of the Social Security Act) obviously depended on voluntary enrollment. Accordingly, the Social Security ~dministrationlaunched an intensive promotional campaign in local and national news media, directly aimed at encoura~ng the aged to participate. More than half of the 50 states took the initiative in enrolling and assuming the premium payments for those amongst the aged who were on the state public assistance rolls, responding understandably to the powerful financial incentives to do so. At the end of the first year of Medicare’s operation, the success of the recruitment program was evident: Of the approximately 19 million aged citizens, 93 percent, or 17.7

million, were enrolled in the voluntary medical insurance program (Part B of Title 18). One in five ofherica’s elderly had entered ahospital under the new law, and 12 million had used Part B services. Hospital expenses accounted for $2.5 billion of the $3.2 billion expended by the SSA for Medicare.

their aver-

e ~ i c arose ~ ~ enot so

The most serious and persistent of the problemsconcerned the methods and costs of payin doctors and hospitals underMedicare. The y avoided setting aspecific limit on the amount a a Medicare patient, and specified instead that be paid “reasonable charges.” The lawmakers that such charges would be higher than those customarily ow-income patients, lestMedicare patients be treated aschare’9was defined as one that was “customary” for indivi~ualphysicians, and no higher than the charges “prevailing” locally or those regularly paid by Medicare7spayment administrators. (These fiscal intermediaries, largely but not exclusively Cross for hospital expen Blue Shield for Part B benefits, care, another surprise of th the dece~tralized agents ts seeming clarity, this sta islative politics of enactment.) ableness was unworka~le in thecontext one knewwhat doctors were customa~lyc doctors or government officials about what conthe upper limit of “prevailing char~es.”And, althou~h Shield and commercial insurance companies had evidence about own past payme~ts, therewas no a eement about what constituted s e ~ c e s ,in ’ “compara~le circumstances,” thus began with an open-ended payment method forphysiS were as uncertain as everyone else about how the law trued, and fears that the insurance intermediaries woul eze their definitions of “reasonable charges” centive to raise their fees (Marmor, 1968). between enactment of the edicare law and its initial operation9the rease in physician fees more than doubled (see Table 6.1). on of that increase was undou~tedlyprompted by Medicare’s pa~mentmethod itself, andthe subse~uent inflation in physician fees nued t o cause seriouspolitical problems. ospital price increases presented the most intractable political problem for the John n administration.In thefirst year of Me~icare’s daily service charge in America’s hospitals operation, the aver increased by an un dented 21.9 percent (Figure6.1). Each month epartment’s consumer price survey reportedfurther Table 6.1. Increase (%) in Physicians’ Fees 1964 1965 1966 1967

~ h y s i c i a nfee index Consumer price index

2.4 1.3

3.8

2.0

7.8

3.3

6.1

3.1

90

R

Legislation to Operation

cut:

~ e ~ i s ~ a tto i o~np e r a t ~ o n

91

increases, and by the summer of 1967 President Johnson asked HEW secretary John Gardner t o “study the reasons behind the rapid rise in the price of medical care andt.0offer recommendations for moderating that rise.” Five months later Gardner reported that theMedicare prog a m , by requiring hospitals toreexamine their costs and charges, had any hospitals “to increase their charges” eport concluded that the question for the a1 prices will rise, but how fast they will rise.” problem, accentuated but not caused alone by the Medicare pro,would remain a worrisome political issue. In the State of the nlon Address, January 17, 1968, President Johnson illustrated how nt’s expanded role in financing personal health services its responsibility for controlling price increases. Meaed the president promised, to “stem the rising hospital costs continued to rise faster than e index, the rateof increase the Medicare progam from period to 12.2 percent in the *

quences of medical inflation revealed in a strikingway the differences between the politics of legislation and those of administration. Once Medicare was enacted, its pubdropped sharply. The press no longer had the drama of com~itteeclashes or heated con~essionaldebates to report to their audiences.The bro lignment of opposing economic interests thathad marked the earlie dicare debate fell apart as the issue turnedfrom whether the government wouldinsure theaged against healthexpenses to how it would do so. Groups in the medical care industry remained active, but their activities weremostly consultative and relatively ,not those of diehard ideological adversaries. Lobbyists hos~itals,physicians, nurses, and nursing homes continually pressed their claims on the Social Security Administration and ournals kept members aware of the actual workp~ogram. In the process, the voice of the beneficiary (insuranceconsumer,patient) became less distinct. The claims of the aged insuree were less salient symbolically than those of elderly persons and their advocates pressing for the statutoryredistribution of medical of their aged constituents, care. ~ongressmenpassed on the complai~ts and in the case of hardships caused by the program’s regulations for reimbursing physicians who directly billed their patients, there was ameliorative legislative action in 1967. though a bill to include the disabled under ~ e d i c a r eprovisions was defeated in 1967, no one in the Johnson ad~inistrationquickly pressed for massive extensions of the

92

to

Legislation

~peratio~

ance. In 1968,a labor-suppo~ed ~ommittee ce was organized, and in summer of 19 sociation announced that it was studyi health insurance planin theUnite One of the fascinating featuresof the succession of new issues, unexpe junctions of events. In the

troversy over ex In ~aliforniaa ~ ~ a n c ipressures al in the first year, as the price increases and unexpectedly high utilization strained administrative bu prompted charges that doctors and hos tage of the new p r o g r a ~ ( ~ t ~and vens The disjunction between the legislative and administrative olitics t, however, s u r p ~ s i nThe ~ . f r a ~ e n t a t i o nof a u t ~ o ~ t y litics, the myriad oppo~unitiesfor delaying le~slative both entail that promoters of controversial lslation seek broad agreement among a wide variety of p~blicso nimal cha~ge.The conse~uenceof this is that reformist attention became focused on eresymbols and combating critical S eguacy of private insura owever crucial these dis ovided no answers (in inister a program whose en usual ~ e r i c a nuncertai is not until programsare on the statutebooks that the problems of m a n a ~ n glarge-scale government innovations are ~ , resolution o f directly confronted. A treatment of those p r o b l e ~ the which is often vital to the effectiveness of the program, is the subj

a

e turn now from an account dicare'sbirth to an account lopment. As the pr e noted, Part II raises a new ~ e time a key art of an set of ~uestions, edicare ~ e c a over inarily complicated political and economic world of .And throughout the whole period, 19663-99, ~ e d i c ical fate was sha d as much by broader forces in the en~ronmentas ower medicalcare domain. edicare had its tenth anniversary, but hardly anyone noticed. Attention then centered on the presidential race between Ford and Carter and,for ~ e ~ c medicine, a n the leading topics were persistent medical in~ationand the continuing, c ~ i s p u t eaboutnationalhealthinsurance.InJuly 1986, marked its twentieth a n n i v e r s a ~with considerable fanfar fallen off the political agenda in t e a prominent object of attention (a re's twenty-~fthbirthday in 1991, the ~ r o g r a ~ faced severe fi pressures, as didAmericanmedicine generally, and nobody publicly celebrated its silver anniversary. By its thirtieth anniversary in 1996, edicare was once again a major topic of h e r i can politics, the obje of intense fiscal scrutiny by a ~ o n ~ e and s sa president n e ~ o t i a t i nthe ~ terms of a balanced budget that would emerge inthe summer of 1997. At the century7s close, returned to controversial status, thesubject of a ~ipartisanCO that ~ddressed,without a ~ e e m e n twhether , the program r e ~ u i r ea ~ erhaul or incremental adjustment. dicare's operational development is marke ce. The social insurance philosophy that e original appeal as a proposal used the trust fund t e r m i n o l o ~for Part to s u ~ ~ eas sense t of financial p r e c o ~ ~ i t ~ and e n tthus sta~ility to edicare. But, over time, forecasts of the trust fund accountin~-and

94

The Politics of Medicare: 1966-99

projections of “insolvency”-undermined the very sense of‘ security the trust fund was supposed to engender (~berlander,1 ~ ~The ~ adminis) . trative compromises deemednecessary for nonetheless contri~utedt o the subsequ~nt medical care. That development in turn pr to the e~pansionist intentions of understand in^ of these discrepanci prises,anddisappointments lies not so much in the ~ y ~ a n t i n subtleties e of l e ~ s l a t i v e b a r g a i ~ i n ~ and the i~iosyncrasiesof political personali S in the wider forces that framed this ~ a r g a i ~ i nand gshaped am operations after 1965.

e e

edicare’s complicatedhistorical origins are difficult to explain in the quite different political environment of the 1990s. It is mportant, for example, to appreciate how rogram is from an international perspectiv er, began public health other i n d u s t ~ a democl racies either started with cover workforce or,inas the case of ~ a n a d aincrementally , expanded special p r o g r a ~ sfor the poor t o universal p one service (hospitals) and then to another (physicians 975). This contrast implies that distinctive ~ e ~ c circum a n S, rather than some c o ~ m o n feature of are’s programmatic birth, y determined both the initial desi S of how it was to develop overtime. ong those unfamiliar withthe geser difficulties as theproduct of inipidity “thesis” goes as follows. If as failed t o solve the problems of dly directed, it must be because nored the gap between the lems identified and the remedies offered. This view was vividly a ent, for example, in Ross Perot’scomment, inhisaddress to the pr~sidentialcampaign, that “none ~ a t i o n aPress l Club during the l of our social programs~includin dicare, “were [sic]ever desi work” (Perot, 1 ~ ~ 6 ) . The fact is that reformers inl965 assumed hospitalizationcoverage was but the first step in icare’s benefits and t morewouldfollow under the same patter ayroll financing as cia1 Security. Like-

96

Politics:

Medicare’s

1966-90

wise, the strategy’s proponents took for granted that eligibility would be gradually expanded to take in most, if not all, of the population, extending first perhaps to children and pregnant women. promoters thought it obvious that the rhetoric of enactment should emphasize the expansion of access, not the re dation and reform of ~ e r i c a medical n care practices. The clear goal was to reduce the risk,s of financial disaster-for the elderly and their families-and the clear would demand a largely understanding in1965 was that the ~ongress -off posture toward the doctors and hospitals providin the care are would finance. Three decades and more after ent, thatvision seems odd,It isnow taken for grante one pays for medical care affects the care given. In thebuildup to enactment in 1965, no such presumption existed. As noted in Part I, the incremental strategy of the 1950s and earl:y 1960s also assumed that Medicare’s social insurance form was accept8able to the extent it sharply differentiated the pro demeaning world of public assistance. “On welfare,”i lance is an expression that generally implies S ers made certain the program’s features on of ‘karned” social-insurance benefits, not charitable dispensa.” tions, The initial program avoided a means test by restrictin eli *bil.ity to persons over age 65 (and their spouses) who h to the social security system during their working lives. eld from the stigma of welfare, edicare was unable, as we shall see, to escape from the growing problems of ~ e r i c a nmedicine generally, especially medical inflation. Indeed the problem of cost contr as a largely unforeseen, recurring, and centralinfluence on n the decades following its enactment. Instead of‘ trying edicare’sscope, reform efforts focused on containing enditures and rationalizing its administration. By the 198Os, the combination of persistent medical inflation andthe increased popularity of a n t i - ~ a s h i n ~ o rhetoric n had for many cornmentators transformed the image of Medicare into an out-of-contr~)l entitlement.

Once under way, Medicare proved far more complex to administer than its parentpension programs within the Social Security Adminisedicare expenditures varied with the use the elderly made of

The ~ o l i t i c of § Aceommodution

97

with the charges andfees of medical providers. Techin medicine increased costs unpredictably, whereas pension outlays were based on a rigid for ed present bensocial-insurance payments. t o adapt to the efits to past behavior of both roviders and benefici oclal Security peny focus on recipients and internal adminis).These di~erencesin organi~ational tasks, nexpected two-part insurance hybrid, produced a historically unprecedented level of complexity for Social Secua~ministrativeelite. ements reflected strong me edicare’s administrative arr ’ enactment, as earlier chapresist~nceto the p am’s implementation inthe ters have emphasi face of this resista S and initial administrators a workable consensus in their ne~otiations with p ital, n u r s i n ~home, and physician worlds, This vvil to accommodate explained the acceptance of benefit and paym exerted i ~ a t i o n pressure a~ and certainly hinvernment’s ability to control increasesin the stic definitions of key legislative t e r m s - ~ a ~ i c costs” for hospitals and ‘ ~ c u s t o m a ~ d to be significant loopholes that promp of pro~ders, Chapter as 5n depreciation and capital costs-taken into account in imbursement rates-contributed a built-ininflationa~ rivate insurance companies as financial and adS

ernment controls on the realities of r~im~ursement.was It left to these istories of close relations with provi the reasonableness of costs under The truth is that in the early years o ram’s administrators were not to confront most pr ders of medical services in ways necessary to restrain costs. S S ~ ministrators prided themselves on their his successful imple tation of social insurance,andthey need ation of all parties for ~edicare’si lementation to pro care costs threatsposition. ~edicare’s

98

Medicare’s Politics: 1966-90

The late 1960s thus witnessed the efficient administration of a program whose design features were themselves inflationa~.The resultrl; were predictable. edicareexpenditures swelled, budget of the nati as a whole. In the first year of tion, as noted earlier, the average daily service charg pitals increased by more than 20 percent. The average expenditure growth over the next five years was 14 perc definition of “reasonable” chargespaved the way for physician fees. The rate of gro th in physician fees more than doubled, from 3.8 percent in 1965 t o 7, percent in 1966, The rate of inc physician fees also remained gh over the next five years, at cent (Table 6.1),about twice the rate ‘ tion in the consumer price carereimbursements rose index (CPI) (Tables 7.1 and 7.2). Tot Table 7.1. AnnualChanges

(%I) in PhysicianFees Consumer Price Indexfor Fiscal Years 1967-71

Fiscal year

~hysicians’ fees (index, = 100) calendar year 1967

1967 1968 1969 1970 1971

96.9 102.8 109.1 117.0 125.8

According to the

Increase (9%)

7.4 6.1 6.1 7.2 7.5

Source: Howard West, “Five Years of Medicare-A Social Security ~ulletin,Dec. 1971, p. 21.

Statistical Review,”

Table 7.2. Consumer Price Index and American Hospital Association Data for

Hospital Expenses, Each Fiscal Increases

Year, 1967-71, and Annual Percentage

~ospitaldaily service charges Fiscal year year

Index (calendar 1967 = 100)

Annual increase (%l

1967 1968 15.0 1969 1970 15.1 1971

92.2 106.4 61.73 120.5 135.4 80.71 152.8

16.6 15.4 13.6 13.3 12.4 12.9

Source: Data for daily service charges

~ o s p i t expenses a~ per patient day ( M A ) Amount increase

$53.67

~nnual (5%)

12.5

70.13 91.37

13.2

are from the ConsumerPrice Index, Bureau of Labor Statistics; datafor hospital expenses perpatient day are from “Hospital Indieators,”Hospitals, Journalof the American HospitalAssociation. (From Howard West, “Five Years of Medicare“ Statistical Review,” Social Security ~ulle tin,Dec. 1971, p. 21.)

The 1970s:~ n e ~ e & Reforms t ~ a ~ a n d~ n ~ e r ~ i t t eProgress n~

99

72 percent, from $4.6 billion in 1967 t o .9 billion in 19’71(see 7.1; orn nick et al., 1985,43, Table 25). ver the same period ( 7.1),the number are enrollees rose only 6percent, from 19. lion in 1971 (ibid., 36, Table 17). ith thefull benefit of hindsight, it iseasy to criticize the accommodationist postureof Medicare’sinitial a~ministrators. At the time of the program’s enactment, however, Medicare7slegislative mandate was t o rotect the nation’s elderly from the economic burden of illness ~ ~ tly interfering withthe tra~itional .It was with this aim in mind tha trators sought an accommodation to ensure the program. Not until later did care come to be seen as a powers to constrain both the andpractices of American medi11,1972,4748; Marmor, 198’7,43).

y 1970, there was a bipartisan consensus that the United faced what amounted to a crisis inthe costs of medical care ( ate, Committee on Finance, 1970). Though partly stimulatedb care’s rapidly rising expenditures, healthpolicy initiatives inthe 1970sin fact concentrated on reforming American medicine overall, not revamping e. The sense of crisis spawned two separatelines of policy deve aimed at controlling medical costs. The first line of development constituted a reawakening of the movement for national health insurance. Thiseffort reached its apex in the ’S Comprehensive Heal bill, or the Long-Ribico or, 1980). catastrophic scheme-w Incontex that political inated t o grander designs. The second line of policy ~evelopmentconsisted of more limited, menta^ initiatives that addressed the conventional topics of h policy and management(quality, capital spending, and planning).Origre’s administration (and, in fact, viewed with care administrators), the new p r o ~ a m relied s on and were intended to circumvent the “’protectiveness andparticula~sm”of program specialists (Brown, 1985,5$~). For example, the Social Security ~ e n d m e n t sof 1972 (P.L established professional standards review organizations (P review the care received by federally funded patients; encouraged use o f health maintenance organizations (HMOs)in Medicare;required states

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The 1970s: Ine~ectualReforms ~ntermittent and

Progress

101

to review capital-spending projects for hospitals; and authorized federal support for state experiments with prospective-payment systems. In 1974, ~ongressenacted the Health Planning and Resources Development Act (P.L. 93641), which created more than 200 health systems agencies (HSAs) to oversee areawide medical planning across the nation. These fragmented measures were part of a broader national health insurance strategy that ultimately failed to materialize (Morone and or, 1981,431-50) nationalhealthinsurance failed to pass ess, theother pla andregulatory programswere left without the full force of the financing national health insurancewould have provided. They became incomplete alternatives t o comprehensive reform .and, because of their contribution to the diff‘usion of federal tood in the way of centralized reform later (Brown, 1985, or, 1990, 33). These partial reforms, one sees in retrospect, quate measures for controlling medical costs. They left the basic inflationary structure of the medical care industry-retrospective payment,pluralistic financing, andintermediary administrationlargely intact. The adoption of these f r a ~ e n t a r ymeasures did, however, reveal two important featuresof health politics in theUnited States that are critical for understanding how ~ e d i c a r edeveloped administratively over time. First, no matter how large the public subsidies and how substantial thepublic interest in the distribution, financing, and qualityof services dominated by private actors, the American impulse is to disperse authority, finance, and control. In an industrylike medical care, this reluctance to consolidate authority is arecipe for inflation, as the past three decades, as well as ample international ex~erience, demonstrate (White, 1995; Evans, Barer, and Hertzrnan,1991;Marmor, 1976). Second, the initiatives of the early 1970s illustrate the adherence of federal policyma~ersto a theory of medical care that had slowly emerged throughout the post-World War I1 period. This widely held view, sometimes referred to as hierarchical regionalism, presumed that “more medical care for individuals distributed by regional hierarchies [of providers] would lead to better health for populations7’(Fox, 1986, 208). On the basis of that conviction, governments acted to subsidize “research and profes~ionaleducation, increase the supply of professionals and facilities, establish and encourage regional hierarchies [of hospitals], and reduce the direct costs of care to patients” (ibid.). half ospects for national health insurancefaded in the last ,le~slativeinterest shifted from new ~rogramsconsistent with national health insurance to a renewed emphasis on cost control itself. By the end of the decade, though, there was little progress on the anti-inflation front either.

102

he 1972 Social Security ~ e n d m e n t and s the 1973 fe ing so-called health maintenance organizat beginning of flirtatiomarket-based versions of COSK Os, first called prepaid practices, were identi~edwith of ~ e r i c a medic n from the 1930s t o the early id group practice model was associated with the ideal ance, the appeal of capitative payment9 viction that nonprofit forms of organization were superior. 1970s represented a largelyRepublican repackaging (and transformation) of the early largely.~emocratic model. The reform in the1970swas an effort to find an apparently bipartisan solution to the nation’s med1983). the i n ~ a t i o n a ~ ~ ical inflation problem (Brown, medicine, H ected to use capiincentives of fee-for-service delivery and price of medtation payment, to enhance competition thereby t o reduce costs. Advocates-sometimes labeled reneurs”-made heady pre~ictionsabout S would come to dominate and thus reform in the19708, however, didnot live up to the f membership was modest throughout the 1970s (see Figure7.2), while national medical expenditures continued t o rise sharply( F i ~ r 7.2). e Federal efforts t o use instrument of cost containment, according to of failure (Brown, 1983). The Carter administration, genuinely alarmed by rising hospital costs, concludedthat “clearly,the time hatdl come-indeed it has been h re for a long time-to bite the bullet on hospital costs” ( 78, 67). The Carter administration’s attempts to secure passage of slation that explicitly regulated hospital costs was blocked. But federal efforts to regulate the hospi stry did put it on the defensive. The industry s ~ b s e ~ u e n t l y d a “voluntary e control spending, one that also disa d in practice ( S

a new Health Care Finan thin HEW to administer b dicare away from the Soci agerial ethos and bureaucratic style the broader universe of federal healt than a freestanding component of the on’s social-insurancesystern icareadministratorswithin own, 1985,591). With this change, FA becamemoreconcerned with nancing of health services than with social insurance. This change would, over time, prove to be critical to altering not only the practical administration but also the *

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104

Medicare’s Politics: 1966-90

icare. Congress also enacted in 1977 the Medicaid Antise h e n d m e n t s (P.L. 95142), legislation that charged HCFA with collecting and analyzing hospital cost data. These seemingly technical changes and theshift in administrative outlook accomanying HCFA’s establishment weremore importantthan they repared the way, among other things, for the method of paying hospitals on a prospective the end of the decade, the piecemeal reforms of the early 1970s rom one side came charges that such fragmented measures had predictably failed to restrain inflation in the health industry. From the other side came criticism that piecemeal change had left 30 million or more h e r i c a itizens uninsured for the expenses of illness and both Medicare and dicaid in precarious financial condiedicare’s administrative divorce from socialsecurity in the late 1970s did, it is true, prompt hope for the program’s reform. Nonetheless, this administrative shift distracted attention from the need for more substantial policy reforms that would address the fundamental sources of medical inflation, the erosion of Medicare’s benefits, and the confusion experienced by its beneficiaries. Largely unreconstructed in benefits and cost control instruments, edicare continued to experience large annual increases in expendiures as the1970s came to a close. “By 1980, Medicare was the second lar est domestic program and the fastest growing” (Moon, 1993, 41). heless, because it was still widelyviewed and supported as nsurance, Medicare escaped severe budget cuts. Increases in Medicare spending contributed to the much larger problem of recurrent annual increases in overall health spending. Claims of strain were fully justified. The growth of expenditures on medical care farexceeded the rate of inflation in the eneral economy throughout most of the 1970s with the result that me ical-care spending constitutedan ever increasing proportion of the gross national product (GNP),rising from 7.1 percent in 1970 to 8.9 percent in 1980 (see Figure 7.3). Medicare, and all of medical care, was consuming a larger and larger piece of the economic pie, crowding out spending on other goods and services. Despite-the rapid growth of Medicare expenditures, however, the elderly actually experienced significant erosion in theirprogram benefits. By the mid-1980s7the nation’s senior citizens were spending the same proportion of their incomes on medical care as they had before edicare’s enactment (see Figure 7.4) (Schlesinger and Drumheller, 1988). The Medicare program also produced considerable confusion for elderly citizens that persisted and, some wouldargue, worsened overtime.

F c

The 1980s: The ~ h a l l ~ nof g ethe Reagan Era

107

The separate coverage of hospital and physician services, borrowed wholesale from the conventional Blue Cross and Blue Shield plans of the period, was easy enough for the Congress to stitch together in the bargaining of 1965. For the elderly, though, it meant two different pros, each with its own financing sources, its own fiscal intermediary, different deductibles, coinsurance provisions, and forms. Part financin~came from earmarked deductions from wages (the heal insurance component of FICA contributions);Part B drew its financing from both individual monthly premiums and general tax r ~ ~ e n u e s . To this mix was added a third level of complexity with supplementary policies sold by major commercial and nonprofit health insurers, the -called Mediga~plans. Since thesesupplementary policiestook edicare’s benefits as their baseline, Medigap benefits were typically expressed b reference to the elements not covered or only partially edicare’s Parts A and B, initially c~nfusingbecame more complicated rative changes. With the shift of Medicare to H ~ e c u ~ offices ty throughout the country ceased to regard administrative matters as theirbusiness. For the elderly, meant less assi~tancewith the delays, complicated documents, an requests for clari ’ t from the beginning of Medicare offices. es were now left to cope with this from trative maze lar r own; theirlink to Medicare was the tollfree telephone numbers of the insurance companies that act as the pro~ram9s fiscal intermedia~es, It this is confusion that con acy of both the incrementalstrategy of founders and the subsequent a~ministrativeadjustments containment and the 1970sin the hopes uccessful cost administration of both dicare and Medicaid (Oberland ~~~

edicare, after nearlyfifteen years of relatively quietcontro pecialized politics of medical care finance, acquired much e Reagan era. Always of great interestto those in edicare was a second-order topic in themass polind the 1970s.The oil crisis of the 1973-74 period andtheconsequent, “ s t a ~ a t i o n ”had joined with finance as theh i g h - ~ r i o ~items t y on the national publi This isnot t o say that Medicare’s politicshad been un it is simply that edicare had faced ordinary intere specially protected under the mantle of social insurance’s ~ntitlement

10

Politics:

Medicare’s

1966-90

theories and the elderly’s reputed political influence. That protected status was what the 1980s were to challenge. The challenge came in two forms.The first was inclusion o cutbacks in the grand design of the Reagan fiscal policy o second wasthe bold departure inMedicare’s reimbursemen G (dia~osis-relatedgroup) reform of 1983 represented. TheReagan administration came to power brandishingantiwelfare-state and a n t i r e ~ l a t orhetoric. ~ It promised t o reduce, not expand, the role of the federal government in thedomestic sphere. The administration, like others, lamented the relentlessness of medical inflation and the budget implications of Medicare’s rapidly increasing expenditures. But the administration approached cost control from a istinctive viewpoint. It was preoccupied with restraining thecosts of public programs, not with reducing medical inflation per se, Thispreoccupation meantthat edicare policy increasingly became budget gether, the Reagan administration’s health policies emphasized four themes: reducing the federal medical care budget; restraining payments to Medicare providers; cutting benefit ticularthrough increased cost-sharing for Medicare and excessive health insurance causes medan administration’s policy initiatives, the theory that “excessive” health insurance causes medical inflation and the overutilization of medicalservices was opento serious evidence is clear that increased utilizationitself has playe in driving up Medicare’s costs (Freeland and Schendle 1993, 4 2 4 3 , Table 3.1). The theory also overlooked the crucial role of providers-especially in fee-for-servicepractice-in fueling medical i ~ ~ a t i oIn n . addition, the commitment to cost-sharing as the central ’ n remedy had a fundamentalflaw: relative indifference which cost-sharing discourages early diagnosis, shifts ,and is not a necessary feature of effective costcontrol (Evans, Barer, and Stoddart,1994;Conrad and Marmor, 1983). The Reagan administration’s efforts to restrict payments to roviders-the enactment of prospective hospital payment 1 in 1983 and of ane schedule for physicians (Resourceelative Value Scale, ‘ ‘ S”)in 1989-were muchmoreeffective in achieving the overa goal of restrainingthe edicare expenditures. Indeed, thesetwo payment measures were the ost s i ~ i f i c a ndevelopments t in Medicare policy since the program’s inception. The reform of Medicare’s methods of paying hospitals and octors reshaped the program’s politics, introducing what amountedto new regulatory regime (Oberlander, 1995).

110

Politics:

Medicare’s

~966-90

reducing the ongoing inflation in hospital costs under ing the Reagan administration to contain the size o f t care budget. From 1985 to 1990, hospitalexpendituresunder icare dropped from 28.9 to 26.1 percent of total nati~nalhospital expenditures (Letsch et al., 1992, Table 17),a sign that federal interventions are capable of bringing Medicare expenditures undercontrol. Medicare’s per capita expendituresgrew less rapidly than those of private insurance (on services that were provided by both) from 1984 t o 1992 (see Figure7.5). One cannot discuss Medicare in the 1980s without reference to the passage and subsequent repealof the Medicare Catastrophic Coverage Act of 1988 (MCCA).The story of the ~ C C A is part in one respect. It highlights the connection between group politics and the new politics of deficit redu deviation from the Reagan administ n’s efforts to restrict expenditures,the MCCA greatly expandedicare’s benefits. Ratherthan reflecting the ideology of the Reaga inistration, however, the legislation was largely the work of a single individual, Otis Bowen. The 1982 National Commission on Soci Security Reform, under Bowen’s leadership? had recommended that edicare hospitalization coverage be expanded t o an unlimited number of days, that its hospital and skilled-nursing-facility coinsurance re~uirementsbe eliminate^, and that Medicare beneficiaries be offeredan optional Part €3benefit (physician services), one that would put a cap on out-of-pocket expenses. It, was these recommendations that Bowen, when he subsequently be-, came secretary of Health and Human Services under President Rea-, gan, sought to enact (Oberlander, 1995). Bowen’s efforts to promote catastrophic-care covera widespread dissatisfaction, especially among Democrats in congress^, with Medicare’s limited coverage of care for chronic conditions (Rovner:, 1987). The new benefits under the Catastrophic Coverage Act were quite extensive. They included not just those of the 1982 National Commission, but also expanded provisions for hospice care, home health services, mammography screening, outpatient prescription drugs, guaranteed payment of Medicare premiums for the impoverished elderly, and protection against theimpoverishment of a spouse from nursing home expenses.l The legislation did not include, however, what was perhaps the most important benefit sought by the elderly and seen by them as a central featureof catastrophic protection: namely, the coverage of long-term institutionalization in nursinghomes. The method chosen to finance this expansion of benefits was, in equal parts, a product of political necessity and histo~calaccident. Reflecting his commitment to reduce the federal budget for medical *

f

edicare’s Politics: 1966-90

11

erly-to

pay a sup~lemental~ ~ e m i with ~ m ,

he act’s h i ~ hprogresl~

ional ~ Q ~ m i to t t Pree ~ in c o n v ~ ~ the n g impres-

The 1 ~ ~The ~ Cs h a: ~ ~ e of n ~the e ~ ~ a Era ~ a n

I13

I

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0

Conclusion

115

trality and objectivity,they generated considerable dissatisfaction and conflict, especially within the medical profession.For example, the decision to reallocate funds in favor of primary care practitioners, rather than simply limit compensation across the board, setup tension between specialized physicians and primary carephysicians. By dividing physicians, these seemingly technical changes moved part of the battle from one between organized medicine and the government, to one within the medical profession, a shiftthat was to have implications for the futureof Medicare.

The politics of Medicare in the 1980s we have sketched are unintelligible, however, if viewedsimply as technical policy adjustments inan era of fiscal strain, The changes arose as much from moregeneral shifts in the political environment as from technical considerations of reimbursement. On the one hand, the combination of increased defense spending and sharplyreduced tax revenues had putall social spending in a political vise. Social Security escaped that vise through the legislative changes in 1983 (which brought the program’s finances into balance) and the subsequent insulation from the automatic spending reductions of the 1985 ~ramm-Rudmanlegislation (Ball, 1~88). Medicare remained within the vulnerable set of programs for the rest of the 1980s and beyond. On the other hand,the world of American medicine was very different-politically and institutionally-from what it had been at Medicare’s enactment. No one of political significance advocated universal health insurance in the 1980s. The deficits of the Reagan (and Bush) administr~tionsdominated political discourse and setsevere limits on what seemed sensible to discuss in anysocial welfare program, including medical care. The policy debate was shaped as well by the debris from the reform isa appointments of the 1970s and by the frustrated expansionary expectations of Medicare’s early promoters. In thatenvironment of the 1980s, celebrators of market reform in medicine had an unusually powerful effect,oEering the prospect of more services at less cost, with less involvement by the go~ernment(Marmor, Boyer, and Greenberg, 1983). Attracted by the gold mine of funds flowing through asystem of retrospective, cost-based reimbursement, the captains of American capitalism had come to see opportunity in the1970s where politicians had found causes for complaint (Marmor, Schlesinger, and Smithey, 1986). In the hospital world, smallchains of for-profitcompanies-the

116

edicare’s Polities: 1966-90

ons: a glut o ~ ~ h y s i c i a n ~ i

118

Politics:

edicare’s

1966-90

priority. Making medical-care markets more competitive was not a plausible strategy to satisfy short-term fiscal oak (Marmor an health costs through market reform tianson, 1982). Restraini requires precipitating an o nizational revolution in the delivery and governance of medical services. And from the Reagan administration’s perspective, this revolution could not be carried out with s u ~ c i e n t speed. It was at best a long-range strategy thatwould have no impact on current federal health expenditures. The only option was to disreagan administration’s i~eologicalcommitment to competimbark on a course of strict regulation and direct control of payments to providers. By the early 198Os,the difficulties of Medicare had become those of American medicine in general, rather than of the program alone. The remedial proposals enacted during thatdecade were, of necessity, sub‘ally broader than the tinkering needed to ~ecurity’scash programs (Light, 1986; .The politics of Medicare thus diverged fr and disability pensions, This divergence was the consequence not only of differences in administering a program of third-party payment instead of pension checks, but also of the rapid pace of cham world of modern Americanmedicine, and of the continued strain of medical in~ation.As a result,Medicare became morevulnerab~et o a major legislative intervention than other parts of the nation’s social-insurance system. A particularly importantchange was Medicare’sadministrative relocation to HCFA in the late 1970s.That seemingly innocent shift further separatedMedicare from the social-insurance roots that hadgiven it its initial legitimacy, definedits goals, and linked it locally to elderly beneficiaries.At the same time,the politics of budget deficits,relentless medical inflation, and America’s presumed aversion to tax increases made an expansion of Medicare highly unlikely. This situation presentedboth opportunities and risksby the end of the 1980s. Thevery unsettled state of Medicare policyoffered the chance to rediscover the reasons why the nation had agreed in 3.965 that medical care for the elderly should be especially protected from the influence of personal wealth and the randomness of illness andinjury. Moreover, there is always the possibility in medical care that better allocation of existing funds could lead to more appropriate care without necessarily paying more. Unlike pensions, where increased benefits would necessarily entail higher outlays,the reallocation of funds freed up by reduced payments for unnecessary or harmful medical care might be able to cover expanded benefits. But with oppo~unitiescame risks. any policy suggestions could worsen the circumstances of older citizens in thename of competition,

Notes

119

rationalization, and reform. Cost containment could easily lead to the f needed care. Indeed, there were numerous examples cases in which DRGs’ financial incentives induced hospirge older patients prematurely,Cost containment-when dicare alonenould simply shift costs to others or make epatientsless welcome ants. Providing Medicare benewith. vouchers for H ~ ~ as seasily prompt providers to search for the healthier old (“cre ming”) as aresultinthe provision of more eEcient medical care to aZZ beneficiaries. Finally, the focuson budgetaryaggregateriven by deficit poli obscure the reality that des ite dicare’s expenditure in 1991,millions of older ericans remained without tion from the catastrophic financial conse~uencesof chronic illness. The mantle of social insurance, so crucial to Medicare’s origins, by the late 1980s provided no certainty of protection from these risks.

1. res script ion drug coverage, which did notplay a large role in thepublic debate over the legislation, would prove important in the legislation’s subsequent repeal. After thebill’s enactment, updated prescription drug usage figurescaused a substantialincreaseintheestimated cost of the MCCA presc~ption drug benefit. That in turn led congressional deficit hawks to join the calls for repeal (Moon, 1996, 132-33). Once again, deficit politics played a 2. By the time of MCCA’s repeal, opposition t o the act was wide~pread among all elderly, and went well beyond the efforts of any particular group (Himelfarb, 1995, 79). A s noted by Richard Himelfarb in his detailed postmortem of MCCA, the ~ e ~ cof eMedicare ~ ~ ~beneficiaries o ~ (inaccurate in many cases) that the MCCA would increase their Medicare premiums in order to duplicate benefits they were already paying for was highly influential in their decision to oppose the act (Himelfarb, 1995,711. 3. The rise of for-profit chains and health care i n d u s t ~ acorporations l lent credence to the notion that medicine could and should be treated more like an industry and less like a profession. In addition to the general a n t i r e ~ l a t o ~ tone, there was growing supportfor devolving any regulation to a lower level, be it regional, state or local, which, in theory, would be moresensitive and sensible,

120

edicare’s Politics: 1966-90

* 60 reserve days may be used only once. ** Neither Medicare nor Medigap insurance will pay for most nursing home care. *** To the extent the three pints of blood are paid for or replaced under one part of Medicare during the calendar year, they do not haveto be paid for or replaced under the other part.

1997 Part A monthly premium: $3 1I with fewer than 30 quarters of Medicare-covered employment; $1 87 with 30 or more quarters, but fewer than 40 quarters of covered employment. Most beneficiaries do not have to pay a premium for PartA.

* You pay the $ 1 0 0 Part B deductible only once each year. ** Federal law limits charges for physician services (seepage 20) *** Part B pays for home health care only if you do not have Part A of Medicare. **** To the extent any of the three pints of blood are paid for or replaced under one part of Medicare during the calendar year, they do not have to be paid for or replaced under theother part.

edicare’s Politics:~ 9 ~ 6 - 9 0

S

chart shows the features of the standard plans.

te: There are also two deductible (~1,~OOout-of-po~ketexpenses:) lans based on plansF and J.

of the decade was not among the major rican national politics, In 1991, only 3 ricans polled r a n ~ e dhealthcare an~or ortant issue facing the country (Gallup Poll, presidential campaign, however, widespread inct issuesof American medinto brief but intense conflict. First, therewas the tares, which federal officials r e ~ l a r l y as away to reduce the federal bud et de~cit. Thatissue momentarily he the debate between and Clinton c a m p a i ~ swhen Director Richard claimed in July 1992 that ~ e d i c a r eoutlays would have to callyreduced if the budget re t o be substantially lowered. The otherset of political issues the emergent politics of universal health insurance in the Os-both the realization that an e~traordinaryconsensus had emerged about the need for far-reaching change and the presumption that, if elected, Clinton aimed to act on that consensus. are and themedical concerns of the elderly reced~dinto as the battle over the Clinton health plan d o ~ i n a t e d S during 1993-94. It was only in mid-1995, when the Medicare trustees forecasted the program’s trust fund “ins01v~ncy~~ by 2, that broa$ public attention was drawn once again t o Medicare. pite this atte~tion the p r o ~ continue^ a ~ until 1997 with few dra-

124

The Politics of Medicare Reform the in

1990s

matic shifts in its administration, financing, or benefits. in thesummer of 1997, however,was major change. The tive adjustmentsin dicare’s financialstructure,alteration of the an experimen terms of its payment various health plans, and medical savings accounts-all with i m p o ~ ~consequences nt for care’s own administration. Thiswas not a well-thought out, considered reform of a popularprogram r e q u i ~ n gadjustment. What happenedin 1997 was,like the original enactment in 1965,a ratherpressured, highly uncertain set of policies, adaptations to a transfo ed political envint (Oberlander, 1997). e context for the 1997 edicare changes reflected two long-term forces at work in American politics. One element was the wearing down of the faith in government-and ameliorative social pro~ams-that heyday of the Great Society. had been central to Medicare’s birth in the The second was a form of fiscal politics that emphasi~ed the consequences of the aging of the bab oomers, p ~ ~ i c u l a r l strain they would put on both dicareand Social yearsahead. ~ u i l d i n gon the deficit politics o OS, the sel~-st~led Street 1 financier vocates of generational equity-fi~res ter Peterson and senators Durenberge inate theview that without 1 Security wouldbecomeunafl‘ord ey, 1990, 5). This presumption of gr ss In the future edicare adjustment in 1997, precisely ricanshort-term budget circumstanceshad improved one’s expectations at the beginning of the d e ~ a d e This .~ would not be the first, e last time, that distorted a s u r p r i s ~ w o u l dmark only time that theperc

uring thel992presid~ntial c ~ ~ p the a i ush ~ ~dministration proposed a “cap” on der to reduce forecasted federal health S billion. Such a policy, edicare, let alone Medicaid. ~conomistsadvis paign issued direwarnings: enforcing such caps reaching healthcare reforms, would destro cost-shifting from Medicare to employme t-based insurance’ andleac to the loss of millions of jobs (Thorpe, 19

e a ~ a ~ e of n iConcerns n~

125

126

The Politics of Medicare Reform in the 1990s

former attorney general Richard Thornburgh, widely attributed to Wofford’s advocacy of universal health insurance, turned the attention of the nation’s political commentators t o the troubled state of American medicine. The nation’s reporters-and many of its politicians-discovered that a broad social consensus had actually emerged over the 1980s that American medical care, particularly its financing and insurance coverage, needed a major overhaul (Hacker, 1997).

A NEGATIVE CONSENSUS ON HEALTH REFORM Had George Bush won a second term as president, deficit politics and Medicare would no doubt have collided head-on. The campaign flurry of excited criticism from Democrats generally and the aging lobbies particularly would have made that all but certain. But President Clinton faced different problems in acting on the bold campaign promises he had made t o reform American medical care “comprehensively.” It was no longer disputed that the American system of medical care-enormously expensive by comparative standards while leaving roughly one of six Americans without insurance coverage-required substantial reform. The critical unanimity on this point bridged almost all the usual political cleavages-between old and young, Democrats and Republicans, management and labor, the well-paid and the low-paid. The U.S. spent more and felt worse than all its economic competitors. What’s more, nine out of ten Americans told pollsters in the early 1990s that American medical care required very substantial change, a consensus that was also reflected in polls of Fortune 500 executives (Marmor, 1997b).This was the encouraging news for medical care reformers, whether in Congress, among interest groups, or in what would become the Clinton administration. The bad news for reformers was, as had been the case in earlier decades, a bitter truth. A consensus on the seriousness of American medical care problems did not signify agreement on the shape, magnitude, or priority of those problems. Nor did a negative consensus bring with it agreement on remedies, as was amply demonstrated by the battle over Medicare’s enactment in the 1960s. Policymakers and politicians are often surprised to discover that an overwhelming public acceptance of the need to address a given problem does not guarantee any consensus on what the best solution is to that problem. Public acceptance is merely a precondition-a crucial one, to be sure. But public acknowledgment of a problem does not ensure that an agreement can be reached on a policy resolution. In fact, the more complex the

128

eform in the 1990r;

care expenses from public insurance compani~s and

edicare, or through the “managed competition” quently proposed-financial controls on Medic would s~~~~as well as restrainmedical costs.’That, in turn,W risked introducing another element into the fray: the genera fiict ~etweenolder ~mericanswho felt entitled t o Medicare’s benefits an increased to its present as serious. Critics could have been expected to seize on the image of “greedy geezers’’ as aplausible explanation for the nation’s budget and otherwoes, (Though this view has never attracted majority support, it has been widely advertisedand, in its less form, commands respectful attention.) of unaffordability is a very different viewof ~nderlying thisc the proper role of government in social welfare policy. The advocates for reducing America’s programs fo elderly, such as the ~ e r i c a n for s GenerationalEquity (31990) an ConcordCoalition (19921, espouse a more limited role for public p S in general-something closer to opposed to the social insurance ideology erican social policysince the depressio~. he enthusiasts for deficit reduction turne reand Social Security inthe and 1990s. ion of federal social welfare ,especially those for children and youth the in R e a ~ a ~ u era, s h left littleelse but the elderly programs to turn to for fiscal savings. Of course, these two conceptions parallel almostexactly the welfare and social security approaches d i s t i n ~ i s h e din Chapter 2, and the charity and middle-class p r o ~ a m sanalyzed in Chapter 5, In this W a ~ o u the t criticism of social in~urance the occasional portrait of the elderly as excessively demanding, Throu~hout the 1980s and 199Os,political and fiscal conse~ativeswere able to rally attention and concern for their ~ r i ~ h t e n i nbudgetary g portrait of the present and the future,The curthey repeatedly insiste ,would be deprived of economic well-being because of the excessive allocation uadagno, 1989). This claim of generational inequityproved intermittently divisive in the social policy politics in these decades. Indeed, the pres that most prominently emerged-~mericans for en era ti on found its fortunes waxing and waning (Americans for Generational Equity, 1990).Much of their forecastingwas unjustified hyperbole and, beyond that, therewas no documented evidenceat all that theAmerican public washostile to the country’s older citizens or to Social Securit~(Jacobs, Shapiro, and Schulman, 1993).Yet, the regular

132

Politics The

of Medicare eform the in

1990~

issemination of the assertion that theUnited ~ t a t e could s not afl‘ord its level of~enerosityto the elderly without harmin future h en era ti on^' the context in which care came to be understood. The! S of

crises are sel-

continue to be h retirement in intense. Like the periodic references to “crisis” whenever fund comes within seven ye ams are broadly popular-as

EL

A ~ e ~ a t i ~onsensus ve on ~ e a l t h Reform

133

usibly suggested that theUnited States could have save er year in administrativecosts alone by cuttin urers andgoing to a single government insure^ and ~oolhandler,1986). potentialadvantages of Canada’s ~ ~ t i o ~ a l r, and no matter how seriously study groups Clinton regarded the idea as

who distanced himself from the

alliances would not be guaranteed to receive any additional benefits or acker, 1997’).As in theearly 19?Os,Me~icarewas once again subordinated to national health reform. This t e, however, the supression was more out of fear of antagonizing edicare constituent^ than out of optimism of the reformers. resident lint on hoped to produce by the end of his first term a rent amalgam of the fragmented pieces euphemistic all^ called the 6 6 ~ e r i c medical an care system.”Yet this approach quelled neither the concerns of the e l ~ e rnor l ~ the fiscal anxieties of critics. The el

134

edicare 1990s Reform in the

not believethat theproposals adequately protected their interests.Nor id the critics believe that this approach ad~ressed theproblem of further necessary CO are expenditures. attempt to gain the derly for its major reform the administratio ct, propose adding some addidicare benefits: coverage for prescription drugs, as well as care for the seve abled. The issue of long-term care was o t h e ~ i s enot address surp~singly,these modest carrots to win the support of y. Testifying before CO rocess, Judith Brown, emphasi~ed th the worry that “individuals who decided to join the Medicare program would be subject to higher cost~sharin~, no cap on out-of-pocket costs and less enerous low-income protections-in short, worse covera available through regional alliances.’’ response with language clearly sugg among the elderly’s mostp r o ~ i n e n t tration hadfailed to rally s u p p o ~ pressure group: “We are deeply disappointed that t would not provide the same coverage for Medicar would for younger populations’’(House Committee 1993).Yet Brown alsowarned that alliances m “Currently,there is a syste special vulnerability of th n. ...For those who are most physicallydependent on the system, we believe that itis prudent to preserve a program witha good trackreleastuntil the new system has provensuccessful.”Ironically, t P withheldsupport both because the proposals might result in in health alliancesreceiving worse benefits than under traedicare, andbecause the healthalliances held out the possib@tt@r benefits than ministration’s reform plan provided no clear proposals for bringing Medicare expenditures under tighter control. This omission guaranteed that edicare would, at some future point, once again come under political attack, pecially conside~ng its substantial impact on the federal budget. 1995, Medicare constituted 10.5 percent of the federal budget,c o ~ ~ a r to e d3.5 percent in 1970 ( 1996,2). In the end, of course, the Clinton administration’s effort t o enact “comprehensive”medical care reform ended in humiliatingdefeat. The plan’s slow death in September1994 prompted a furious and continuing round of blaming, exculpatory rhetoric, and scholarly reconstruceluding Fallows,1995;Hacker, 1997; einmo and Watts, 1995; White, 1995; Yankelovich, 1995).It is

The 1995

ust tees Report and Claims of Insolvency

135

ing, though, that even if the Clinton reform plan would have failed to confront the most crucial concerns of the elderly W dicare expenditures W he problem of cost-sh to control me~icalc afford the ~ o s t sof b

to reduce the fe raints of what it of ana aged com~etition and regional alliances, leavin

did not remain so for very

am’s promised ~enefits.

13

eform in the 1990s

From ~ e ~ i s ~ a t i v e~ m 199~-96 ~ a s s e to

dicare “Reform”

in 1997

137

the same social-insurance principles as Social Security pensions, the goal was to provide universal hospital coverage as an earned benefit, rather than as a charity payment, to all those who had contributed during theirworking lives. As explained in ~ h a p t e r5, only a surprising last-minute move by overage for physician services in 1965to ut unlike hospital coverage, physician y premium payments from current beneficia~es federal tax revenues. Because general tax revenuescan -but not out-projected shortfalls in paying for physician services have simply been coveredby additional general revenues, y increased premiums, or by t b a c ~ s i nexpenditures. As a conseuence, there have never been dicare Part B crises of the form associated with Part A.It is onlyprojected shortfallsin the hospital trust fund that have t ed therecurrent crises over age. Perversely, the same so the use of bankruptcy ~nancingof hospital services that was so critical to gaining political ace has-through st political vulner ttacks of the pro ence with the trust fund demonechanisms can be for the politics e of a trust fund is more than t e of ~art. ~It hasvery real political impli~ationsand arisen at predictqble points in has established, the three 95-all came at the point that edicare’s actuaries p r o j ~ c t the e ~ trust funds exhaustion withins e u e ~ m appearing vulnerableaccordcted ~nancialshort n, critics as well as S solvency” to make program oubles of the trust fund provide a seemingly prudent rationalefor t r a n s f o r ~ i n g t h e p r oitself ~am (~berlander,1995).And it was just such an attack thatwas triggered by the 1995 trustees’ report.

epublicans, led by then Speaker of the House Newt ~ i n g r i c hbol, stered by their victories in the1994 congressional elections, and united

..

I

140

The Politics of Medicare eform in the 1990s

ould agree on not only the most far-reach in^ smce its enactment, but reforms strikin licans had unsuccessf'ully demanded in 1995 ~ ~ b e r l a n d e1r ,

he ~epublican-con-

one of the key issues ...whether edicare could and should be made more like the private sector in which, s u p ~ o s e ~ lsavings y, were being while employees were being given a choice among types of cove was to save money in ways that reflected ex tself: through some mix of tightening o f the payment] systems, correction of the pro~lemswith the Me ~ r o ~and a perhaps ~ , higher charges both! The Balanced Budget Act to beneficiaries. The a oney inthetraditional way, whileincluding measuresto edicare more like the ~ ~ v asector t e insurance world ( ~ h i t e1, 29). (~berlander, 1999) *

The mix of' traditional an nontraditio~al forms of cost control an reform was projected to save substantial fe at was not anticipated was the reluctance o f ciaries t o take up new options, ~ h i c meant h in turn that traditional cost control woul minat@ theim~lement~tion oft

1

c

A

1

The Politics of Medicare Reform in the 1990s

144

avoid enrollin time. Critics yould ude, however inac-

nizations wer

lar with some in 30 years: why did the le~slation pass when it did and in thatform? The rationale for reform was simple, but cannot explain either the on itself or its implementation. The ch care sector that swept the nation in the d care revolution-provided for some advocates a model for edicare. At the core of the reform perspective was the belief‘, as Jon rlander has written, that edicare should subs tan ti all^ increase enro~lmentof [its benefici esl in managed care plans” (Oberlander, 1995).To do so, according to supporters, promised greater cost control, widerchoices available to Medicare’s bene~ciaries,improved medical quality, and, most prominently, b ~ n Medicare ~ n ~in linewith private sector developments ( armor and Oberlander, 1998).None of these claims were (or are) obviously true and little of the debate

The ~ e ~ i ~ c e ~ f ~o ofe~ 1997 ~ s

145

addressed what many analysts knew to be exaggerated claims (Oberhite 1998). It is not this private sector rationale that explains the Medicare of 1997, but more complicated combinations of politics, polic in the political climate surOne must look first t rounding Medicare. The 1 public understanding of Medicare's mmatic assumptions was one r ~ a s o n social insurance roots and me vulnerable to fiscal, philosophical, and adminisin the mid-1990s. To understand how a broadly supcould shift from the status of sacred cow to endangered the level of analysis to broader elements in . In particular, it means emphasizing the t of more than two decades of q u e s t i o ~ n gthe s of the New Deal and t h 1990). It also requires attendby the bipartisan a ~ e e m e nto t reach a balanced budget e the very difficult political task of making rest~ctionson

r the country could not continue to aRord ms it had enacted earlier-set the stag ime, but did not determine precisely when. The timing of' major policy changes-whet~er in governments or large firms-is almost never a simple matter of responses to worsening pr~blems.That is the p~rspectiveChapter 5 id en ti fie^ as highly misleading, the view of a government as a rational unitary actor measurs, i d e n t i f ~ n gthe costs and benefits of various remedies, the best solution to the problem at hand. Thinking of the care reforms this way explains neither the timing nor the content of the policy changes, let alone their operational conse~uences. What is required t o explain the reforms is the conjunction of relevant policy ideas with both political o p ~ o ~ u nand i t ~conve~tionallyunderstood problems (Tuohy, 1999). Looked at that way, the timing and the content of the 1997 legislation are not really puzzling. Most simply put, the ideas e m ~ e d d ~ indthe 1997 reforms-both traditional and innovative-had been around throughout the 1990s. Th Republican takeover of the Congress in 1994 gave the new majority a special bar~ainingposition with the president over any big fiscal measure he strongly s u p p o ~ e dSo, . when President Clinton took on a balanced budget by 2002 as his central com~itmentin 1997, that made a

1

eform in the 1990~

allowed each to claim credit for balancing the federal budget.13 It was that bargain, onefew ericans understood9that makes sense of the just as mostAmericans had no few in 1997 had any understanding transformed.

satisfactory account of what happened to edicare between 1995 and 1999 will require(and should prompt) nsiderable scholarly ars to come. The main featuresof th S promoted vouchers for rican social policy, but Pr ton vetoed the bill and ran his 1996 reelection camp defender of what later came to be called tradition vinced after theelection that a balanced budget was linto on made common cause with a longstanding~epublicanarticle of .But with balancing the budget came the need to reduce sharply care's forecasted general revenue e~penditures and that in turn ntial cooperation.The price of that cooprms of Medicare along with mocrats, a development we *

eful, but largely unanticipated. The rized a Bipartisan Commissio~on the artisan title implied the prospect of ,the reality was a group of ideological op~osites.The commission’s leaders-Senator John Breaux (D., La.) and Con~ressman .,Calif )-were both well- now^ rowth of entitlements generally and social insurance prodicare particularly. And for the most part they used the rk to advance their own vision of ~ e d i c a r ereformn of 1995 adjusted andrelabeled as “premium support,” met with the fierce opposition of the liberal Democrats on the commission and the whole effort came to a close in March 1999 without a formal reendation. The stalemate ensued because the S required a supermajority (at least 11 of 17 members) to transmit a formal proposal to the Congress and the president, andseven of the Democrats firmly opposed the Breaux-Thomas plan. Though the commission disbanded in March, the battle over edicare reformwas hardly over. Thecommission chairmen introduced their proposal in the Congress in May 1999, and their bill

14

The Politics of Medicare Reform in

the 1990s

prompted weeks of hearings and substantial med then, is the t ~ n c a t e dsketch of what took place. require the full detailsof how this surprising storyunfolded to understand its key determinants. First, procompetitive proposals like the ~ r e a u ~ - T h o plan ~ a s were among the available reform options in partbecause of the tireless work of policy entrepreneurs inside and outside medical the care ~ommunity (Oliver, 1996).Second, the Republican domination of the Con 1994 came to limit shaa~emocratic president CO Lively accomplish with over whether to balance the b blican proposals t o “CU -and did so successful1 balanced budget bill was to can majority would have to find be politicalcredit for both parti would require substantial red tures thatboth parties could place in 199’7 thro nd innovative policy adjustments i for cost control and what app 99 for what amountedto a policy turnaround, a transformationof Medicare into aversion of Clinton’s o ana aged competition. The reason for this is complicated to do with the conversion of Republican leaders to the id for Medicare.This began with Congressman the prodding of the America of~increased lly s u p p o ~ i v dicare’s e~penditures,became CO vouchers were the best way to cut Medi incomes (Castell~lanch,1999).The same a erican Health Systems, lobby a rs were also persuaded dicare was to change t tlement. For these g r o ~ p sand their in straightfo~ard.As long as HCFA wa control toolsto rein in hospital and p faced a concentrationof payer power Vouchers, onthe other hand,would 1 effect a Medicare global budget. B voucher system would shift the ris aries andthe plans theychose. This is not the place to discuss the sub-

Notes

149

stantive policy issues raised by vouchers,topics that a t this writin not been ade~uatelyaddressed (see armor and Oberlander, t it is clear that the theoretical appeal of a managed for ~ e d i c a r ~ w i vouchers th renamed ‘‘premium ~ u p ~ o ~ ” - g a i n ebacking d by I997 from ~epublicanswho had once railed against virtually the same policy when Bill Clinton and his task force ~ r e s e n t their e ~ comprehe~sivereform proposal in 1993.Yet when the commission cochairmen intro~ucedtheir plan in the C o n ~ e s sthe , disputes that had stal some thin^ of a roller ded on the public agenda, but either the seriousness of its remedies for them.

1. The increase in public concern over health care was quite dramatic in the early 1990s. Although, as noted, only 3 percent of Americans ranked health edicare as the most i m ~ o r t a n issue t facing the country in 1991, by 1992 it was 12 percent (Gallup Poll, 1992,160), and by 1993 the figure had grown to 28 percent (Gallup Poll, 1993,168). 2. For a comprehensive analysis of the political and program cations of the 1997 ~ e d i c a r ereforms, as well as of the “flip-flop” politics between 1995 and 1997, see Oberlander (1998). 3. This recalls the lag between public perception and reality Chapter 7 noted about the implementation of DRGs; crisis talk continued at the very time the rate of medical inflation declined, 4. As already noted, the Clinton administration did incorporate cost fiscal strategy. Those reductions were less stration and not overtly identified as an

5. Another analogy is useful here. When the United States declares war, no one shouts that the Department of Defense is going to run out of money. There is, of course, debate over the wisdom of the military engagement and disputes over the willingness of Congress to pay for the additional war-related expenses. However, no one would contend that the increased expenses due to a new military e n g a g e ~ e nwill t cause DOD to become bankrupt. 6. The 1995 Trustee Report concluded its gloomy assessment of the Hospital Insurance Trust Fund’s short-term and long-term prospects by stating: “We strongly recommend that the crisis presented by the financial condition of the Medicare Trust Funds be urgently addressed on a comprehensive basis, including a review of the programs financing methods, benefits provisions, and delivery mechanis~s,’ (Rushefsky and Patel, 1998,45). 7. Although the Contract with America did not address health care per se,

150

edicare the Reform in

1990s

the congressional Republicans turned their sights on

tainly the numberof' Id put more financial ility of social insurance programs in the future must also take intoaccount the overall ratio of wor to nonworkers (both thoseunder 18 and those retired). That ratiowill, according to current estimates, remain relatively constant between the 1990s and 2020, rising to a level through 2040 that is still belo the dependency ra erica experienced in 1960 (National~ c a d e m yon an ging Society, 1999,l ly 7 million (out of 39 million) recipients hadenrolled in (New York Times,

enrollme,nt only o 6 million out of lcarerecipients by thespring o while Medicare Sa were little used and none of the other typesof private plans were even availrk Times, 1999). In 1997, the CB0 projected 1999 enrollment levto havegrown much faster, to7.3 million, and of private plans at close to one million (CO Office, 1997, 1,2). 11. ~ l t h o u g h t h advocates e of edicare + Choice were vocal s u p p o ~ e r of s free markets as a means t icare + Choice operated by ercent of the average cost. ting fixed payment per us, in fact, the savings ee Notes 9and 10. This 13. victories onfeatures other of the writes, rson the GOF' lost have may its bid t ffered some losses in the House in 1996, but it transformed the agenda, altered the terms of debate, and helped unleash a private sector transformation of the health domain thart is entirely consistent with its long-term political project of balanc era1 budget, reducing feder spending, and promo tin^ the activis place of the activis arket-oriented approaches to health care-now even embedded in the ~emocratic bastion of social policy-have istinct winners who reap the rewardsof the redistribution of resources they enerate. It is the Republican basebusiness, insurers, some health care roviders, pharmaceuticals, movement conservatives, ofallthe members of the erstwhile No Name Coalition-that has profited from this transformatiorl (Peterson, 1998). 14. There was growing evidence 'vely controlled payments to Os began dropping ~ e d i c a r ernment premium payments were too low. See, e.g., the ~ ~ Z ~ iSun ~ o(Sepr e tember 23, 1998), noting Pruden ' S decision to withdraw from the Medicare markets of Maryland, California shington, DC., New York, New Jersey, and parts of Florida. *

152

The Ideological Context of

be expanded. Second, I will turn to trying to understand how and why the development of procompetitive ideas for public policy came to play such an importantrole in Medicare debates duringthe lasthalf of the 1990s and will in all likelihood beset against the “traditional” assumptions inthe yearsto come.

The striking fact about the origins o character of the 19 r

edicare is not the surprising thought they coul not what they U hospital insurancefor the or in the end did) include. of illness was the anreasonable provis

ety’s aspiratio~s, the legislation of 1965 was but a first step ina series of pra~maticefforts to make medical care universally accessible and its costs morefairly and sensibly distributed across groups, redistributin~ the financial burdens from the sick to the well and thepoorer to wealthier t h r o u ~ hsocial insurance taxes. ppropriate standards of access and dis n of costs are not, however, directly confronted inincremental,aticadjustments to the political possibilities of the moment. are’s philosophical ~nderpinni~gs-to the extent ey were clear in 19~5-were largely negative?~pecificationof what edicare was not than what its are was not tol care is removedfrom the market and direct1 authoritie~ and their contractu~l agents. That W ized medicine” for the old, a negative reot~peself-consciously icare’s reformers. Nor was .Its immediate predecess enacted in 1960-was precisely that and acc (see pages 27-30).Thus, if medical care was to be understood as t good and if means-tested programs to assure its availability nacceptable, it stood to reason that some other fo ment interve~tioninto the medical economy was require

The s t ~ c t u r of e

enacted-~ocial ~ e c u ~financin ty rtA),and premi~msplus g e ~ e r a sician expenses (Part f3)-had a clear political expl .. arly understood social insurance rationale. The rhe was there, but the~ublic7s understand in^ of the distinctions betwe~n vate health insurance nefits themse~ves,pro

with essentiallyno serious r did not cover the cost

* .

ond the continuin ce premises did providea general insurance covera~e.But either the ~ r o ~ r a mreformers ’s nor subseq~entdefenders have defined precisely the character of that rightent of protection it promise edicare p h i l o s o ~ his~ m0 medical care emphasi~es, nity For the elderly, circum~ta ily all differ, s o m e t i ~ e sprofound nses, from this point of view, wou would receivethe same treatment, uld be irrelevant to the tr conce~tiondoes not r e q ~ i r ~reatmentof any p a ~ i c u l a rclass of ailments; it re uires instead that whatever treatment is otherwise a ~ p r o p ~ abt e ovided free o f the 7 andthe like ediments of class, r e ~ o n srace, at treatment, not luxurious treatment, heroic treatment, or unli cetic equality is as justifiable as t be. ~ o n s i ~ e r a t i o n0th s ould bear on the extent of treatm available.

l54

The Ideological Context of ~ e d i c a r e ’ Politics s

ception, the United State

the test of efficacy In the 1980s and

all the medical care passing

,a number of c o ~ m e n t ~ ~ o ~ ~

~ ~ d i c u r~hilosophical ~’s Roots

155

rary (and often financially comfortable) old.In common language this was the Medicare version of the alleged “generational inequity” of America’s social policy toward the elderly. This set of claims raises a number of different issues,only one of which is the topic of reflection here, The most controversial question is whether there aregrounds for restrict in^ the care available,even if efficacious and sensible on costbenefit o rounds for the elderly, because of alternative uses of those same fundsfor other Americans. This issuehi~hlightsclaims of generational unfairnessthat became more prominent as fearsabout the affordability of an aging population became more widelydisseminated inthe early 1980sand then again in icare(and Social Security)have always thelate 1990s. Because enjoyed broad (if not de informed) public approval, many critics shifted to com~laints that these popular p r o ~ a m scan be neither afforded nor managed. Thatled some thoughtful defenders to consider what acceptable constraints on benefits for might be. Could one, for example, justify the dep~vationof ef5ective care for the elderly in a way the elderly themselves might view as ju

orman Daniels provided gn approach t o this question in the late 1980s that illuminated the issues at stake (Daniels, 1988).If one pits the care of an older person against that of a younger one, the calculation compares the “utility”of one person to another. This formulationthe interpersonal compa~sonof utility-is fraught withdi~cultiesno social philosopher has solved. But were the question posed differently-comparing benefits over one individual’s lifetime-areasonable case can be made for con cent rat in^ more resources earlier rather than later in life, If the right to health care is understood as the right to return to fu~ctioning afterillness so as to complete one’s plan of life, then a more completed life calls for less expenditure-holding illness constant-than a lesscompleted one.The claims of the 50-year-old7on this account, dominate the claims of the same person at 80 and do so for reasons i n t e l l i ~ ~tloethat person. It is as if one were allocatin resources over one’s lifetime and embodying in that decision ti social contract: the older the citizen, the greater the restraint. This formulation made a genuine contribution to our debateover the allocation of resources for different age groups. It dif5ers from the formulation of generational conflicts in animportant respect. The policy of restraint applies not to others, but t o oneself at a point in thelife cycle. The basis is not the gains to us as opposed to the losses of others, but the distribution of care to us over time. It is hard to imagine a more important philosophical cont~butionto debates over Medicare than this distinction between the fair treatment of age and the fair treat-

1

The ~ ~ e o lContext o ~ ~ of~ l

Rise

The

o ~ ~ r o c o ~ ~ e tIdeas i t i v eabout

157

medical resources to the elderly and theirproviders. But not, for a variety of reasons, adjust itsbenefits to the mo medical circu~stancesof that group: namely, chronic ailm the attention to the future fiscal problems of Medica notewort debates since the early 198Os, it is ~articularly latively little sustained attentionto justifying the care the es and does not finance. discussion took place when the debate over politics in the1995-99 period. returned to the center stageo f ~ e r i c a n Instead, what trans~iredwas 'a fiscal and i d e o l o ~ ~ a l d i a l o ~ e t h a t m i ~ e dfact with fiction, fear with claimed prudence, and fantasy with sobriety about the future,The re aries aswas the debate of 1965 legislation covered. In part this f a guiding philosophy about the ecially am a ~ i c u l a t i oof~ required. The lackof clarpolitics made Medicare's y. Viewed thii way, underental~.~~e,~umptionsp r e r e q ~ ~ sfor ~ t eanti

ompetition among manients andproviders had

. have already seenhow M e d i c a r ~enactment ,~ representedan initialstrate 'c ste toward universal health i~surance under social es were not tightly bound to they developed, and over time can medicine largely ignored edicare's increme~tal lost its force, as the early reformers aged and the understand in^ of what social insurance 'red waned. I n the quarter century from the sta S t o the economic boomofthe 199Os,another setof

The Ideological Context of

158

ogical context in which edicare’s political battles were mmonly described as the e of a procompetitive ethos, this family of notions depended on a set of dichotomies: markets over ernments, competition over regulation, i ~ d i ~ d uchoice al over colle s e ~ u ~ tHowever y. misleading these simple formulations, theybecame f the externalenvironmentsetting theterms of the crucial el debates o care. iC

From our perspective at the end of the twentieth century, it mi seem obviousthat thedebate over Medicare reform should focus onto S like m a n a ~ e dcare, competitive health plans, and p~vatizat uch an idea, however, would have been unthinkable at the time of edicare’s enactment in the mi -1960s.For the qua the ~econd World War,~ m e ~ c medici~e an ex~erience expansion: in scientific research, inthe to distribute these gains morewidely in and in the vigorous effo edicaid, and the community menreforms of the 1960slike tal healthmovement. In theearly 1970s the debates about er of important ways. Claims of “ tion strained ~ e ~ c public a n conti~uedto escalate faster t again received prominent atte the former, celebratory rhetori here of medical care debates then, esigning remedies for a medical W costly, too complex, and too callous in a growing number of uninsured. It is worth remember in^ as well that at thistime it was assumed the necessary tools of reform WO extensive governmental planning andmore ~ g o r o u regul s costs of care, the quality of clinical practice, and the locati of capital investment. By the end of 1970s, however, this reformist perspective had been discredited and debunked by many.To promarket critics, the answer t o erica’s medicalwoes was less regulation,not more, rms became a dominant featureof policy debates ~ e d i c i n egenerally (Marmor, 1990). insulated in the 1980s from these newer ideological c esis of those procompetitive ideas and how they came to be applied t o erican medicine proved to be crucial to edicare’s fate in the late 1990s and will beimportant beyond that. With these considerationsin 1

.

The Rise of ~ r o c o ~ ~ e t i tIdeas i v e about ~ e d i c u Care l

159

mind, we nowturn to the rise of procompetitive ideas in ~ e r i c a medn icine over the last quarterof the twentiethcentury andits likely bearing on debates in theopening decade of the next century. t least three factors made the increased attention to competitive n understandable development in the 1970s.First, traditional ns about access to medical care and the to take a back seat to worries about care-to federal programs, to employers, and uninsured and poorly protected could not compete for the public’s attention with the nuinely ominous numbers on medical inflation. In 1970, the Unitedates, ossessing astrongand growingeconomy, on health care (U. Bureau of the Census, eak economy still eling from the twin ’ decade, the propo~ion was 9.1 percent (ibid.). d 11 percent of the ~ t a t e was s spending ab0 A second factor was the general ascendance in academic writing of a particular microeconomic approach to analyzing public policy, or more accurately,the ascendance of economic analysis that had aderegulatory mission.3 Theantigovernme~t,free market enthusiasms of economists identi~edwith the University of Chicago conventionally represent this development, but others who would hardly be associated with that ike Brookings economist Charles Schultze, were also influ,145).Indeed, it is fair to say that theneoclassical ‘can economists of this period madethe growth of economic analyses of public policy a factor in thisassumptive shift.M1 of this provided the intellectual groundwork for making procompetitive reforms more plausible in medical care.4 third factor bolstering the so-called competitiv~movement wasthe vernment, a ~ t i r e ~ l a t o sentiment ry to the wider ugh for many this movement is synonymous with Ronald Reagan’s presidency, it in fact had earlier roots. Richard Nixon’s two presidential victories celebrated the limits of government and o n if his ad~inistration’sdomestic polappeal of market c o ~ ~ e t i t i even icy actions actually expanded federal social policy s i ~ i ~ c a n t l y , can commentators often forget the extent to which Jimmy Carter ran for resident on an a n t i - ~ a s h i n ~ oantigovernment n, platform, portraying himself as a down-home farmer who, with pitchfork in hand, was headed to the nation’s capital to slay the federal leviathan. The increased le~timacyof this general political ideolo~-most obviously consequential intraditional areas of governmental regulation like t r u c ~ i n airlines, ~, and ~ n a n c e - ~ a d eits application to medical care

The Ideological Context of

160

acceptability of these

proc

l i v e presumptions

An e ~ ~ a n s i oofnthe role of com~etition,consumer choice, and market incentives r a t h e r t h a n g o v e ~ m e ncontrol t is more likely to create the much needed stimulus toward greaterefficiency, cost consciousness, and responsiveness to c o n s u m ~preferences r so visibly lacking in our present arra~gementsfor providing medical care (President’s om mission for a National Agenda for the ighties, 1990,78--79).

imilar claimsreceived wid ead coverage in tra e journals, in the o p ~ l apresst r and on Capit anced under the label of ishable. They varied n medicine, the rationa their mechanisms’ implementabilit~, ’ rablethreadsof procom were some connectio~s ost impo~antlyt thecommon ideolo~cala nd competition blurred the $ubstantial differences a r n o n ~ ~ net eonceptions of how the medical care market should bt ! *

merged first in the 1970s emphasiz~d that ~atient!~ f their medical bills and face the eco~omicconsesurance was the major p

162

The Ideolo~calContext of ~ e d i c a r e ’Politics s

ical system organization would be rejected if the effects were brought about through alack of competition or by the domination of the market by a particulargroup. These were the threebroad conceptions of a procompetitive medical care market and, as noted above, they were not necessarily independent of each other. Antitrust action could be used t o eliminate barriers to the development of competing groups of medical professionals, a result compatible with the provider reorganization approach. The costsharing approach might well permit indemnity insurance with fee-forservice reimbursement to compete with the insuranceprices of prepaid oup practice. These instrumental connections, however,were less important than the ideolo~cal commonalities t o which the proponents appealed. AJl three procompetitive proposals rejected go~ernmentalr e ~ l a t i o n in the abstract andespoused correcti in^ the market theyso admired. Procompetitive advocates carefully chose their label,in partto draw an explicit contrast with earlier reform approaches that relied on direct government provision of health insurance. The implication was that other reform proposals were anticompetitive and prore of the intuitive appeal of procompetitive proposals was that they represented a form of autore~lation, thesuggestion that the “invisible hand” would sort out the allocation of medical care without the heavy hand of public regulation and management.6 The fact that a system of competing health insurance plans requires extensive r e ~ l a t i o nto work never received the attention itdeserved in this period. And that in turn helps to explain why, over time, the disputes in American medicine pitted idealized models of market transactions against portrayals of actual governmental programs, warts andall. This would be obvious in the late 1990s in thesuggestion of the”3ipartisanomm mission on the Future of Medicare that vouchers and other market devices would right the wrongs of the Medicare program in thetwenty-first century.

Not only was there a perceptible increase since the 1970s in the attention paid to proposals to make American medicine more’competitive, but a dramatic shiftsimultaneously took place in the language of medical commentarythat will continue to affect the discussion of medical care reform in the future. The tradition~l doctor-patient relationship becomes, in competitive talk, provider-consumer,or buyer-seller, or supplier-deman~er,~ e d i c i n becomes e just another business. The fallout from this refashioned language came to be a threat to the professional ethos of American medicine and by the 1990s had altered the

The Rise of ~ r o ~ o ~ ~ e t Ideas i t i v eabout ~ e ~ i Care ~ a l

163

balance of presumption about what to expect from doctors, hospitals, and health insurance. Traditionally, much of the 44income” doctors, nurses and other medical practitioners earned was noneconomic: self-esteem, respect from the community, and idealization as selfless professionals. In castin medical care as no d i ~ e r e nfrom t other industries,medical als were reconceptualized. They no longer deserved (and i no longer received) the noneconomic benefits of public este tial patients, and the gratitudeof families. The stereotype of the medical professional as a self-interested (selfish) agent of business fed on itself And, over the period under review here (1966-go), the public9s 19 em for medical practitioners indeed fell sharply (~tevens9 Part of the decreased satisfaction with~ e r i c a medicine n undo edly arose from worries over costs, Although it is impossible to establisha clear causal connection between the demystification of the medical profession and the increased costs of doctors, the phenomena went hand in hand. For example, despite sharp increases in the ber of new physicians, doctors’ incomes grewby 30 percent from to 1989, [This contrasted with an average 16.3 percent increa other full-time workers over the same period (Fuchs, 1990).1 Physicians’fees €or procedures were appro xi mat el^ 234 percent higher in the United States than in Canada (Fuchs and Hahn, 1990), and their takehome pay was more than 50 percent higherthan thatreceived by Canadian doctors (Evans et al., 1989).It should not besurprising that to the extent professional medical work was increasingly regarded as ordinary commercial activity, higher physician fees (and incomes) were increasingly understood as the resultof market power or greed rather than a professiona~s just desserts. atientdissatisfactionbegat doctor dissatisfaction. ease in incomes, the prestige of the medical profession decreased over the 19’70s and 1980s. Doctors complained that they no longer enjoyed the autonomy they once had. Rather, elaborate andexpensive procedures including utilization reviews, requirements for pread sion ce~ification,and otherforms of second-~uessing proliferated. survey in 1986, €or example, found that 60 percent of physicians strongly opposed third-party reviews of their ~ospitali~ation d (Harvey, 1986).In an often-~uoted 1991 article inthe ~ t Z ~ n t i c , r reported that more than 30 percent of current physicians would not have attended medical school had they known what their futures had in store (1991,71). The language of ind rial economics and co~petitivemarkets did not just aRectdoctors spitalsandhospitaladministratorsrecast themselves in new terms. The hospitaladministratorincreasingly

l64

The Ideological Context of

became the chief executive officer. Assistantadministrators were as vice-presidents for their respective functions. These! changes were not mere1 Rather, representec. they e encouraged to think of a hospital as primarily a. ate organization-and the concomitant shift in administrativ~! away from medical staff and toward professional managers-. has inevitably affected the way Americans regard medical care. It; sume unanimityon this and equally wron sicians and nursesthi he point here is narrowe nding of ~ e d i c i n ehelped to deflate public confihe probability of proposals threatening profes-. sional autonomy. As hospital ad~inistrators way to chief executive officers S), so too did their incomes c e. By 1990,hospi an average base salary of over $ 00: those receivi averaged an additional ~125,OO e that the salaries of these chief administrators increased by 8.5 percent (on Consumer Price Index grew by 4.6 percent this took place in themidst of a supposed “crisis”in healthspending. There are, of course, advantages to treating medical institutions like ~ospitals as businesses. Improved capital b~dgetingand financial and accounting systems are all vital in getting better value for health itures. Nor can one pretend medical practitioners are all selfless S concerned only for the welfare of their patients. Clearly ecoanomic motives are important. Indeed, many of the concerns of those who subscribe to procompetitive strategies areidentical to those oftraditional social insurance advocates. Asymmetries of information and between doctors and patients require attention no text. Likewise,whatever one’s personal p h i l o s o ~ h ~ ~ of entitlement to medical care, uncertainty about the efficacy of alterselecnative treatments and the problems of moral hazard and adverse tion all need to be addressed. But the rhetoric of the competitive reform helped to d sets medicine apart from other industries and it was in part that made it possible for a emocratic preside~t to “proon to marry ideas of universal hea insurance preceding chapter noted. That in turnwould edicare that were not even dimly i ~ a ~ n in e d the early 1990s. ainst government-financed or “provided medical care, procompetitive advocates regularly claimed that governments are not

165

The Rise of ~ r o ~ o ~ ~ e t Ideas i t i v eabout

competitive proposals

red to offer speci~c insurance companies are not creases, rather than elimi-

procompetitive plans were not robust in precisely this crucial res~ect-na~ely,their implementability. They onditions were just right. ons required to eliminate reform implicitly ackno

the conclusion that other ~ ~ s i n also e s ~

one hand, and the failed socialism

166

The Ideological Context of

earlier, all called for a myriad of restrictions on practitioners, payers, plans int reover, what came to be called mana~~d-com~etition opposite of an unfettered market.On th d extensive ~overnmentregulation, inde derably more wide-ran for by more traditional national example, in the economic stru le ~ m o n ginsurance plans encou of managed competitio~,some firms would have triedto and healthy clients. In rural areas,where it isoften difingle medical p r o ~ d e to r cover the populatio~, com~etisible. To avoid suc competition d e s i ~ new ~ d or

i~surance-a

with real systems (and, unsur~risin

The Rise of ~ r o c o ~ p e t i tIdeas i ~ e about ~ e d i c a Care l

167

It was in thatcontext that Bill Clinton came to select managed competition within a global budget as his reform dream. That choice was, gested, fateful and doomed t o political controversy. te competition in medical care to make it acceptable, t and increases insurancecoverage, the role of government is plain and the attackers have a field day. In place of national health insurance, the Clinton reform effort left a sta~ematedpolitical outcome-symbolized by the literaldisappearance Tan in ~eptember 199~-followed by an unprecedented in American medical care arrangements. Though this is r any extended discussion, it is important for this ~ssessmentof the role of competition to note whatever connections there were betweenthe long buildup of competitive ideas andthe Clinton debacle. story was oneof great hopes, great changes, a The hopes of some of the procompetitive adv of either consumer sovereignty or organizational reform-were a combination of universal covera eand competitive conditions inthe pricing and delivery of medic care. The Clinton reformers also hoped to combine competition in the delivery of care with egalitarian financing of the basic insurance. Theirhopes, as we know, were dashed completely. Yet the story was more s i ~ i f i c a nthan t that.By capturing the interests and ener es of so many reform actors, the procom~etitive ent siphoned e n e r ~away from other s t r a t e ~ e sof reform in an public life, acy of this rise and transformation of competitive ideas in medical care will be with erica for decades. ~ i t h o u the t regulation proposed bythe Clinton plan, the advocates of what is termed mana etition were set loose. By i 9 ~70~percent , of Americans wer ost of those plans managed little else but costs and, in doing so, restricted the choices of both medical professionals and their patients. In the name of expanding choice, American medicine went a period of extraordinary reduction of choice. Aggregate health e at lower rates in the mid-lg~Os, but can thatbe misleading. The ratio of medical care inflation to general inflation, for example, was not markedly reduced. But the rise incosts to American firms did slow for a time, with the externalizing of more costs-both fiscal and psychic-to patients andproviders, Finally, there has beenenormous change in the ownership and behavior of insurers, hospitals,medical plans, and drugfirms, Organizational consolidation describes much of what has transpired: the owth of multihospital chains like Columbia HCA and the spread to nation~ideactivities of prepaid group practice organizations like

The

168

Ideological Context of

ais~r-Permanente. In addition, there was shiftin of ~nancialriskation of new firms as with carving up capitation payments-and the o manage medical services than to constrain wh ,and reduce or slow the rateof growth in thepric of this constitutes an e ~ t r a o r d i n set a ~ of ironies competition, choice narrowed. In thename of consumer responsiveness, consumer cornplaints shifted in character and increased in a n ~ e r In . the name of ~ e r i c a entrepeneurialism, n ~ m e r i c a nphysicians turned oyees of' firms ownby others. Choice without , thout choice, this ca res the set of ironies. The p as a result, will be increasin~lyfought out in stat tures (see Rich and White, 1996). There the dispute^ are over what' d e ~ e of e public regulation theres ~ o u l dbe over the enormo~s arno~n~' rivate regulation that has already transpired.Very few observers would have pre~icted the subject controversy in the state legisla-, res of the mid-1990s: issues like ve-by mastectomies, limits of onel on for the deliv of a child, or gag rules on what 1 their patients about the limits of their manage titive enthusiastsdid not predict such dis sen in part because of the role of their S of ~ e r i c a me n ince the 1970s there has been a constant and broad ~ i s ~ uover' te v e ~ m e nin t capitalistdemocracies.The argument^^ in favor of increased competition-in medical care enerally and particularly within health insurance-received fa responses than atany other time in the period since t r. The United States responded iff'erently to this thanother industrial democracies. In Europe the argument for incre y took for granted that universal enti insurance was a given. ents over the role of cornpetition were part of the broader di over whether univ health insurance coveragewas desirable and im result, the story is the rise of procompetitive ideas without a counter^" part to the guaranteeof insurance covera~e.

1. This section follows the analysis in 2. Indeed, by 1999 managed care and health insurers were two of the fou:r industries that less than a majority of~mericans said wouldthey trust: tobacco and oil were the others (HarrisPoll, 1999). 3, It may be hard to remember, but at one time economics helped to provide justi~cationfor government i n t e ~ e n t i o nand regulation. The principal

~otes

169

motive for the increased application of economics to public policy after World War I1 was the expandingof government as a p ~ v e y of~ large r public programs entailing major expenditures(Melhado, 1988,35). do cites a personal telephone conversationin which StanEnthoven reports that he had readSchultze’s book, The bZic Use of ~ r i u a t e ~ ~ t e rshortly e s t , before devising his Consumer Choice ealth Plan and that he regards his (own) book as the “‘working out” in the health care economy of an example of Schultze’s general propositions ( hado, 1988,371. 5. See, for example,Christianson and cClure(1979) for trad and Demkovich (1980) coverage in the pop r press and on Capitol 6. By “allocate medical care,” I mean determine who will get what medical care. The mechanism employed by the market is usually, but not exclusively, price. It is importantto note that anoften-unstated assumption of procompetitive advocates forhealth care is that the market itself can notonly efficiently? but also a ~ ~ r o ~ r i a allocate t e Z ~ care, The support for this normative claim is rarely given.

This Page Intentionally Left Blank

ches one needs to

?

he ~ r e c ~ d i n ~ c h on a ~ t e r icare s ~ o s t e n ~ c t mdescribe e~t a nd fiscal issues. Those politics dominated by administra

' -

172

edicare's Patterns Politics: and uzzles

relatively little attention to disputes over the me erlyandwhether the~rogram was adequat 1971, were years o f "accom rown's a ~ p r o p ~ aphrase. te

-

at the cost of built-in i n f l a t i o n a ~pressures. In the 197Os,in contrast, there were substantiv hanges in benefits (for example, to cover dialysis and the disabled). t much more political a t t e n t i o ~was given to

Puzzle One

173

understandable, cannot substitute for a causal account. Put another way, the narrative o f what happen d cannot answer why those patterns emerged. To do so requires integrating three factors largely implicit in Chapters ‘7 and 8. One has to do with contemporary interpretations about the state of the economy and political order at any one time and the impact of those beliefs on the defi ion of Medicare’s problem^" and the range of plausible “remedies.” edicare’s standard operating proc~dures-and the accepted organi ional ideas they reflectedconstitute the second ca ry o~causallyimportant factors. And, third, there are the changing buti ions of political power within the formal institutions of government, especially shifts in the party affiliation within the C o n ~ e s and s between the Congre§s and the administration, All three of these causal factors are important: the first to define the problems that were on the political agenda, the second to specify the range o f options that were operationally available, and the third t o account for what choices were made among the options available to deal with the problems identified. Just as with the explanation for edicare’s enactment) the scholarly explanation e’s politilevels of 1 history requires attention to these quite dist

A s t ~ k i n feature g of edicare’s evolution since 1965 has been continuity-in basic financing sources, range o f benefits, types o f regulation, , less o ~ ~ o u s l beneficia~es. y, Put another way, for a program erstood by reform advocates as the first step to ~niversalhealth no dramatic expan§~onof‘ insurance, the puzzle is why there has b who is covered or for what medical costs. contrast, for example, the two large national st politics of expansion in Canada proceed universal hospital insurance legi ation and implementatio then physician coverage, 1 8-71..) The absence of expansion does not, of course, m n no change in policy, p ation, or coverage, as edicare’s inclusion in the early 19 abled and ~ c t i m of s renal failure ustrates. Nonetheless, the limits on as does the expansion beyond preexpansion require explanation j vious limits, ne approach to why edicare has been constrained in expansionu n i v e ~ s health ~l in rance stalemated for most of the twentieth century-is what we have term a “structural” account of political tructural explanations

Reflections on Medicare’s

174

lilies: PuzzlesPatterns; and

n with the constitutional allocation of political authority, which means in the United States the fragmentation of institutional power expressed formally as separation of powers tutional f r a ~ e n t a t i o nmeans th likely in the United States, other more unified political authority. something I close to super.. majorities are required to overcome dativegauntlet civics books describe as “how a bill becomesa 1aw”Asecond structural constraint o n olitical action is the distribution uld and should not es or political contest ,but the underlyin eological commitments those slogans a e. ~ i e w e dthrough this #analytical lens, tics is one of hobbled majorita~anis with majority support for universal health insuranc~? decades since the 19~0s-the dispe~sion pportunity for derailing reform plans. In ambivalent about underlyin~ideology can public is at best the positive role of n domestic life. regarding state interference awkwardly coexists 1 mntin specifisocial welfare p r o ~ a m s ”( *

ral account should by now be reasonre’s enactment emerged under extraor stances: a super-majo in the aftermathof the Kennedy assassinatio~~ and the o v e ~ h e l m i n mocratic victories in the presidential and consional races of 1964.Absent such ma’oritiesone should not be sured at limits on major change in r continued stalemate over universal health insurancecov There is one counterfactual that might well arise inconnection with this structural approach. If olitics and crucial to expla make a huge mistakein 1965 in limitingthe been on the agenda in less propitious times? hey, to use the verhavetried to mak(3 nacular, “stupid”not to demand more? Shoul edicare an instrumentto reform merican medicine then rather than at tation to it? To answer such questions requires t s the ne~otiations o ndings of the p a ~ i c i p a ~in enactment, details presented in the narrati nalytically highhted by what the first edition identifi lison’s model of ureaucratic politics’’ (Allison, 1968).The m one understands those reformers, the less “stupid” their choices seem. But, equally, the riskaverse decisions of the 1960s, however comp ensible, wereconsequential. They rested on presumptionsabout dicare’s incremental *

Puzzle %o

175

expansion that simply did not turn out to be the case, as Chapter 9 e~phasizes.

ow can one explain the seemingly puzzling fact that in th presidentialadministrations committed to afree-market agreed t o impose a d m i n i ~ t e r eprices ~ on an hospitals and ians? Itis certainly not the case thatcturalconstraints erican constitutional design entailed related group payment for edicare’s hospital bills. grounds for believing this W largely circumstantial, dent of a special, momenta^ confi ration of setting, participants, and interests. Rather, the regulatory pattern of the 1980s years and has been sustained. Here, the most promisin approach is a hybrid, something inbetween the constr mental structures and the momenta^ alignment of political forces. This is the ex~~anatory approach Chapter 5 characterizes as “or zationa1”-paying attention to “stable, institutional rules and re1 ships, the inertial weight of existing arrangements, and ideological mmit~ents that malleable, are but not in the short run” (Graetz and ashaw, 375). The existing rules and relationships for edicare policymaking in the 1980s were those we can call “insider politics.” Therelevant participants were the congressional com~itteeswith jurisdiction,the interest groups mostaffectedby edicare’s paymentpolicies, andthe administrative officials in HCFA-all of whom dealt with each other regularly. To the extent the Reagan administration wanted constraints on ~ e d i c a r e 7hospital s outlays, the range of relevant options-absent a s~per-majorityof Republican legislators-were those acceptable gressional ~ e m o c r a t s i n l e a d e r positions, ~hi~ to managers in tal community. The congressiona and to signi~cantsector emocrats presumed re1 dicare’s history of regulating hospital prices. The interest some familiarity with DRGs from experiments in New Jersey. HCFA officials had fostered and indeed financed the experiments that made DRGs an operational option. out such understanding, ~edicare’sexpansion of prospective bursernent and tighter fee schedules during the Reagan-Bush era of Os would betruly anom~lous. Whether we call this micropolitics or insider politics, the puzzles it resolves are very different from those

176

Reflections o n Medicare's

olitics: Puzzles Patterm and

changes whose'explanation demands attention to large-scale changes in the external political en~ironment,

tisan ~ommlsslon

electoral shifts,in turn,ine

what problems are highlighted o:r of remedies is considered eas sib le or

There are a number of explanations for the flip-flop that aresimply It was not the case, for example, that public opinion oliticians were feeling pressure to make manag dominant withinMedicare (Aaron and Reischaue a1 of managed care withinthe broa eeipitously in the 1995-98 period ote, in addition,that si enactment public opinion has never been ra major innovative force i edicare ~olieymaking. opinion has been influe 1, it has set limits on to constrain prog icare, p a ~ i ~ u l a r serving ly er, 1995).Insofar as voucher proposals were a ic benefits indirectly, there was no demand lic. (P~blicopinionmay doom voucherrefor ctoral shifts in1998"-or changes in the announced posiepublican pa~ies-play dem~ndsfor a major transfor~ationof Medicare in so~rcesof traditional political science ex

Puzzle Three

help here. Interest a role in populariz

177

edical care industry surely had are and competitive models of t that was close t o a con t itself explain the unexp

n is a complicated (and unplanned)combination of elements, ich alone would have produced the resultantoutcome. Chapter 8 noted the conversion of Repu~lican leaders to a mana~ed com~eenamed ‘‘premiu~ and the Fe~eration of 99

icy conservatives

efits expanded, competition at work, and choice to be enhanced, the conventional claim by the late 1990s was that Medicare would finally be ready for the twenty-first century. of the 17-member Bipartisan he work during l illustrated the riseto prominence of the view that Medicare required transformation. The commi~sion, as noted, disbanded without aformal recommendation, little more thanmonth, a two devel ments tookplace. First, edicare trustees reported that the ho tal account was in muc er condition than anyone had ~ ~ e d i c t e d just year a before. nerally rose only by 1.5 percent in 1997-98 and the Part would have enough funds to pay its bills until 2015. r his was hardlythe crisis requirin~immediate called into question the presumption o f unaffordability that had dominated edicare debates from1997 to early 1999,

17

and

Puzzles Politics: edicare’s

Patterns

The headlines prior to the commission report’s release captured the

each of these pre

defensible analysis. Yet, the conventional competitive strate dicare reform did omenoonewould not constitute anine~plicableanomaly. It w have expected at theb e ~ n n i ofthe n~ ecade,but whose lineage is clear with hindsi~ht.Once the Clinton administr~tionembraced “competi=

ent coalitions will make in the first ~ecades of the tw~nty-fi~st c~ntury.

could the ~ e ~ c political a n sys-

about the effe~ti~en n~u$ion bout what

come as no

~on~lus~on

181

pose, structure, and future of the edicare program. As the first edition of this book showed, the criti of Medicare’s original formulation were defeated, not converted. The enactment of Medicare came in the wake of a seismic shift in the electorate and a transformation of the congr~ssionalbalance of partisan power. The puzzles of this final chapter illustrate the interplay of causal influences outside o those more closely related to the program’s organizatio ate constituencies. for example, there is no ~nderstanding the fr~strated expant ambitions of Medicare’s architects withouttaki the impact of the Vietnam war controversies and thest 1970s onthe evaluation of the GreatSociety’s reforms and thepolitical fate of nationalhealthinsurancein that period. The Reagan era brought withit not only dividedgovernment but also the creation of a would powerfully (re)shape the overall public policy d, finally, as this chapter has emphasized, under’s fate in the1990s requires attentionto the context in which the Clinton administration experienced humiliating defeat over health reform in 1993-94. That context changed substantially through the rest of the decade. With Republican control of the Coness, ~emocraticcontrol of the te House, and th a balanced budget in place by ,the options for and theirpolitical prospects were bound to alter. Nonetheless, these ions are not simply a matter of reading the bills introduced in rec ~ o n ~ e s s e Nor s. theysimpleextrapolations of trends in progress. Rather, as with dicare’s origins, efforts to change the p r o ~ a mreflect presumption^ about the role of govern~ e nint American life and the purposes of social insurance in paying for medical care. Medicare’s fate will soon be intertwined once again with proposals to expand insurance coverage for the nation. Thatmuch the developments in thepresidential campaign strategy of ~emocratic contender Bill Bradley made plain by the fall of 1999, Equally obvious the controversies about “managed care” and whether Medicare should embrace or reject its expansion are on the agenda of American politics. The agenda’s range, however, is subject to transformation by both electoral andeconomic shifts andno onecan claim with certainty whatthe political and economic environment will be like a few years ahead, let alone decades. is that thepolitics of What can be concluded, however, consist of two types of policy disputes. First, therelatively narrow policy disputes where the ideolo~calcleavages in the larger public are largely irrelevant and second, those relativelyrare but i m p o ~ a n dist putes where the deepest divides in the American polity are crucially

Reflections on Medicare’s Politics: Puzzles and Patterns

relevant. That is what the politics of the edicare pro~ramreveals, history. both in its origins and inits pro~ammatic

1. It is also useful to analyzeMedicare’s politics by the program’s substantive features. Jon Oberlander has done precisely that, and I have relied in Chapter 8 on his generalizations. Oberlander found three patternsin Medicare policy disputes: struggles over benefits (with apattern of nondistributive politics), over financing (wherethe pattern has been one of crisis politics), and over federal payments (where the politics have centered on the budget). Benefits policy means what Medicare does and does not pay for-including long-standing issuesof whether prescription drugs andlong-term care should be included in theservices insured by Parts A and B. Oberlander describesthe “pattern” in thisareaas“non-dist~ibutive politics.” By that,hemeans simply that edicare’s development since 1966 has not been one of expansion of benefits, espite the existence of political incentives that [according to scholars like n Oberlander, 1995,5) might have genedicare came in the 1970s to and thedisabled under social olds. Medicare has not experienced persistent expansion of its health insurance benefits even though thosewho stand to gain from the program-both insured andproviders-have been well- organto demand expansion. econd, the “core feature of edicare financing policy has been crisis poli(ibid.). What Oberlander ans here is that the structure of Medicare’s financing arrangements-the sources of funds ranging from payroll taxes to general revenues to beneficiary contributions-has “created recurrent bankruptcy crises,” as Chapters 7 and $emphasized, prominent,“focusing”events in the program’s politics (ibid.). The third category is Medicare’s regulatory politics, the program’s policies affecting “payment to medical providers .. and the medical practices of these ~roviders,’’ The main pattern here, according to ~berlander, “has been budgetary politics” in which the regulation of hospital and physician payments has largely responded tofiscal pressures andbecome intimately “intertwined with the federalbudgetary process,” The key generalization isthat “crisesin edicarefinancingexplain the timingand political via ility of [most] of edicare’s regulatory reforms” (ibid.). This characterization was crucial to Part S account and ~ighlighted in the reflections of the final chapter. 2. In fact, the public was voicing increasing unhappiness with managed care in the privatesector at precisely the same time that Washin~on began to seriously about applying the managed care concept to Medicare (Harris /.

hical perspective of the firstedition of this book was for a young scholar.It lists the books, articles, docuso ments,interviews,andotherprimary ded in writ in^ about the political battle ove ment. It is not so much evaluative as revelatory, e I looked, what I took to be i m p o ~ a n t ,an care analysis in the wider scholarship on Arne second edition, I have faithfully reproduced these b i b l i o ~ a p ~ i cpa la ~ s iblio~aphical ~itations” and “ r Readings.”)This is consistent ion as it was both because edicare might want t o . challenge the original inter~retation an because that interpretation rested on materials available then, not now.

over the period since the first e was published in 1 voluminous. I will not attempt to characterize its range etail since that has already been done exhaustivel~ in Jon ~berlander7s 1995thesis, ‘ ‘ ~berlander’sbibliography is now chigan’s ~ i s s e ~ a t i oServices n a when his book on edicare is p u ~ l i s h ~ dInstead, .) I want to cite the major works on which this edition hasrelied and suggestto the reader what might be helpful on particular topics. feature of the scholars hi^ on the politics of origins and enactmenthas been the limited attentiondevoted to recon-

184

Scholarship: Medicare

A Selective

have extensive influence on detailed policy making” and he substantiates that a r ~ u m e nwith t extensive primary re enactment of‘ both ~ e d i c a r ein 1965 and the ervice in 1946. In short, Jacobs challen es one of‘ the major conclusions of the first edition: the “limited of mass opinion ..in this 12).For those interested in ublic policychoice” (Jacobs, 19 the role of mass opinion in the formulatio~of public policy, Jacobs’s

186

Medicare Scholarship:

A §elective Review Essay

ance, one that has had an important effect on (mis)understandings of edicare. That, however, is a topic for a separate essay. here is a sketchof those works on Medicare’s politics on whichI have relied in ways that citations might not fully reveal. The political analysis of ~ e d i c a r ein operation has been relatively quent, almost all article length, and much less connected to the ral studyo f ~ e r i c a n politics than was the case W e program’s enactment. N o comprehensive book-len enactment politics has been written, though there are S of near-books. The most extensive is Jon Oberlander’s 1995doctoral dissertation, which will be published in anexpanded form within the next few years. As Part II’s conclusions and citations illustrate, I have relied considerably on Professor Oberlander’s primary scholarship. The second waspublished in 1999by Professor Tim Jost of State’s Law School(Jost, 1999). Concentrating on the role of courts edicare’s history, Jost has produced the most corn d account so far of the forces shaping the politics cymaking since 1966. His conclusions are largely compatible with the generalizations of Part 11: congressional domination of much of Medicare’s policymaking, the salience of‘ fiscal politics in the period since 1983, the relativeweakness licopinion inexpanding benefits and the relative S of public opinion in constraining large-scalereductions of be these respects, the scholarship of Oberlander and Jost complementone another and provi~edeither inspiration or support for the generalizations of Part I There are a number of very helpful accounts of monographic literature on whichI have drawn and to which I commend ention. Mark Peterson’s writing on the Congress, cited extensively apter 8, is avery good and recent example. Whilenot concentrati edicare, Peterson’s analysis of what happened to c ymaking in the 1990s is especially useful to an und are’s political fate in the latter half of the decade, Larry Jacobs’s later scholarship on public opinion(Jacobs, 1999) shows how the views of the mass public constrained efforts to restric care’s benefits, but didnot otherwise play a major role in affect1 dicare’s policymaking in the1990s. His scholarship is consistent withthe contentions art I1 and reinforces the independent, but similar conclus erlander’s work. I should mention as well the article by Larry t ~ ~ i n a n ~~i enu~i ean ~ ,artic that brilliantly distinin the ~ e a l Care ishes between the complicatedpolitics of edicare reform in the 1990s and the relative ease with which analysts describe the “problems” that “need” fixing (Brown, 1996). Brown’s earlier article on the “periods”of Medicare’s politics provided the initial framework for my *

*

The ~it~rat~re on ~ e d i ~ a ~dministrative re~ Politics,1966-99

187

discussion of what struggles the program faced over time (Brown, 1985). It would be wrong to give the i ~ p r e s s i o nthat no political sci~ntists have written books on Medicare in operation. Rather, the few that have are quite easy to identify. Judy Feder published in 1977 what was then a fresh investigation of how the hospital industry and Medicare had dealt with each other in the edicare battle, both during the l e ~ s l a t i v e edicare’s early years of operation (Feder, 1977).David writing in the 1980s, took as his central subject the political struggle over paying hospitals that culminated in the widely noticed G (~ia~nosis-Related ~ r o u reform p~ in 1983 (Smith, 1992).These monographs, valuable in themselves, do not attempt to place range of‘ conflicts into a broader portrait of A m e ~ c a npolit turn b ~ e f l yto those that have tried to do so. Two general books on American politics and medical care policy deserve special m~ntionin that regard. Rushevsky and Patel’s analysis of federal health policy ma kin^ in the 1990s portrays the institutional political fate in that decade was decided. ). The same is true for the broa who survey the scholarship o how how that illuminates the fate not only ety of federal health programs ( ~ e i s s e r t ~lluminatingin a quite different way is Jacob Hacker’s bo te of the Clinton health ref or^ effort (Hacker 1997). Th ere explains better than any other analysis why Presi ton selected the “ competition’’strategy for his “comprehensive” reform pl r’s analysis of the role of c o m p e t i t i ~ ~ conceptions of he m is crucial for und~rstandinghow those resurfaced in 1995 in Republican Medicare proposals and ted over time to a wider audience, c ~ l ~ i n a t i during ng 1999in the thom mas legislative proposal. I have relied to a considerable extent on Hacker’s work for my understand in^ of the ~ o w t hof proptions of h e a l t ~reform since the 1970s. d i ~ ~ r epolitics ’s have been hampered to date by the also been somew

article by Larry Brown was The same dating applies t o ow America slouches rather n moves decisively towards national health insurance (Nlorone and re’s post-enact~entpolitics icare’s regulatory policies

edicare scholars hi^: A Selective

s e ~ i c eresearch s and writ“sins”to some). Thebulk of‘

The ~iteratureon ~edieare~s ~d~i~~strutive

189

entative of how re is a conven-

labor between political and policy analysts. In pa^, it also illustrates that policy analysts present their views within the context of accepte notions of what ~oliticspermits. The result is unrealistic-both in the “ove in what the future portends. of the work of political and Brown o f ~ o l u ~ b iTheda a, Skocpol of are are cited, but hardly cine and my b ~ have writa n ~ h i else n ~ 1. or other sociolo~istsand ~ o l i t i c ascientists ten over the past quarter centur~~.) The most ~ e n e r o uview ~ of this is that the division of labor has benefits and oon is an ~conomist.The less generous view is that, for the understanding of public pr political economy approach is a necessary, if not s ~ ~ f i c i eco nt producin~real i l l u ~ i n a t i o hich political conThere is another tentions are present are contestable.

190

Medicare Scholarship: A Selective Review Essay

Consider, forillustrative purposes, the claim by roo kings' economist^ enry Aaron and Robert Reischauer that “[flivecentral factswill shape, debate on the future of edicare” (1995).~ c c o r d i nto~ schauer: edicare enjoys overwhelming support among the American electorate, a popularity that is well deservedbecause the program has achieved all of its designers’ majorobjectives. Second, the cost of providing Medicare benefitsis projected to risevery rapidly and will exceed projected revenues by ever larger amounts. Third,legislative reform of the entire health care system isnow off the political agenda and likely will remain so for years tocome. Fourth, there existsa strong andbroad consensusagainstraising taxes.Fifth, dramaticchangesaretakinin the way healthcareis financed and deliveredfor the non re population. Theimplications of thesefactsarestraightforward.First, before changes are madee,policymakers will havetoassurethe general population an riesalike that the reforms will not compromise t h e a t t ~ b u t e sof the program that the public values so much. Second, Congress will have to act soon to restore Medicare% financial viability. Third, the measures thatCongress adopts will not be part of any major legislative effort to reform the overall health care system. Fourth, most, if not all, of the budgetary savings on Medicare will come from reducing federal paymentsto providers and raisingcosts to~eneficiaries, not from raising Medicare payroll taxes. Fifth, congressional reforms will-and should-bring Medicare more in line with the structure of h care financing and delivery that is evolving to serve the noncare population (4-5).

As Jon Qberlander and I have noted elsewhere, these claims are mixtures of plausible surmiseswith historical inaccuracy, possiblescenaras if they were open to only ios resented as certain fact, facts set out one interpretation, and forecasts of the distant future that are not rooted in theindeterminacy of political and economic predictions ( mor and Qberlander, 1998). Let me simply take on tion that congressional reforms “will (and should) bri in linewith the structureof health carefinancin~a evolving to serve the non- edicare population”-wh objection are obvious. n Note three featuresof this claim, There is first thec o ~ f l ~ t i oof,predictive and normative judgement. It is clear that both are important types o,f judgement, but they lose credibility when casually conjoined. Second, there is the recommendation that ~ e d i ~ ashould re be adapted to what itselfis “evolving.”Thisassumes butdoes notexamine seriously the belief that ~ e d i c a r must, e as practical a matter of avoiding resent-

The Literat~reon ~ e d i c a r e 5Asd ~ i n i s t r a t i v~~~ l i 1966-99 t i ~ ~ ,

191

ment, resemble the health insurance practices affecting other Amerior does the claim rest on any demonstrated superiority of the “evolving”practices. Instead, as Ilearned in alater exchang and Oberlander, 1998),Aaron and Reischauer are certain t cans will increasingly resent Medicare beneficiaries who choice of provider than they do. There is no credible evidence to support this claim and whatevidence there is suggests just theopposite. Another issue raised by politically presumptive writing concerns dictions about the political agenda over time. The c o m m e n t a ~on dicare, as with other programs, is regularly accompanied by cl about whatthe futurewill belike years and decades into thefutur ion about confident futurology,presented elsewhere,is that conons of partisan balance and economic circumstances cannotbe easily anticipated and that considerable humility, for political scientists as well, is warranted One of the most strikin icare’s political evolution is how the ideological cleav birth its reappeared, a in different guise, more than three decades later, Most reform advocates, for obvious reasons, claim an interest in “saving Medicare,” But the equally obvious truth is that theprogram still excites fundamental differences about the proper role of g o v e ~ m e n in t health insurance.For those who embrace its social insurance purposes, this would be satisfaction. For those who reject those principles as inappropriate, the fight over ‘ ‘ r e f o ~ i Medicare n~ is in fact about changing it fundamentally. For an interesting and illuminating discussion of these matters,see the 1999 reports of the National Academy of Social Insurance Task Force on Medicare, especially the one on “Medicare’s Social Role” ( ~ a t i o n a l Academy of Social Insurance, 1999). In writing the chapters of Part 11, I have relied much moreon the secondary literature thanwas the case with the first edition of this book. At the same time,my understanding of the political environment fating Medicare came from broader research and writing projects that did not have the politics of the program as its central focus. My understandings of the context of American social welfare politics i period 1966-90 are set out most explicitly in a coauthored work mor, Mashaw and Harvey, 1992). My views about American medical care politics in thisperiod are most fully discussed in abook of essays on ~ n d e r s t a n d i n ~~ e ~Care ~ Reform t h ( M a r ~ o r1994). , Finally, Iwant to acknowledge earlier versions of these chapters.h earlier version of Chapter 7 was published in American ~ o ~ r n a l o ~ ~ and hi~oso~~y i t y : the icine and again in Marmor and Mashaw, ~ o c i a l ~ e c ~ r3eyond R~etoric of C ~ i s i (Marmor s and Mashaw, 1998). Andan earlier version of Medicare’s relationship to the linto on health reform effortappeared in The A ~ e r i c a ~ n ~ o s(Marmor, ~ e c ~1993).

This Page Intentionally Left Blank

ical care oflimited duration for an injury or shorthysician usually but not always provides such care in an office, clinic, or hospital. S: E~penditures for d e l i v e ~ n gand m a n a ~ n g the nonmedical aspects of care (for example, billing, claims pro,and overhead). Included are (a) the direct costs e indirectcosts paid by other he non~onetary costs to patients

iduals whoknow nce claim dispropo~ionatelypurchase insuranceandincreasethe costs ofthe insurance pool.

coordinated conferences and ~ i s t ~ b u t information es regarding re reform; founded in 1991 by Senator John R, Rock~feller

eimbursement under which governmentandprivateinsuranceplans (“all payers”) pay amount for the sameservice. For instance, federal-state rams would not be able to reimburse ho

194

Glossary

lower rate thana private insurer suchas provider thus could not shift costs from o

re: Services provided to individuals who are not

inpatients in amedical institution.

appro~imately33 million members as of the late1990s.

provision and financing of US.medical care, : A trade association reprees, and medical administrators. Founded in 1898,it has ~ 0 , 0 0 0members, about a tenth of’ which are hospitals. ) : An organization founded t as of 1999 represented 296,000 of this count 6009000doctors. : Both terms apply to hospital bills efers to the expenses of those are not paid. Free caretechnic debt usually (but not always) too poor to be expected to pay. e who reasonably might be refers to bills leftunpaidb

e : The nonprofit national organization of 69 independent co~orations that constitutes the oldest and largest private health insurer i United States and est third-pa~yadministrator of affiliates provide health insuranceto more icans. : The national health insurance system-~dminis-, 10 provinces-that covers the hospital care, outpaS for all ~anadians.Usually tient care and some presc are” is ~ n a n c e ~ ~ provincial tasa-tion. Private docto e practices bill the ~ r o v i ~ - . cia1 health ministries monthly; community-owned hos negotiate annual budgets with the provincial governments. The provincial governments set rates limiting the fees that providers can charge.

: A payment method in which a doctor or hospital is paid

amount per patient per year-regardless of the services used by the patient.The method is used by some American but is a form of reimburs ent found in many organizatio Lings. It is the way most tish and Dutch general practitioners are paid, t: Onewayof handling ;also known as gatekeeping. ,a practitioner determinesho of service (includingthat of specialists) a se management usually dealswith high- cost, seriously ill ;a case manager monitors services and can arrange for alternative treatments.The system is sometimes regarded as meddlesome, sometimes as helpful. : Insurance that pays for very large health ly associated with accidents or chronic illnesses and diseases, such as cancer and AIDS). In general,this covpensive and hard to find. : Free health caregiven by doctors, nurses, and hospitals. (In1956,the InternalRevenue Service mandated charity care for nonprofithospitals, to keep their tax-exemptstatus; thatruling was rescinded in 1969but many hospitals continue to provide free care.) : The ons soli dated Omnibus Budget Reconciliation Act of 1985.It requires employers to make it possible forindividuals who lose their health insurancefor various reasonsto continue to purchase such coverage for two years with their own funds, through the ern loyer’s plan. e: The percentage of medical costs, not covered by insurance, that anindividual mustpay. (Many plans pay only80 percent of hospital and doctor’s costs.) : A method for determining the price of health ms (the yearly amount that individuals pay for coverage). A community rating premium is based on the average medical cost for all covered people in a geogra hic area. The S Shistorically associated with nonprofit plans. Most of these plans abandoned when forcedto compete with commercial insurers in the1950sand thereafter. ~ n t ~ are: A range of services and care settings that patients may require at different stages of their illness. *

196

Glossary : The flat fee that must be paid by patients when they

h care-despite their insurance.Such “copays”range from nominal fees per visit (say, three dollarsat anH set limits. : A provision of a health care plan thatre~uires cover some part of their to hold down costs by deterrin sary care,or it may discourage necessary ca an be regarded as a1 forms include

their insurance : The amount a patient must

pay out of pocket before surance will finance s u b ~ e ~ u e ncosts. t (See

t o defend a ainst a otential

ification system

ber. (Sixty percent of‘ ~ e r i c a n sare insured through their own employer or that of a family member.)

sion. The law governs most private pensions and other employee laws that concern employee bene.The result hasbeen the exclusion from state insurance regulationsof the sel~-insu~ed health plansof many large companies.

nt that all employers offer and the Clinton plan, 80 percent) of small businesses seem to fearthat a healthinsurance m wouldbe so costly thatit would drive them out of business. Most analysts believe that the are borne by employees. costs of em~loyer ma~dates largely o~ernment benefits, includinghealthinsurance, nferred automatically to all eligible in are partof m ~ n d a t o spending ~ programs such as ,and food stamps. The first two of these protory taxation form of finance that underlies two do not. ent; the latter for end-stage renal ey transplants, enacte ed to determine the price of health e amount a certaingroup (such as the employees of a business) has previously paid for medical ser~ndemnityinsurance com anies most often use ex~erience when d e t e ~ i n i npremi ~ m rates. Small businesses,however, can be hurt by experience rating, becayse one employee's can cause a s i ~ i f i c a n tincrease in the

of reimbursement where e canbe fixed (a fee derived frommore com~licata (relativevaluescales). he patient, in insurance lingo. : Lists of approved drugs, which are the only ones that

scribed by physicians participatin~ in certain pro The list generallyexcludes more expensive options when cheaper, equally effective drugs are available. gs essentially identicalto brand-name vers' name and~ i t h o uthe t higher price of the o nal roduct. mount, set by an administrative body, that conthe funds available to pay for medical care services in a ,or nation. Usually covering government s ~ e n d i n ~ surance payers,global budgets are most often associiversal health insurance, underwhich all indi~duals in a countryare covered.

198

Glossary

: A. trade association made up of the %S: Payments made by a healthinsurance firm to patients or medical providers t o cover all or some of the costs of medical care.

national health statistics. Createdin 1977. osed of manufacturers of medical d nostic products, and health care information systems, founded In

firms zation, nsurance founded in that write and sell

(usually monthly), and patients seek treatment from its affiliated medical s t a ~The . goal is to provide rms often called e-in which a provider is supposed to act as gatekeeper to spensive medical tests. Often subscribers pay a small mount at each visit. Patients in HMOs have variable limits on their choice of doctors. Staff model. Doctors are salaried and workonly for the HMO, often at a single site. el. Doctors are organi~ed in an independent partnership, corporation, or association that contracts only with the H Networ~model. ~ombinestwo or more types of HMOs. hrase that has several meanings: (1)the network^ tals, and insurers thatwould, in the Clinton procontracts negotiated with regional )the benefits offered uals and companies; (3) methods of paying for health care. urns of money due to doctors in an HMO or other system that are not paid until overall volume period can be determined. Ifvolumeproves to be higher than

planned, enough funds are permanently withheld to meet preset e~pendituretargets. ee: A. form of health insurance

in which the insurance company for a may be equal to or less

A. form of medical pracsicians cantreat both HMO and private patients. ts are charged a negotiated rate, usuallyon a per e: ~nsurance pro~ded by an employer to the employees’ family members, who may or may not receive fewer benefits than theemployees.

A new type of medical plan-

uals. Such patients usually a ~ospital, nursing home, or : The a m o ~ nhealth t insurance companies pay for

200

Glossary : Harmful treatment or neglect of a patient by a doctor medical provider, which is deemed professionally unac-

ceptable. sion that means different things to di to efforts to control costs by usi doctors or caseworkers-to CO nate theuse of medical services by patients. to networks organized by insurance companies, pitals. h example is thetype of network ru octor, whodetermines the zed, that he or she willreceive. The patient's services is thereby controlled. Both a slogan and a set of ideas about rgely embraced by President Clinton as an early label for his reform proposal, it proved a complicated marketing term and was abandoned as a Clinton policy tag. The concept of managed competition combines market forces with ~overnmentregulation, Large groups of consumers buy medical care (or insurance for care) from networks of providers. Th to create price competition among those networks and both restrain prices and encourage high-quality care and responsiveness. The variation among plans described as managed competition is substantial. The label is accordingly of uncertain worth. : The federal-state h goncally poor. Enacted in 1 year, While program detai o state, statee all $50 billion o d the federal govtogether spent ernment spent $68 billion. paid for the care of 32.6 million people, spending nearly a third of its budget on are. iver: The formal process The most controversial U. icaid e l i ~ b i l ~while t y narrow. S it said it would finance. : ~ a l o g o u sto ind 1 retiremen1 and employees can tax-deferrec. contributions and employees can ~ i t ~ d r a ~ tof pay u ~coveret ds medical expenses. : The federal health insurance program for the elderly anc, disabled enacted in 1965 and started a year later. Its benefit!; I

'

202

Glossary

$832 billion-one-seventh of the entire U.S. economic output. The Congressional Budget Office estimates that the cost may rise to $1.6 trillion by the year 2000.

National Health Care: A misleading label for a health insurance system that covers all citizens and various other residents. Sometimes it is the designation for so-called Single-Payer version of national health insurance, particularly those modeled after Canada’s system. Under such a plan, the government sets all budgets for hospitals and fees for doctors and other providers. Oregon Plan: See Rationing. Per-Person Premium: A flat-rate health insurance premium, as opposed t o a premium for a family or one based on a percentage of income. Pharmaceutical Manufacturers’ Association (PMA): A trade association founded in 1958 that represents 88 companies within the industry that develop and manufacture prescription drugs. Physician Payment Review Commission (PPRC): Recommends reimbursement rates for doctors in the Medicare program. Founded by Congress in 1986, the 13-member commission is charged with analyzing Medicare payment issues and submitting its findings to Congress. Congress then decides on the policies to be used, and HCFA sets the actual rate. Play or Pay: A health insurance reform plan in which employers either provide their workers with a basic Health Benefits package (“play”)or pay into a government insurance pool. The system was popular in 1991 among congressional Democrats. Point-of-ServicePlan (POS): A feature of a health insurance plan whereby patients are financially rewarded for using a limited group of providers, but are permitted to seek out-of-network care at higher cost. Preexisting Condition: A physical or mental condition diagnosed before an individual receives health insurance coverage. Some insurers refuse to cover a person with such a condition; others increase their rates or refuse to cover the patient for a specific time. Preexisting conditions are the object of intense reform attention in 1994 as an example of how conventional insurance practices have hurt precisely those who need insurance most. Preferred Provider Organization (PPO): Under this system providers, usually organized by networks or panels, offer medical care for a set fee. Various benefits, such as lower Coinsurance and

Glossary

203

better coverage, create incentives for patients t o see “preferred” doctors; restrictions on caregivers are, by contrast, the disincentives. Premium Tax: A state tax on the payments made t o an insurance company by policyholders who live in that state, Price Controls: Government-set price ceilings on goods or services. In medical care, the term usually refers t o a physician fee schedule. Primary Care: The care people routinely receive when they go to the doctor. Primary care can be delivered by a doctor, nurse practitioner, or physician’s assistant. Doctors practicing family medicine, pediatrics, or internal medicine are generally considered primarycare providers. Prior Approval: A form of utilization review whereby an insurance company requires a hospital or doctor to get permission from the insurance company before providing care. Protocol: A guide for the treatment of a specific disease or condition. Qualified Medicare Beneficiary: A person aged 65 or older whose income falls below the federal poverty line and for whom the Medicaid program must pay all Medicare costs, including Part B premiums, Deductibles, and Copayments. Rate Setting: Refers generally t o a government’s setting of priceswhether for electricity, water, or health care. Maryland has had such a system for hospitals since the 1970s. Rationing: Any process that in medical care limits the services a person can receive. Allocation based on income is widespread in the United States, as are other limits. Rationing is unavoidable in medical care, although the bases of rationing are varied and differently valued. Reinsurance: See Stop-Loss Coverage. Relative Value Scale (RVS): A method of establishing differential fees for physicians’ services. The RVS was a 1992 effort by Medicare to shift funding away from Specialists, who were receiving relatively high Medicare payments, toward PrimaryCare practitioners. It bases the value of each medical procedure on its complexity. The conversion factor chosen translates the number into a specific dollar amount. Risk-Control Insurance: See Stop-Loss Coverage. Risk Pool: A group of people brought together for purposes of pricing insurance. Sometimes the term refers t o those who seek insurance

204

Glossary

but cannot, because of their medical hi story^ get it (a " the risk pool consists of every

A. form ofhealth insuran inister such plans,

with no int~rmediaries.

physician who has pu

i~sur~nce.

p a ~ does y not.

person or organization that pays all or part of expenses-but not the patient (the first party) or insurance companies. ospitals or other e government. The cost of such care is often shifted to payi atients or their insurers. : Those persons-estimated a t 15 million to 30 mil-

efers to a situation where all (citizens*

: A process by which an insurance company

for patients. : The number of physicia

ices that the ma

expect t o be provi

purpose, for example, a re,the idea arose in 1 9 9 ~ y to limit the federal government’s responsibility for financprogram. Then the conception was of a fixed sum available purchase health insurance with a minimum set of benefits. In 1999, the idea changed to a variable a m o u ~ tavailable to be used in connection with what was a . The technical term for this variable voucher, in 1999, was premium support,” as in the BreauxThomas proposal. : Similar to a tax. this method of raisin^ requires all employers t o pay a percentage of their payroll for their employees’health insurance. A small portion of the p r e ~ i may u ~ be paid by the employee. ers’ ti0 ee: Insurance that reimburses in~ who are injured employers for the costs of c o m ~ e n ~ a temployees in the course of their employment.

This Page Intentionally Left Blank

derson, Odin (1968). The ~ n e a s y ~ ~ u i l i b r i u ew m . Haven, CT: College &E University Press. Bauer, Raymond, A. Ithiel de Sola Pool, and Lewis Dexter (1963). American New York:Atherton, C a n t ~ l Hadley , (195 University Press. oomington: Indiana University Press. ams, Michael M. (1 Brothers. Edelman,(1964). The Symbolic Uses o~Politics.Urbana: Illinois Universit Eidenber~,Eugene and R orey (1969).An Act of Congress. NewYork: W. Norton. Feingold, E u ~ e n e(1966). re: Policy andPolitics. SanFrancisco:Chandler. F ~ e d m a n ,Lawrence (1968). ~ ~ v e r n m e and n t Slum Housing. Chicago: Rand Mc~ally, argaret (196~). Health ~nsurance for the Aged: The1965 ~ r o ~ r a m for ~ e d i ~ a rBerkeley: e. Institute of ~ o v e r n ~ e n tStudies, al ~ n i v e r s i t yof California, 88,26-28. ton, RichardF.(1972).Glass and Politics in the United States. Chapter 2. ew York: wile^ Harris, Richard (1966). A Sacred Dust. New York: NewAmerican Library. 6). ~rofessional Public elations and Politica~Power, opkins University Press, inio ion and A ~ e r i c a nDemocracy. New York: Knopf. anto, Philip (1967). The ~ o l i t i c of s Fede~al Aid to ducati ion in 1965. Syracuse, NY Syracuse University Press,

Part

20

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I

962). ~ a t i o n a l ~ o l i tand ics ~ederal

d Anne Somers(1961). ~ o c ~ o r~sa,t i e n ~and s , ~ e aInsur~ t ~

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delsandtheCuban merican Political Sci-

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.“Social Securit tem~er):~. re of Aged Through Social

ement in a Congressional Com~ittee.”~ ~ e r i c a n

ber):36.

~ o Science li~~cal

~ e ~ e r e n c to e sPart I

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at ion's Business (1962). Cited in American edical Association (196333): 52-53. ~ e Swe ~ u ~ l(1962). ic “Evaluation of Ways and Means Democrats, First SesNew Yorh Times (1965). dical Care Price Changes a1 (1968). “Emergency Medicare and Desegregation: A Special

’ ~ o s ~ iPractice t a ~ (~u~y):14-19,63-64.

nderson ill ~ ~ . 3920). S .S t a t e ~ e n t sentatives, 89th C o n ~ r e ~ s (1965). ‘“hy Eldercare Offers

Aged under the Social Seeurity before the Committee on Ways 87th Congress, 1st Session,

U.S. ~ o n g r e s (1961b). s ~ e s t i ~ o of n ySecretary Ribicoff, Health Services for the Aged under the Social Security Insurance System. Hearings before the ~ o m m i t t e eon Ways and Means, House of Representatives, 87th Congress, 1st Session, I (July-August). U,S, Congre~s(1965). Trends i n ~ u a n t i t and y Qu o ~ ~ e a lInsurance th Couerage among the Aged. Executive Hearings, s and Means Committee, ouse of Representatives, 89th Congress, 1st Session, 40-44.

Legislative Reference Service, Education and Public Welfar The ~ e d e r a ~l o u e r n m e n tRole : in ~ ~ o u i d~iend ~i c a r eto U S Library of Congress, ~ a s h i n ~ oDC: n , U.S. ~ o v e r n m e n tPrinting Office. U.S. Congress ( 1963). The err- ills Program, 1960-1963. eport of Subcommittee on Health of the Elderly, Special Committee on Aging, U.S. Senate, 88th Congress, 1st Session (October), 1-4. . Congress (1965a).Social S e c u r i t y ~ m e n d ~ e n0t s~ ~ 9Report 6 ~ .of the Committee on Ways and Means of H.R. 6675, 89th Congress, 1st Session, , US. ~ o v e r n m e nPrinting t Office, Report No. 213. W a s h i n ~ o nDC:

2 10

References to Part I ongress (1965’13).Summary of Major Provisions of House of Representatives 6675, the Social Security Amendments of 1965 as Agreed to by the Ouse, Senate Conference Committee, Committee on Ways and Means, 89th Congress, 1st Session (July 21).

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Social S e c ~ r i t y - ~I .. ~npublished ~. data, IX-b-6. HEW (1965b). Hew Memorandum, A W. Willcox, GeneralCounsel to Wilbur J.Cohen, AssistantSecretay 21,19651, Re:H.R. 6675-Douglas Amendment on Hospital Spe EW (1967a). A ~ e ~ otor the t Presi~enton ~ ~ d i cCare a l Prices. DC: U.S.~overnment Printing Office. EW (1967b). “Current Data from the Medicare P r o g r a m . ” ~ e ~ Z~nsurance th tati is tics (November 20). EW (1967~).A Report to the President on ~ ~ d i cCare a l Prices. W a s h i n ~ o n , DC: U.S.Government Printing Office.

Askey, Vincent, M. D. (1961). “Aging, Medicine, and Kerr-Mills.” Address delivered before the California Medical Association, Los Angeles, May 1. Bray, Ho~ard-Staff Member (1965). “Memorandum on Important Defects in H.R. 6675 Currently underDiscussion in the Senate Finance Committee.” (May 20). Cohen, Wilbur J.-Assistant Secretary, HEW (1965). “Memorandum for the President,” March2. Mills, Wilbur D. (1964). “Financing ealth Care for the Aged.” Address before Downtown Little Rock Lions Club, Little Rock, Arkansas (December 7) .

211

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Ball, R. M. (1988). “The ~ r i g i n a Understanding l on Social Security: Implications for Later Re~elopments.” InT.R. armor and J. L, M ~ s h a w(Eds,), Social Security: Beyond the ~ h e t o r i cof Crisis (pp. 17-40). Princeton, NJ: Princeton University Press. et al. (1990). “Satisfaction with Health Systems in Ten Blendon, R. J., ~ e a l t hfairs 9(2):185-92. Changing Politics of Federal Health Insurance Programs.”~S 20(2):202-11. itics and ~ e a l t Care h ~ r ~ a n i z a t i o~~~s n: as ~ e d e r a l DC:Brookings Institution Press. Brown, L.D.(1985). “Technocratic Corporatism and Administrative

2):12-14. Plans.” S e p t e m ~ e 22. r edical Care.”New ~ n ~ l a n d

~ o uofr ~n eadl i c i n e301:812.

214

to

eferences

Part I1

on ~ u s t i e ~etween e rove

It and Pay for It. ~ionulJourna~12:

m a n ( D e c e ~ ~6). er dlines You Didn’t

References to Part II

2 15

Fuchs, V. R, (1990).““TheHealth Sector’s Share of the Cross National Product.” Science 247:534-37. Fuchs, V. R, and J. S,Hahn (1990). “How Does Canada Do It?” New ~ n ~ l a n d Journal of ~ e d i c i n e323-386: 884-890. Gallup, George (1991). Public Opinion Newsletter. Gallup, George (1992). Public Opinion Newsletter. Gallup, George (1993). Public Opinion Newsletter. Gornick, M,, et. al. (1985 and Program Expenditur~s.”~ e a l t hCare Populations, Use of F i n a n c i n ~R e v i ~ w(A Graetz, Michael J. and Jerry L. Mashaw (1999). True Secu~ity.New Haven, CT: Yale ~ n i v e r s i t yPress. acker, J. S.(1997). The Road to Nowh Plan for ~ e a l t Security. h Princeton arris Poll (1999). #28, April 28. Lewis New York. Surveys of Physician and Public p pinion: 1 ~ ~ Harvey, L, (1986). Chicago: American Medical Association, erzlinger, R, (1991).“Healthy Competition.” AtZ~ntic268:69-82. imelfarb, R. (1995). Catastrophic Polit~cs:The Rise and Fall of the ~ e d i c a r e Catastrophic Covera~eAct of 1998. University Park: Pennsylvania State University Press. Himelfarb, €4,. (1997). “False Promises: Lesso Reform Catastrophes.” Paper presented a t Association Meetings, Chicago, Illinois, April 10-12. immelstein, D. U. and S.Woolhandler (19$6). “ trative Waste in U.S. Health Care.” New 314:441-45. House Committee on Ways and Means (1993). Hearing on President’s Health Care Plan. October 21. : Cornell University Press. Jacobs, L. (1993).~ e a loft ~~a t i o n sIthaca, . Jacobs, L. (forthcoming). Po~iticiansDon’t Pander: Political ~ a n i p u l a t i o n and s the Loss of ~ e ~ o c r a tResponses. ic Chicago: University of Chicago Press. Jacobs, L. R,, R. Y. Shapiro, and E. Schulman (1993).“Poll Trends: Medical Care in the United States-An Update.” Public Opinion ~ u a r t e r l y ,57(3): 394427. Fall 1993. Jost, T.(1999).“Governing~ e d i c a r e . ” A~di n ~ s t r a ~Law i u e Review 51(1):40-116. Kaiser Family Foundation (1999). ‘Voters Say Medicare Top Health Issue For New Congress.” #1452, January 14. Kuttner, Robert (1999). “ edicare Com~ission’sVoucher Plan Is Bad News for Poor Elderly.” Boston Globe, 17 January. Letsch, Suzanne W., et al, (1992). “National Health Expenditures, 1 9 9 1 . , , ~ e a l t ~ Care ~ i n a n c i Review n~ (Winter):1-30. Light, P, (1986). Artful Work: The Politics of Social Security Reform. New York: R a n ~ o mHouse. Lurie, N., et al. (1984). “Termination from Medi-Gal: Does It Affect Health?” New ~ n ~ l a Journal nd of ~ e d i c i n e311(7):480-84.

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I1

Oberlander, J. (1999). “Medicare: The End of Con~ensus.’~ Paper presented at the annual meetings of the American Political Science Association, Boston, ,September 1999. Oliver T. 1 93 ,“Analysis, Advice, and Congressional Leadership: The Physit Review C o ~ m i s s i o nand the Politics of Medicare.,’ ~ o u r n a l itics, Policy and Law 18(1):113-74. Oliver, T. (1996). Conceptuali~ingthe Challenges of Public Sector ~ntrepreneurship. Westport, CT: Praeger. Patashnik, E. M.(2000). Putting Dustin the US. : Federal DustFunds dge UniversityPress. and the Politics ofCom~itment, Cambridge:

prepared for delivery at the Services Research andFounAge of Polarization.” In Margaret Weir (Ed.), The Social Divide: Politicul (pp. 181-229). W a s h i n ~ o n , ~ u t u r e o ~ A c t i uGouernment ist Institution Press. “Sweeping Medicare Overhaul is Planned.” Boston Globe, February 28,pp. A l , A14. President’s Commission for a National Agenda for the Eighties (1990).Report ’S C o m ~ i s s i o n for a ~ a t i o n a Agenda l for the ~ i ~ h t i e s . U.S.~ o v e r n m e nPrinting t Office. n Review, July 24, 1992. Assessment Commission(PROPAC) (1992). and the ~ m e r i c a n ~ e a lCare t h System: Report and Reco~mendationsto Congress. W a s h i n ~ o nDC: , Author. uadagno, J. (1989). “~enerational Equity and the Politics of the Welfare State.” Politics and Society 17(3):353-76. einhardt, U,E. (1997). “Medicare.” New Members Issues Seminar, Congressional Research Service, January 21. ich, R. and W. D. White (1996). “National Health Reform: Where Do We Go from Here?” In R. Rich and W, D. White (Eds,), ~ e a l t hPolicy, Fe~eralism , Urban Institute Press. and the ~ m e r i c a nStates, W a s h i n ~ o nDC: ovner, J, (1987). “Democratic Leaders Slow Pace of Medicare Bill.” Congressional ~uarterly~ e e ~Report l y 45(27):1437-~8. ushefsky, M, andK. Patel (1998).~ o l ~ t i cPower s, and Policy ~ u ~ iThe n Case ~ : Armonk, W.M.E. Sharpe. o f ~ e a l t hCare Reform in the ~990s. Schlesinger, M. and P. B. Drumheller (1988 Beneficiary Cost Sharing in the MedicareProgram.” In D, Blumenthal, Schlesinger, and P. Drumheller

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219

(Eds.), ~ e n e w i n the g Promise: ~ e d i c a r eIts , History and ~ e f o r mNew . York: Oxford University Press. the ~ m e r i c a n ~ h e t o r i c o f ~ e c ~ n c i ~ i a t i o ~ . a Press. Care ~ e f o and r ~ the ~ r n Smith,

D.G. (1992). Paying for ~ e d i c a r eThe : Politics

mithey, Richard W. and T.R ferent Perspectives, An E and ~ l l i e d Sciences 42(1)

o f ~ e f o r mHawthorne, .

(1987). understandin in^ Medicare: Difew.” Journal of the His~oryof ~ e d i c i n e ~ e d i c a r and e the Hos~itals: Issues and kings Institution.

ics. New York: Oxford Univers~ty Press. (1990). tati is tical Abstract of the ~ n i t e d ~ t a t e s , 199~. ~ a s h i n ~ oDC: n , U.S. Government print in^ Office. U.S.Senate, C o ~ m i t t e eon Finance (1970). ~ e d i c a r eand ~ e ~ i c aPro~lems, i ~ : Report of thestaff to thecornrnitt ing Hospital~drnissions Threaten

. Bureau of the Census

1996). Governing ~ e a l t hThe : Politics of hns Hopkins University Press. e Jumps: Comments on the Health Care Reform Stee~lechase,” J o u r n ~of l ~ e a l t Poli~ics, h Policy and Law 20(Summer):373-84. edicare-From What?” Paper prepared for delivery litical Science Association, Seprt in The C e ~ t ~uo ~ undatio~, U n ~ e r s t a n d i nL~o n ~ - ~ e ~ ~Cost e d Estimates.] i ~ a r e Yankelovich, I). (1995). “The Debate That Wasn’t: The Public and the Clinton HealthPlan,”In J.Aaron (Ed,), The P ~ o b l Th e~ Care ~ i n a n c i n g(Chapter 4).

This Page Intentionally Left Blank

Aaron, H, J,, 190-191

American medical care system (Clinton proposal), 133-134 e n e r ~ t ~ oE~qaul~ t y

ion, politics of, 55-56, Accretionist strategy, 57-58 a Life Insurance Company, 48 C,82 CIO, 18-21,39,68,73,77 Aged, focus on, 10-15

erson, Clinton, 31-32,46, 69 0

Alger, Bruce, 43 tion)

Eldercare bill of, 46-53 health insurance and hospital i n s u r ~ n c ean House of ~ e l e ~ a t e5s , ~ e n n e administration ~y versus,

p r e ~ i u ms u ~ p o rand, t 177 reform of Medicare and, 141 voucher s y ~ t and, e ~ 148,177

Brown, Judith, 134

ush adminis~ration,166,175-17

222 yrnes bill, 48-50 yrnes, John W., 42,48-50,69 Canada’s national health insurance system, 95,132-133 Carter administration,102 Case studies conceptual models and, 64 knowledge and, cumulative, 63 edicare, 64,71430 organi~ationalprocess model and, ~7-69 politics model and, 69-71 rational actor model and, 64-67

n lint on administration, 126-135, 172 cl into^ ~ a m p a i g n(1992), 124-125 C1into~’s national insurance reform, 167

C o m ~ i t t e eon Economic Security, 5-6 Committee on National Health Insurance, 92 olitical Education ~ompetitivemodels of cost control, 177 rehensive Health Insurance lan (CHIP), 99 Conceptual models, 64 Concord Coalition (1992),131 Con~ress 81st, 8

Index 87th, 30,33-35 88th, 33-35,71 89th, 53 Congressional Eudget Office (CEO), 125,128 ~ ~ r ~ e(nonpartirZy san publication), 33,44 Consumer sovereignty, 160-161 Contract withAmerica, 139 Cost containment strategies, 102, 108,119,127-128,148,175-177 Costs (see Expenditures) Cruikshank, Nelkon, 24,78-~9 Curtis, Thomas, 46 Customary costs,97, 128 Daniels, Norman, 155 Darman plan, 125 Darman, Richard, 123 David, Sheri, 184 Deductibles, 50 Demysti~cationof medical profession, 163 Department of Health, Education, and Welfare (HEW),42,46,53, 75,83-84,91-92 Dia~osis-relatedgroup ( reform, 108-110,113,116,175, 187 Dingell (Senator), 7 Disability insurance, 24,156 Dixon-Yates, 78,80 Doctor visits, 3-4 Douglas, Paul, 54-55 DRG reform, 108-110,113,116,175, 187 D u r e n b e r ~ ~ r ( ~ e ~124 ator), Edelman, Murray, 83 Eisenhower administr~tion,23-30 Eldercare bill,46-53 Election years 1964,41,45 1992,124-126 1996,172

Index

223

Health Care Financing Administration (HCFA), 102,104,118,148, 156,175 Health insurance (see also Medicare) American Medical Association and, 5-6,8-9,15 in Canada, 95,132-133 catastrophic, 24,112,127 Clinton’s national reform, 167 coinsurance and, 50 deductibles, 50 in Great Britain, 12,152 growth of private, 111 historical perspective of, 4 incrementalism and, 16-17 lobbyists and, 17-21 Medigap plans and, 113,125 Fair Deal, 6-11,64,67 national strategies, 100-101 Falk, I. S., 9-10,24,67 purpose of general, 12 Feder, Judy, 187 universal government and, 4-6, Federal Security Agency, 11,66 8-9 Federation of American Health SysHealth maintenance or~anizations tems, 148, 177 (HMOs), 99,102-103,119,161 Fee-for-service (FFS), 161 Health Planning and Resources . Forand, Aime, 24 Development Act (1974), 101 Forand bill (1960), 24-27,31-32,36, Health systems agencies (HSAs), 101 60,81432 Heinz, John, 125 Forand hearings, 24 Henderson, Lawrence, 3 Fraud, Medicare, 145-146 Heritage Foundation proposal (19931, Frazier (Representative1, 34,36,42 166 Friedman, Lawrence, 81-83 Herlong, A. Sydney, 34,36,46 Fulton, Richard, 42 Herzlinger, Regina, 163 HEW, 42,46,53,75,83-84,91-92 Gardner, John, 91 “High School Debate Kit”radio tapes Generational equity, 131-132, 140, and scripts, 39 155-156 HMOs, 99,102-103,119,161 Gingrich, Newt, 139 Hospital Corporations of America, Golden Ring Clubs, 21 Gradualism (see Incrementalism, pol116 Hospital expenditures, 98 itics of) Hospital insurance, 12-13,15,17-18, Gramm-Rudman legislation (19851, 46,55-56 115 Housing policy, 81-82 Great Depression, 5 Howard, Ernest, 38-39,46 Great Society, 46,133,145,152 H.R. 1,46-53,70 Griffiths, Martha, 34 H.R. 3737,46-53 H.R. 4222,39 Hacker, Jacob, 187 H.R. 4351,48-50 Harrison, Eurr, 36-37,42

Ellwood, Paul, 161 Evaluation of healthcare facilities, 88 Ewing, Oscar, 9-10,15-16,59 Expenditures customary costs, 97,128 health care, general, 4,84,89-91, 105-106,163 Medicare, 88-89,102-104,108, 111,114,128-131 physician fees, 50,54-55,84,89, 98,108,113,116,128 RAPP specialists, 50,54-55 reasonable costs, 89,97-98,128 Social Security, 16

Index

ties

defeat of, initial, 3 8 4 4

e n t i t l e ~ e n t153-154 ,

111,114,128-131

f l i p - ~ o p147-149, ~ 176

Index

fraud, 145-146 generational equity and,131-132, 140,155-156 growth of, 100,111,156-157 ealth Care Financin~ Administration and, 102, 104, 118, 148, 156,175 H.R. 1 and, 46-53,70 6675 and, 50-55 ementation of, initial, 87-92, 96-99 insolvency projections and, 93-94, 123,128,132,135-137,142,178 medical progress and, 4 origins of, 64-67,95-96,152 procompetitive movement and, 152,158-162 S of (1970~1, 99-107 ad~inistration and, responses of (1952-64),67-69 rider, 37-38 risk selection, 143-144 S. 1 and, 46-53 scholarship on, 183-191 t ~ r m i n o l o193-207 ~, 32,135-136,138 eans Committee and, edicare + Choice option, 143

139

M ~ r a n t oPhilip, , 75 Microeconomic approach to analyzing social policy, 159 ills, ~ i l b u r28-29,32,34-37,40, , 42-44,48-53,58,60,69-70,137

Moon, ~ a r i l y n188-189 , ne, Jim, 187,189

225 urray (Senator),7 Murray-~agner-Dingellbill (1949), 7-8,15 National Academy of Social Insurance Task Force on 191 National Bipartisan Commission on the Futureof ~ e d i c a r e147,162, , 176-177 National Commission on Social Security Reform (1982), 110 National Committee to Preserve Social Security and Medicare, 112 National Council of Senior Citizens, 18,621 National HealthService of Great Britain, 12,152 New Deal, 5,57, 133, 145 New Frontier, 31 ~e~ ~ e ~ ~(liberal ~ Z weekly), i c 33,53 Nixon administration, 161 OASI, 9,15,27 Oberlander, Jon, 137,183,186,190 Old Age and Survivors Insurance system (OASI), 9, 15,27 Oliver, Tom, 189 “Operation Hometown’’ campaign, 39 Organizational process model, 67-69 Paradox of medical progress, 3 Patel, IC., 187 Permissive consensus, 75 Perot, ROSS,95 Peterson, Mark, 186 Peterson, Peter, 124 Physican fees, 50,54-55,84,89,98, 108,113,116,128 Physician visits, 3-4 Physicians’ service insurance,52-53, 60 Political Action Committee of Political conflict patterns, 72

Index

226 Politics of Medicare (see also Ideological context of Medicare politics; specific laws)

accommodation, 55-56,96-99, 172 aged and, focus on, 10-15 Bush administration and, 175-176 Carter administration and, 102 case studies, 64,71-80 class conflicts, 19,73-75 Clinton administration and, 126-135,139 defeats of Medicare bill, initial, 38-44 ouglas amendment and,54-55 Eisenhower administration and, 23-30 election of 1964 and, 41,45 election of 1992 and, 124-126 election of 1996 and, 172 in evolution from 1966-70,96-99 e~penditures,early, 96-99 Fair Deal and, 6-11,64,67 H.R. 1and, 46-53,70 H.R. 6675 and, 50-55 ideological context of, 151-168 implementation, initial, 96-99 incrementalism, 10-11,16-17,66, 96 insider, 175-176 Johnson administration and, 42-44,46-61 Kennedy administration and, 29-42 lessons of, 56-61 literature on administrative (1966-99), 185-191 lobbyists and, 17-21,47,68,77-78 macro, 176-179 majoritarianism, 174 in 1970s, 99-107 in 1980s, 107-115 in 199Os, 123,172 overview from 1966-99,93-94, 115-1 19 patterns andpuzzles in, understanding, 171-180

Reagan administration and, 107-116,118,175-176 reform and, 123-124 S, 1and, 46-53 Senate andHouse Conference Committee and, 55-56 social policy and, characterof, 80-85 Social Security contributors and, focus on, 15-17 southern Democrats and, 35-38,40 Truman administration and,6-11, 17-18,60,64,66-67 Politics model, 69-71 Poor Laws, 16,131 PPGP, 161 Premium support, 177 Prepaid group practices (PPGP), 161 Pressure groups, 17-21,47,68,77--78 (see also specific names)

Price controls, 102, 108, 119, 127-128,148,175,175-177 Procompetitive movement market for medical care and, 162-168 Medicare and, 152,158-162 rise of, 157-158 Professional standards review organizations (PSROs),99 Public Law 86-778,27-30 Public Law 89-97,4-5,56,59 Public Law 93641,101 Public Law 95142,104 Public opinion, mass, 75 Public policy (see Social policy) Quealy, William, 48 Rangel, Charles, 139 Ranney, Austin, 80-81 RAPP specialists, 50,54-55 Rational actor model, 64-67 Rayburn (Representative), 36-37 RBRVS, 108,113,116 Reagan administration, 107-116, 118,175-176 Reasonable costs, 89,97-98, l 2 8

Index

227

S I,46-53 Scholarship on Medicare, 183-191 Schultze, Charles, 159 Senate Committee on Aging, 29 Senate Finance C o ~ m i t t e e28, , 53-55 Balanced Budget Act (1997) and, Senate and House Conference Com141,143-144,147 mittee (1965),55-56 budget deficit and, federal, Senior Citizens’ Councils, 18,21 123-124,131 Skocpol, Theda, 189 Bush administration and, 166 Smith, David, 187 Clinton administration’s strategy Social policy (see also Medicare) for, 133-135,139,167 changes in, timing of, 145 cost c o n t a i n ~ e n t127-128, , character of, 80-85 132-135 housing, 81-82 diagnosis-related group, 108-1 10, Medicare case and, 11-80 113,116,175,187 microeconomic approach to analyzelection of 1992 and, 124-126 ing, 159 generational equity, 155-156 political conflict in, patterns of, 72 legacy of, 166-168 public opinion and, mass, 75 Medicare -t Choice option, 143 Social Security Act (1935), 5-6,9, negative consensus of, 126-135 51-52,81 in 1970s, 99-107 Social Security Administration in 199Os, 123-149 (SSA), 16,83-85,87-88,91,97 in 1997,124,137-147 Social Security Amendm~nts(1972), physician fees, 108, 113, 116, 99,102 128 Social Security approach to health politics of, 123-124 care, 25-28,8445 in Reagan era, 107-115 Social Security contributors, focus Republican (1995), 139-140 on, 15-17 Trustees Report (1995) and, Socialism, 39,92, 165 135-137 Regulation of in dust^, ~overnment, Somers, Anne, 3 Somers, Herman, 3 116 Southern Democrats, 35-38,40 Reischauer, R.D., 190-191 Report of the ~residen~’s Commissio~ Special interest groups, 17-21,47, 68,77-78 (see also specific Persons and, 141 edical Association and,

names) Resource Based Relative Value Scale (RBRVS), 108,113,116 Ribico~,Abraham, 39-40 Rider, Medicare, 37-38 Risk selection, 143-144 Roosevelt, Franklin Delano, 5-6, 57 Rudman, (Senator), 124 Rushevsky, K., 187

SSA, 16,83-85,87-88,91,97 Stark (Representative), 141 Starr, Paul, 189 Stowe, David, 10 S u p p l e m e n t a ~Medical Insurance Program, 87 Thomas, Bill, 147-148 Thompson, Clark, 34,42 Thornburgh, Richard, 126

228 Truman administration, 6-11,17-18, 60,64,66-67 132,135-136,138 (1995), 135-137 Tsongas (Senator), 124

Voucher system, 148,177 Wagn~r,Robert, 7 Watts, John, 36 ~ a y and s Means Committee H.R. 1and, 47-53 .R. 6675and, 51-55 ~ n ~ - A n d e r s obill n and, 39,43

Index edicare and, 32-35,41-42,47 in 1965,45 87 Weissert, ,187 Weissert, to health care, Welfare a 25-28,96 m i t a k e r and Baxter (public relations firm), 8 Wicker, Tom,52 Wilcox, Illanson, 54 ~ i l d a ~ s kAaron, y, 19,78,80

Yak Law ~ o u r study, ~ a ~ 41