Health Reform through History: Part III: Medicare and Medicaid

Here's the last of our posts this week on health reform history...Then we'll turn our attention back to health reform's future...

Medicare, the government health insurance system that covers all America's senior citizens and many of its disabled, and Medicaid, a federal-state partnership providing insurance to the poor, are two of the great legacies of the Great Society era of the mid-1960's. Medicare and Medicaid cover tens of millions of people and remain giants of the current American social contract. Like the State Children's Health Insurance Program of the mid 1990s, Medicare and Medicaid emerged after a comprehensive reform initiative had failed earlier.

In the 1940s, Congress and President Truman made various attempts to institute national health insurance. A 1947 bill with Republican support (including that of Congressman Richard Nixon) would provide government subsidies for a private nonprofit insurance system with premiums scaled to individual's incomes. (If you include private for-profit insurance companies in the mix, it sounds quite a bit like current coverage proposals.) In 1950, Congress did finally pass, and Truman signed, legislation to provide federal matching grants to state payments for medical care for the poor. This became the forerunner to Medicaid.

During the 1950s, expanding health coverate to all temporarily faded as a pressing political concern, reflecting both the enormous expansion of employer-sponsored insurance and the conservatism of the time. But by the late 1950s, pressure grew to expand Social Security to include relief from medical bills for the aged. Because the elderly have the highest medical costs of any group, many seniors were unable to purchase insurance; medical bills were a leading cause of poverty among the elderly. In 1960, outgoing President Eisenhower did sign into law Kerr-Mills, the forerunner to Medicare. That gave grants  to states for health care for the aged poor. But it didn't work very well; by 1963, only 28 states were participating.

Though the massive Democratic sweep of 1964 gave President Johnson huge majorities in Congress. Medicare and Medicaid emerged from a compromise between the majority and the Republican minority in Congress. Democrats wanted a mandatory hospital insurance program for the elderly (which became Medicare A) and an expanded federal-state partnership for medical insurance for the poor (which became Medicare B), while the Republicans, supported by the AMA, tried to make it subsidized but voluntary insurance for regular medical bills (which became Medicare B). In the photo above, Johnson signs Medicare and Medicaid into law as Harry Truman and his wife Bess look on. 

Still, the huge size of the Democratic majority obscures the importance of Johnson's leadership in passing Medicare and Medicaid. A large portion of those Democrats, including many powerful committee chairmen in both houses, were conservative Southerners and instinctively hostile to expanded social programs. Johnson, the formidable former Senate Majority Leader, had to threaten, bully, and charm members of Congress to shepherd the programs through.

We think President Johnson would have approved of the speed with which the Obama Administration is moving health reform today. As NPR reported in a November story,

...Just moments after a bill to create Medicare got through a key House committee in March of 1965, Johnson sounds like he's in no mood to celebrate. He gets on the phone to demand that legislators keep the bill moving.

"You just tell them not to let it lay around. Do that," Johnson barks.

"They want to, but they might not," he continues. "Then that gets the doctors organized, then they get the others organized. And that damn near killed my education bill. Letting it lay around. It stinks. It's just like a dead cat on the door. When a committee reports it you'd better either bury that cat or get some life in it."

President Johnson did have one huge advantage on Obama: it wasn't the middle of the worst recession in decades and he had a relatively balanced federal budget that gave him room for new spending. Again, from the November 2008 NPR story, Johnson's recorded telephone calls offer insight into the President's approach to budget matters. Below, in a conversation with Vice President Hubert Humphrey:

"I'll go a 100 million or billion on health or education," Johnson said. "I don't argue about that any more than I argue about Lady Bird buying flour. You got to have flour and coffee in your house. And education and health, I'll spend the goddamn money."

Of course today's economic climate is tougher. But Obama has made clear that he too regards health coverage as essential to our nation as coffee was to LBJ.