What the 1965 Medicare debate can teach us about health care reform.

How to fix health policy.
July 7 2009 3:42 PM

Med School

What the 1965 Medicare debate can teach us about health care reform.

Illustration by Robert Neubecker. Click image to expand.

When it comes to health care reform, the Obama administration appears to be obsessed with the mistakes of 1993. So it is following a kind of don't-do-what-Clinton-did strategy: letting Congress take the lead, opening up task force meetings (in fact, avoiding the very term task force), and keeping Hillary far away—overseas if possible.

But maybe the president should be paying more attention to the achievements of 1965, the year Medicare was passed with overwhelming support. As the country's largest-ever expansion of public health care, Medicare is an instructive model for the proposed second-largest—at least when it comes to getting it passed. In pitching health care reform, what can the Obama administration learn from the debate over Medicare?

Advertisement

One way is to make the bill's constituency as broad as possible, even if the bill itself isn't. Advocates of Medicare were careful not to paint the plan as a stepping stone on the way to government-run health care—but they formulated their plan in a way that could logically be expanded to cover everyone. That meant picking a group that everyone agreed should be covered in full: senior citizens. Few politicians on either side wanted to come out against giving health insurance to elderly parents. And conservatives were uncomfortable differentiating between seniors who needed coverage and those who didn't. Medicare's proponents thus designed a program that proved difficult to resist over time.

Obama could do something similar, says Theodore Marmor of Yale University, who served as special assistant to Medicare architect Wilbur Cohen in the '60s. He could extend Medicare backward to cover early retirees above 55, for instance, or promise to cover every child below the age of 6. That way, he would get opponents to accept the logic of universal health care—thus making further reforms easier—without forcing them to accept a complete overhaul. All 45 million uninsured would not get coverage right away. But eventually, they would.

Another lesson from the Medicare debates—a corollary to the first one—is not to worry too much about consensus. "There's this idea that bipartisanship is a necessary condition for sustainability of a program," says Marmor. "That's complete crap." Sure, Medicare passed with bipartisan support. (Seventy House Republicans joined 237 House Democrats in voting for it; in the Senate, 13 in the GOP joined 57 Dems.) But the Democrats didn't need any help, Marmor points out. Republicans signed on because they didn't want to be seen opposing a popular bill. (They made the right decision. Medicare is one of the most popular government programs ever, with beneficiaries reporting more satisfaction overall than Americans with employer-based health care.)

Third, the administration should emphasize how the health care industry can benefit from health care reform. Medicare was a boon for both health care providers and insurers. It covered millions of formerly uninsured Americans, thus boosting the number of hospital visits, treatments, and tests. Along the way, Medicare contracted with private insurers to provide coverage, giving them more business. And as a way of securing doctors' support, the original legislation essentially gave them a blank check to charge Medicare however much they wanted. "If they'd known how well they were going to do, they wouldn't have spent all those years opposing it," says Jonathan Oberlander, a political scientist at the University of North Carolina who studies Medicare. "They would have said, 'Please pass this.' "

That's one reason health care companies have been cooperative so far. In June, they sent a letter to Obama agreeing to cut costs, update their medical-records technology, and streamline hospital visits. Why the sudden shock of conscience? Making concessions now puts them in a better position to fight back against bigger overhauls, like a public option or employer mandate. They're also anticipating a brave new health care economy: If the administration rewards whichever provider cuts costs best, then they're all going to cut costs.

There's a flip side to that argument: If Congress doesn't pass health care reform, insurers and providers get hurt. Costs continue to rise, so fewer employers can offer insurance, which drives insurance companies out of business. Employees who used to have insurance don't go to the doctor as much, reducing income for providers. "I think the insurance industry has a real financial stake," Oberlander says. "But they want it to be on their terms."

The huge difference between 1965 and now, of course, is costs. Back then, spending more on health care—thereby covering more people—was the whole point. Now the administration wants to expand coverage but cut spending. As a result, the Medicare model of shoving through an ambitious program with few major concessions may not work. Rather, Democrats may have to make some deep compromises, says Oberlander. For example, a new public plan could pay so-called Medicare Plus rates, or higher rates than Medicare, in order to put doctors and hospitals at ease. Democrats could include malpractice reform. They could also scale back the public option by having it kick in only if private insurers fail to bring down costs—Sen. Olympia Snowe's "trigger" idea—or based on a "co-op" model, as suggested by Sen. Kent Conrad. Few Democrats love these alternatives, but given the importance of savings in addition to expanded coverage, they may be necessary.

Perhaps the main lesson of Medicare, though, is that even its opponents eventually came around. One of Ronald Reagan's most famous quotes came in 1980 when he chided Jimmy Carter for saying Reagan started his political career by campaigning against Medicare. "There you go again," Reagan said. The audience laughed. But Carter was correct: Reagan initially opposed Medicare but eventually supported it. If Republicans want to embrace Reagan's legacy, here's their chance.

Christopher Beam is a writer living in Beijing.