The Campaign for Medicare

Beginning in 1952 the Truman Administration, through Federal Security Administrator Oscar Ewing, had begun advocating medical care for the aged—what would become Medicare. This was a retreat from Truman’s earlier calls for universal health care for all Americans. The implacable opposition of the AMA and other pressure groups made universal health care an impossible goal. By scaling back the ambition of the health care plan to encompass only aged Americans receiving Social Security, the Truman Administration hoped to mollify the conservative opposition.

In 1952 the first bill was introduced in Congress to create a Medicare program. The AMA immediately announced its opposition and worked tirelessly and successfully to prevent any such program from advancing in the Congress.

In 1958 the debate over Medicare acquired new intensity as Congressman Aime Forand (D-RI) introduced a bill in the Ways and Means Committee that was drafted by the Medicare-advocates who, in 1965, would play key roles in the eventual enactment of the legislation. The Forand bill was the most serious effort to introduce Medicare, and the AMA mobilized a massive campaign against it, quintupling its lobbying budget to fight Forand. Ultimately, Forand’s bill was bottled-up within the House Ways and Means Committee, but its popularity with both politicians and some segments of the public (labor united behind the idea of Medicare for the first time for example) gave the AMA a real scare.

By 1960 the two groups had been at loggerheads for nearly a decade and a compromise to the conflict was proposed by Senator Robert Kerr (D-OK) and Representative Wilbur Mills (D-AR). The Kerr-Mills bill—which like the Forand bill was also drafted in part by Medicare-advocate Wilbur Cohen—sought to substitute for a federal Medicare program covering aged Social Security beneficiaries, a state-based welfare program covering only the medically indigent and the aged on state welfare rolls. This scaled-back scheme was enacted into law in September 1960.

The Kerr-Mills plan had important differences from Medicare. First, it was a welfare benefit, limited in its scope to those able to demonstrate lack of financial means. Second, the programs would be state-based, rather than federal. But most importantly, the program would be entirely optional for the states. If a state chose not to construct a health care program under Kerr-Mills, they were free to ignore the law. Senator Pat McNamara (D-Mich.)—who was an opponent of Kerr-Mills—complained at the time, “The blunt truth is that it would be the miracle of the century if all of the states—or even a sizeable number—would be in a position to provide the matching funds to make the program more than just a plan on paper.”17

On its face, Kerr-Mills had the potential to be more generous in some ways than a Medicare-type program. At the time, there were 2.4 million seniors receiving state old-age assistance, and an estimated 10 million medically indigent who were not on state welfare rolls but who were unable to pay their own medical bills. Some or all of this population might be covered, depending upon the decisions of the individual states. This contrasted with the 14 million Social Security beneficiaries at the time. So in terms of scope, Kerr-Mills was likely to be a somewhat smaller program. But in terms of types of services, and the generosity of coverage, Kerr-Mills was virtually unlimited, with the federal government pledging to pay from 50% to 80% of the costs of whatever programs the various states created. But 50-80% of nothing is still nothing; so if a state failed to create a program—or created a very stingy one (as is typical for welfare benefits)—the theoretical federal support would be likely to not come to very much. Indeed, by 1963 there were still 18 states which had never implemented Kerr-Mills, three years after the legislation was enacted, and five large industrial states with only 32% of the medically-indigent were receiving nearly 90% of the federal funds expended under the program.18

Initially, even this truncated approach to social provision was bitterly resisted by the AMA. If Truman’s universal health care plan was socialism through and through; the scaled-back Medicare proposals were just socialism’s foot in the door; and even a Kerr-Mills program would just be socialism-lite. But finally, the AMA bowed to political realities and dropped its opposition to Kerr-Mills.

At this point, in 1961-62, Kerr-Mills was the AMA’s fall-back position in its continued opposition to Medicare legislation. The AMA’s argument was that Medicare was unnecessary because Kerr-Mills was a sufficient solution to the problem of medical care for the elderly. Given the limitations of Kerr-Mills, it is not surprising that the program failed to accomplish very much in the five years before it was repealed. A cynic might suspect that failure to accomplish very much was probably just what the AMA hoped for.

In the subsequent political battles over Medicare, the AMA would deploy an alternative strategy, rather than relying on support of the Kerr-Mills legislation. Following the 1964 presidential election, the AMA developed an alternative to Medicare which they labeled “Eldercare.” This scheme was essentially Kerr-Mills on steroids. It promised much more generous benefits than Medicare, but again limited to only the welfare population rather than to all aged Social Security beneficiaries.

In any case, the passage of Kerr-Mills in 1960 did not end the pressure for a Medicare program—as the conservatives and the AMA wished and hoped. After all, the non-indigent elderly were still in need of health care coverage and still unlikely to be able to purchase it in the marketplace. Studies at the time reported that the aged used medical services at a rate twice that of the non-aged; that three-fifths of the aged had less than $1,000 in liquid assets; and that nearly 54% of the aged lacked any form of health insurance. While opponents of Medicare disputed the precise statistics, it was clear to virtually everyone that the aged had medical-care problems that far exceeded those of the average American.

Following the defeat of the Forand bill, and the election of John Kennedy in November 1960, Medicare’s backers crafted a new version of the legislation, introduced by Clinton Anderson (D-NM) in the Senate and Cecil King (D-CA) in the House. The bill had the President’s backing and thus had acquired a sudden new dimension of political heft missing during the Eisenhower years. The AMA was thus understandably panicked by the appearance of the King-Anderson bill, after having tried to compromise Medicare out of existence with the Kerr-Mills strategy.

King-Anderson was, in terms of the Medicare program we know today, half-Medicare. It proposed to cover the costs of hospital and nursing home care, but not surgical costs and not out-patient physicians’ services. In this respect, it was scaled-back slightly from the Forand bill, which in addition offered coverage of surgical expenses. This scaling-back was a futile effort to lessen resistance to the idea of government-provided health insurance coverage.

So as 1961 dawned, the Kerr-Mills bill was established law, and the first King-Anderson legislation was pending in the Congress. The election of John F. Kennedy added new pressure to the push for King-Anderson and advocates for Medicare were optimistic that the 1961-62 session of Congress would see increased pressure for the enactment of Medicare in the form of the King-Anderson bill. Medicare was by no means a done-deal in 1961-62, even absent the AMA campaign against it. But the AMA campaign was a significant force of opposition striving to block Medicare during this period.

It is important to bear this history in mind when considering Operation Coffeecup, and Reagan’s subsequent positioning on Medicare, because it is this history that Reagan was to mythologize.


Coffee-Klatch Politics