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Social Security History

Chapter 4: The Fourth Round-1957 to 1965

PRESIDENT TRUMAN was right, of course. In fact, some of the spadework for what would ultimately come to be known as Medicare was done in the final 3 years of the Truman administration.

The first person to suggest that Government health insurance be limited (at least at first) to social security beneficiaries was Dr. Thomas Parran of the Public Health Service, in 1937 (see footnote No. 25, page 46). At the time, Dr. Parran's idea was not pursued. In 1944 an officia1 of the Social Security Administration, MerrillG. Murray, mentioned the idea again, probably without being aware of Dr. Parran's previous suggestion. (1) But Murray's idea was also buried in the files and forgotten.

It was only after the 1950 election, when Federal Security Administrator Ewing began casting about for some alternative to the moribund Wagner-Murray-Dingell bill, that health insurance for beneficiaries was reintroduced as a serious legislative proposal. For several months, I. S. Falk (who had become head of the Bureau of Research and Statistics) and his staff had been developing such a plan de novo and memorandums on the subject had been circulating within the 'Social Securit.y Administration. Ewing heard of the idea in early December 1950, and when the administrator expressed an interest, Falk drafted a memorandum for him.

The notion of limiting health insurance to social security beneficiaries seemed, from the point of view of the administration, to have several merits. For some time, Social Security officials had been troubled by the fact that, as long as the social security system failed to protect against the greatest single cause of economic dependency in old age--the high cost of medical care--it could not really fulfill its basic objective. (Although Falk's original proposal included all categories of social security beneficiaries, the preponderance were elderly.)

The proposal was also far more modest in scope than National Health Insurance, and therefore far less costly. It would establish the health insurance principle and enable the Government to gain experience in this field. And, certainly not least, focusing the proposal on so demonstrably needy a group of citizens would enhance the possibilities of enactment. (The 1950 census showed that the aged population had grown from 3 million in 1900 to 12 million in 1950, or from 4 to 8 percent of the total population. Two-thirds of these pepple had incomes of less than $1,000 annually, and only 1 in 8 had health insurance. Old people were long considered "bad risks" by commercial insurers, and unions had not made much headway in obtaining coverage for retired workers through employer-sponsored plans.) Falk's proposal also meshed with a growing interest by the Federal Government in the entire spectrum of problems afflicting elderly citizens, an interest sparked by the 1950 National Conference on Aging--the first conference of its kind. In 1950 the Federal Government had taken a significant first step in the direction of providing medical care for the aged, when it enacted a program of direct payments to "medical vendors" for the treatment of welfare clients, including the elderly.

Throughout the spring months of 1951, the "beneficiaries" proposal was discussed in administration circles and among interested parties outside the Government. After word of this activity leaked out, the idea was aired for the first time publicly, during the summer of 1951, at a press conference by Ewing. In the fall and winter of t,hat year, it was developed further and tried out at the White House. Evidently President Truman did not want to anticipate the conclusions of his Commission on the Health Needs of the Nation or tie the hands of the man who would be his party's nominee for the presidency in 1952, for he ultimately declined to commit his personal prestige to the proposal. Nonetheless, Senators Murray and Hubert H. Humphrey (of Minnesota) and Representatives Dingell and Emanuel Celler (of New York), with lit.tle fanfare introduced identical versions of the bill (S. 3001, H.R. 7484, and H.R. '7485) on April 10, 1952. In taking note of the event, The New York Times commented: "Prospects for action this session appear remote. . . ."

That year, the annual report of the Social Security Administration (covering the fiscal year ended in mid-1951 but transmitted to Congress in April 1952) recommended the enactment of health insurance for social security beneficiaries. Likewise, in its final report near the end of 1952, the President's Commission on the Health Needs of the Nation surprised some observers by endorsing the proposal, though in diluted form. (2) (It had been assumed that the complexion of the Commission would foreclose such a recommendation.)

By that late date, however, the issue had become academic--at least for the time being. General Eisenhower, who was about to assume the Presidency, opposed health insurance under social security. Yet the new administration had promised to help needy citizens meet the cost of medical care, and, during the next few years, the first Secretary of Health, Education, and Welfare, Oveta Culp Hobby, and then her successor, Marion Folsom, proposed minimal steps designed to encourage the spread of private health insurance to low-income groups. Neither the "reinsurance" nor the "pooling" proposals, as they were called, won sufficient support for congressional enactment, however, and critics charged that neither would have made any significant improvement in the coverage of low-income groups. Perhaps not. But certainly, in retrospect, the failure of those who opposed health insurance under social security to enact any adequate alternative to it, during the years when they had an opportunity to do so, contributed significantly to the ultimate revival and final success of the social security approach.

Four events in the 1956 session of Congress presaged a revival of the debate over health insurance under social security. One was the enactment of a permanent program of Government health protection for dependents of servicemen--the so-called military "medicare" program. (3) The second was an expansion of payments to medical vendors for the provision of health care to welfare clients. And the third (and least noted) event was the approval by Congress of a $30,000 study of the problems of the aged, out of which evolved a new Senate subcommittee charged with investigating this subject in depth. This subcommittee, later expanded into a full-fledged Special Committee on Aging, would ultimately become a forum for the health insurance debate, although it would have no power to initiate legislation.

By far the most significant portent of a renewal of the health insurance debate, though, was the struggle to add to the social security program cash benefits for totally and permanently disabled persons aged 50 and over. Because the measure called for a determination of medical disability (in order to qualify insured persons for benefits), many physicians feared Government interference with medical practice, even though the bill specifically required such determinations to be made by physicians. Consequently, the AMA conducted a quiet but vigorous behind-the-scenes campaign against the amendment, and the issue developed into something of a test of strength between the "pro" and "anti" health insurance forces in the Congress and the country. When the measure ultimately won, proponents were encouraged to hope that the time was ripe for another drive for Government health insurance. One year later, at the tail end of the 1957 session of Congress, Representative Aime J. Forand of Rhode Island rose to introduce a revised version of the beneficiaries-only health insurance proposal (H.R. 9467). (4) This signaled the beginning of the fourth round of the health insurance debate--as well as initiating the sixth and last stage of the legislative process, decisionmaking in the Congress. (5)

As noted earlier, the decisionmaking stage is, in reality, intermingled with all the others. But the formal introduction of a bill in Congress has special significance; it activates the official lawmaking machinery and forces Congress to deal with the issue in question, even if only to pigeonhole it.

Over the years, many writers have discoursed on the "obstacle course on Capitol Hill." Indeed, the system does put numerous procedural hurdles or decision-points in the path of a major piece of legislation. Hubert H. Humphrey once calculated that a bill might have to surmount as many as 28 separate obstacles before becoming the law of the land. "At each stage of the legislative highway," he noted, "a few legislators lurk, like the pirates of Tripoli, and take toll of the passing traffic. . . ." More commonly, they delay or block a bill altogether. For a fundamental characteristic of our national legislature is that its decisionmaking powers are decentralized and subdivided, chiefly among its 36 standing committees (20 in the House and 16 in the Senate). These committees are very nearly autonomous sub-legislatures in the,ir areas of jurisdiction. And not infrequently they seem insulated from transient political pressures or inchoate public opinion.

Roughly 90 percent of all bills introduced in any given session of Congress are killed at some stage of their journey through the obstacle course, most of them in committee. And, though it may be true that many bills are introduced pro forma and are not intended for enactment, even Presidential proposals have their difficulties. About 20 percent of President Kennedy's requests to the 87th Congress, for example, received no consideration whatsoever.

This decentralized congressional structure is reinforced, moreover, by the fact that the two major parties, being locally based, are in turn decentralized. Each is resistant, to strong control from the top, and party leaders have relatively little power to compell committee members or party "backbenchers" to support official party proposals. They must persuade, negotiate, bargain, and maneuver. And the quest for a majority in behalf of any major bill involves building a coalition of support (often crossing party lines) for that measure alone. Not only must a separate majority be created for a floor vote in each chamber, but majorities must be created at each prior decision--point along the obstacle course--in subcommittees and committees and, in the case of the House, within the gatekeeping Rules Committee as well. In the following discussion, this process will be observed in operation.

At the outset, those who favored health insurance for social security beneficiaries had several reasons for optimism. For one thing, the executive council of the AFL-CIO had decided early in 1957 to commit the 14-million member labor federation to an all-out battle for Government health insurance. In contrast with earlier rounds, the AFL-CIO took on a leadership role. Government health insurance was pressed as labor's number-one legislative priority, and organized labor became the rallying point for all those who favored the measure. Initially at least, labor provided much of the motive power behind the movement. (6) In short, Government health insurance would now have the benefit of that "hard push from below."

To manage labor's health insurance campaign, a five-man task force was set up under the leadership of Nelson H. Cruikshank, director of the AFL-CIO's Social Security Department. Cruikshank and his task force, in consultation with numerous interested individuals and organizations (including technicians at the Social Security Administration), took on the responsibility for re-drafting the original bill and then persuaded Congressman Forand, a high-ranking member of the crucial Ways and Means Committee, to introduce it.

Also heartening for proponents was the posture of the American Hospital Association, an increasingly powerful voice in the health field. Hospitals bore the brunt of the difficulties aged people were experiencing in meeting health expenses. Many hospital officials viewed this growing problem as a threat to the very existence of the private hospital system. For several years a special AHA committee had been exploring ways of relieving this financial pressure and, for a time in 1958, favored the social security approach. (7)

Even before the Forand bill was introduced, top AHA officials had entered into a dialogue on this issue with leaders of other organizations, including organized labor. While the AHA's leaders were not ready to support social security financing, they were willing to support labor's effort to call the attention of the Federal Government to this problem. The AHA's position was expressed in a letter (dated January 31, 1958) from the associate director of the AHA, Kenneth Williamson, to Congressman Wilbur D. Mills of Arkansas, who was the ranking Democrat on the tax-writing Ways and Means Committee and who later would become a key figure in the Medicare debate.

Williamson wrote: "
It is our view that proposals that would utilize the OASI system may hold real dangers to the future of voluntary hospitals and voluntary health insurance, and that this approach should not be accepted unless and until all other possible solutions of the problem have been fully explored and found wanting."

However, Williamson continued : "We believe that the time is ripe for active Congressional consideration of the problem. We therefore respectfully urge that the Ways and Means Committee hold public hearings on the various bills that are before it. . . ."

Doubtless the AHA's position was instrumental in winning early public hearings on the issue. (8) But beyond the hearings, the AHA's acknowledgment that a problem did exist, and that some action might be needed, represented the beginnings of a significant division on the issue within the health field. (9)

Meanwhile, the AMA was girding for another fight against Government health insurance. Members of AMA's House of Delegates, meeting in December 195'7, resolved to defeat the bill. In January 1958, the AMA retained a public relations firm, Braun & Co., to assist in the campaign. Late in March of that year, a "Joint Council to Improve the Health Care of the Aged" was organized. Composed of the AMA, AHA, the American Nursing Home Association, and the American Dental Association, the Joint Council's purpose was, in effect, to seek ways of dealing with the, problem without resort to Government action. In the process, the council hoped to eliminate the political pressure for the Forand bill. A further step was taken, at the end of 1958, when the AMA urged doctors to cut fees for elderly patients.

The first public hearings on the Forand bill, held in June 1958, were inconclusive. The AFLCIO, the National Farmers' Union, the Group Health Association of America, the American Nurses Association, the American Public Welfare Association, and the National Association of 'Social Workers, among other groups, supported the proposal. It was opposed by the AMA, the National Chamber of Commerce, the National Association of Manufacturers, the Health Insurance Association of America (a newly formed organization of some 260 health insurance companies), the Pharmaceutical Manufacturers' Association, and the American Farm Bureau Federation, among others.

If anything, the hearings dramatized the continuing sharp division on the issue. Accordingly, the Ways and Means Committee proceeded cautiously. The committee concluded that more technical background was necessary and it directed that the Department of Health, Education, and Welfare prepare a study of the problem. "With the results of such a study available," the committee report stated, "the Congress will be in a better position to decide what legislative measures, if any, should then be taken to meet the problem."

Several months later, in April 1959, HEW submitted its report to the Ways and Means Committee, and the introduction to that document provides a succinct summary of the situation at that point:

"The rising cost of medical care, and particularly of hospital care, over the past decade has been felt by persons of all ages. Older persons have larger than average medical care needs. As a group they use about two-and-a-half times as much general hospital care as the average for persons under age 65, and they have special need for long4erm institutional care. Their incomes are generally considerably lower than those of the rest of the population, and in many cases are either fixed or declining in amount. They have less opportunity than employed persons to spread the cost burden through health insurance. A larger proportion of the aged than of other persons must turn to public assistance for payment of their medical bills or rely on 'free' care from hospitals and physicians. Because both the number and proportion of older persons in the population are increasing, a satisfactory solution to the problem of paying for adequate medical care for the aged will become more rather than less important. In our society the existence of a problem does not necessarily indicate that action by the Federal Government is desirable. The basic question is: Should the Federal Government at this time undertake a new program to help pay the costs of hospital or medical care for the aged, or should it wait and see how effectively private health insurance can be expanded to provide he needed protection for older persons?"

Significantly, the HEW report did not attempt a definitive answer to the question it posed. After listing major arguments, pro and con, and summarizing all the known technical data bearing on the subject, the report in effect left it to the Ways and Means Committee and to the political process to decide what action, if any, should be taken.

In the meantime, congressional support for the Forand bill had increased. The AFLCIO had made a broad grassroots effort to carry the issue to the voters during the 1958 midterm elections. The affect of this effort is problematical; however, the Democrats did make impressive gains, substantially increasing their majorities in both houses of Congress.

Ways and Means Committee hearings were again held in 1959, during which the new Secretary of HEW, Arthur Flemming, acknowledged once again that a problem did exist and asserted that voluntary insurance, while useful, could not solve the problem. (10) Also in 1959, the plight of the aged began to attract wider public attention as the new Senate Subcommittee on Problems of the Aged and Aging conducted public hearings around the country. Preparations also began for a White House Conference on Aging, scheduled for January 1961.

As the 1960 session of Congress got underway, the pressure for some congressional action on the health care issue intensified, and complex, behind-the-scenes negotiations and lobbying ensued. Inevitably, the issue became enmeshed with election-year politics. Partly at the urging of labor leaders, all the major contenders for the Democratic presidential nomination lent their endorsements to the social security approach. Even the outgoing Republican President Eisenhower flirted momentarily with a program of "catastrophic" health insurance coverage financed through social security, only to back away from it. (11)

Shortly afterward, some members of the Eisenhower administration, led by Secretary Flemming, evolved a plan along the lines of the earlier Flanders-Ives bill (see footnote No. 10) and a more recent measure by GOP Senator Jacob I. Javits of New York. The Flemming proposal provided for Federal grants out of general revenues to help the States subsidize private health insurance premiums for the low-income elderly. The Secretary's problem, though, was to win the support of rank-and-file Republican Congressmen and interest groups identified with the Republican Party, notably the AMA.

Meanwhile, Vice President Richard M. Nixon, the apparent GOP candidate for the Presidency, began searching for a Republican alternative to the Democratic proposal. And, even though the AMA could not be induced to support it, (12) in the end, the Vice President decided to throw his weight behind Secretary Flemming's plan and help win the President's endorsement.

In March 1960, Congressman Forand obtained a vote on his bill in the Ways and Means Committee, after threatening to submit a "discharge petition." (13) Though the committee defealted the Forand bill by a 2-to-1 (or 17-S vote) margin, the action represented the first formal vote on this issue ever taken in the Ways and Means Committee.

Despite this defeat, moreover, pressure for favorable action continued to build : The Senate Subcommittee on Problems of the Aged and Aging held another set of public hearings; Democratic congressional leaders (notably House Speaker Sam Rayburn of Texas and Senate Majority Leader Lyndon B. Johnson) swung behind the social security approach; lobbying in behalf of the Forand bill became unusually heavy, involving giant public rallies and an avalanche of mail to Congressmen; the press, though divided, was on balance more favorable toward the measure than it had been toward the Wagner-Murray-Dingell bill a decade earlier, and some commentators identified health care for the aged as the "number one domestic issue" of the Presidential election year.

Finally, in response to this unremitting pressure, Wilbur Mills (now chairman of the Ways and Means Committee) began to search for some compromise. First, he sounded out colleagues on a plan that would have given social security beneficiaries a choice between higher cash benefits or hospitalization benefits. HEW Secretary Flemming rejected this idea and implied that President Eisenhower would veto such legislation. Nor, in all likelihood, were there enough votes for the idea in the committee sat that point. In any case, it was quietly dropped.

Shortly thereafter, at the urging of congressional leaders, the Ways and Means Committee held another round of test votes on the issue. The Forand bill was again rejected, 17-8; a stripped down version, providing for hospital benefits only, lost, 16-9 ; and the Eisenhower administration's "subsidy" proposal was also rejected by the committee. In short, there was a continued deadlock.

So, early in June, Chairman Mills moved to break the impasse. With the cooperation of the AMA, Mills devised a plan to expand greatly the program of medical vendor payments provided under the State-run public assistance programs. This was to be accomplished by creating a new assistance category called "medical indigency," for elderly people who might not otherwise qualify for welfare in their States but who needed help with their medical bills. (14) From the point of view of the members of Congress, the Mills plan had several merits : It was more modest in cost and scope than either the Forand bill or the Republican "subsidy" plan; from a technical standpoint it was a logical first step; it was a "Democratic bill" in a Democratic Congress and was sponsored by the respected Ways and Means Committee chairman; and, not least, it had the backing of the AMA. Therefore, Chairman Mills' proposal proved to be the one upon which a congressional consensus could be reached. The proposal (H.R. 12580) was quickly approved by the Ways and Means Committee, easily won clearance for a floor vote from the House Rules Committee, and whisked through the House of Representatives by a vote of 381-23.

Over in the Senate, the Finance Committee modified the "Mills bill," renaming it the "Kerr-Mills" bill, and then sent it on to the Senate floor--after first rejecting a bill embodying the health insurance approach by a 12-5 vote. Despite this setback to their proposal, the pro-insurance forces contrived to carry their measure directly to the Senate floor as an amendment to the Kerr-Mills bill--a strategem easier to employ in the Senate than in the far more disciplined House. In late August, at an unusual post-convention session attended by both major presidential candidates (Vice President Nixon and Senator John F. Kennedy), all three of the principal alternative approaches to the health care issue were brought to a vote. (15) The Vice President canvassed Republican ranks in support of the GOP "subsidy plan," which was sponsored by Senator Javits. Senator Kennedy, along with his vice presidential running mate, Senate Majority Leader Lyndon Johnson, canvassed the Democratic ranks in behalf of the social security plan, embodied in the amendment (to Kerr-Mills) co-sponsored by Kennedy and Senator Clinton P. Anderson of New Mexico. And another group of Democrats, led by the influential Senator Robert F. Kerr of Oklahoma, pressed for enactment of the Kerr-Mills bill.

The vote came on August 23rd. First the Republican "subsidy" plan was defeated by 67-28 in a straight party-line vote. Then Senator Kerr and other Democrats teamed with Republicans to defeat the Government insurance amendment, 51-44. The Kerr-Mills bill then swept through by a vote of 91-2. A Senate-House conference committee quickly resolved the differences between the two chambers, and on September 13th, the Kerr-Mills bill was signed into law (Public Law 86-778).

Some partisans of health insurance under social security were bitterly disappointed. But in perspective, the measure had at least obtained a floor vote in the United States Senate for the first time in its half-century as a national issue; and it had lost by a relatively small margin. Moreover, while opponents of health insurance under social security hoped Kerr-Mills would suffice as an alternative, many experts viewed the new program as a logical prerequisite and necessary complement to any insurance program.

Thus the enactment of Kerr-Mills did not end the pressure for a full-fledged Government health insurance program for the aged. Senator Kennedy made "Medicare," as the proposal now came to be called, a major issue in his campaign. He repeatedly attacked the Kerr-Mills program as inadequate by itself to deal with the problem. (16) Republican Governor Rockefeller concurred, and during the campaign, Vice President Nixon also conceded the point. Calling Kerr-Mills "most inadequate," he promised if elected to take further steps. Finally, Senator Kennedy's election victory gave a major new impetus to Medicare; for the first time in 8 years, Government health insurance would have Presidential backing.

Medicare continued to receive prominent play during the early weeks of 1961. Just before the new administration took office, the long-planned White House Conference on Aging spotlighted the issue. Medicare partisans were elated when three high-ranking Republicans who had served in the outgoing Eisenhower administration--Arthur Larson, Marion Folsom, and HEW Secretary Flemming--publicly endorsed the proposal. Shortly thereafter, a special task force on Health and Social Security for the American People, appointed by President-elect Kennedy and headed by Wilbur Cohen (at the time a University of Michigan professor), surprised no one by recommending hospital insurance under social security, as well as a number of other measures. (17) (Cohen was slated to become Assistant Secretary for Legislation at HEW and, as such, would be the administration's chief strategist on Medicare, while the Social Security Administration would once again provide technical assistance.)

A few days after his inauguration, President Kennedy sent a special message to Congress on health, followed by a new administration health insurance bill, to be sponsored by Senator Anderson (S. 909) and Representative Cecil King of California (H.R. 4222). However, the immediate prognosis for the King-Anderson bill was not favorable. As the Kennedy administration took office, the economy was experiencing a mild recession and the President decided to give priority to a series of anti-recession measures, among them a bill to increase social security cash benefits without raising social security taxes. But, more important, the administration simply did not have the votes; either in the Ways and Means Committee (18) or on the floor of the House. Because President Kennedy's margin of victory had been the smallest in recent history, the Democratic Party had actually lost some 20 seats in the House of Representatives (although in the Senate, the outlook was slightly improved with the addition of two more Democrats). From the very outset, therefore, President Kennedy was compelled to look ahead to the mid-term elections of 1962 for the opportunity to build the congressional majority for his program that had eluded him in 1960. Accordingly, a decision was made fairly early in the year to postpone a vote on Medicare until 1962 when, it was hoped, the members might be more sensitive to public pressure.

During the next several months, the President became preoccupied with foreign affairs in general, and the cold war in particular. There was the launching of the Peace Corps and the Alliance for Progress in Latin America, the ill-fated attempt to invade Cuba at the Bay of Pigs, the Communist military pressure in Laos, a summit meeting with Russia's premier Nikita Khrushchev, and the crisis over the Berlin Wall.

But while the Kennedy administration marked time on Medicare, the public debate over the issue gained in intensity. Just after the election, Dr. Ernest B. Howard, assistant executive vice president of the AMA and chief strategist of organized medicine's anti-Medicare campaign, declared that the election results would not force the medical profession to compromise its viewpoint. "The surest way to total defeat," he told fellow physicians in a speech, "is to say, we are now going to sit across the negotiating table and see what you will give us. I think no one should underestimate the tremendous strength of medicine; that's the way we won last time."

A few weeks later, the AMA launched an "all-out effort" against "the most deadly challenge ever faced by the medical profession." The AMA's campaign included distribution of several million pamphlets, numerous radio and TV commercials, a heavy speechmaking schedule by a 70-man speakers bureau, "Operation Coffee Cup" (an effort to generate constituent letters to Congressmen), and other grass-roots activity in opposition to Medicare.

This activity was complemented by concerted AMA pressure on the States to implement the Kerr-Mills act at an early date, in the belief that, given a chance, the new program would prove sufficient to deal with the problem. AMA leaders likewise conferred, early in January 1961 with the new Secretary of HEW, Abraham Ribicoff, in order to urge the Department to expedite its part in the Kerr-Mills program (which was a joint Federal-State venture).

Another significant move by organized medicine was the establishment, in the summer of 1961, of a full-time, political action arm, called AMPAC (for American Medical Political Action Committee). Modeled on organized labor's COPE (or Committee on Political Education) (19) AMPAC was designed to utilize the full repertoire of election ca.mpaign activities.

The commercial health insurance carriers and the nonprofit Blue Cross Association were also active during these months. A major contribution to the fight against Medicare was a challenge by insurance men of the Kennedy administration's cost estimates for the King-Anderson bill. In addition, both the commercial insurance companies and Blue Cross-Blue Shield began development of new low-cost programs for elderly people which it was hoped, would accelerate the spread of private insurance among people over age 65. The commercial carriers' so-called "State 65" plans--designed to reduce costs by pooling risks, cutting commissions, employing mass enrollments, and other devices---was announced late in 1961. The Blue Cross's over-65 plan was announced as the 1962 congressional vote on Medicare neared.

On the other side, organized labor and its allies were equally busy promoting the bill. One project involved mobilization of local pressure in the districts of Ways and Means Committee members. Another involved helping a group of physicians organize in behalf of Medicare. The "Physicians' Committee for Health Care Through Social Security," as it was called, was headed by Dr. Caldwell Esselstyn, a former neighbor and personal physician to Eleanor Roosevelt and more recently the founder of an experimental group practice clinic in upstate New York. The physicians' committee was able to enlist about two-score internationally known physicians including Dr. Benjamin Speck, the noted surgeon Dr. Michael De Bakey, and Nobel prize-winners Dr. Arthur Kornberg and Dr. Dickinson Richards. (20)

A third project, aided by the White House and the Democratic National Committee as well, involved an effort to mobilize elderly people themselves in behalf of Medicare. The "National Council of Senior Citizens for Health Care Through Social Security" (later simply "National Council of Senior Citizens") grew out of "Senior Citizens for Kennedy"--the 1960 Democratic campaign operation--and was also headed by former Congressman Forand. Starting with a nucleus of union retiree organizations (the United Auto Workers, United Steel Workers, International Ladies Garment Workers, and others) comprising several hundred thousand pensioners, the organizers of the National Council were able within a few months to build a loose confederation of senior-citizen groups (mostly union, golden-age, senior-center, and church groups) numbering about 1 million persons. Not only did the National Council thus establish itself as a spokesman for the elderly, but it was able to stimulate local political action through its various member organizations.

Also during these months, the two sides competed for the support of other community organizations. In February, the National Council of Churches came out in favor of Medicare. In June, the General Assembly of the United Presbyterian Church failed to vote an expected endorsement, following a vigorous and well-organized AMA campaign to dissuade the Assembly's delegates; instead, the Assembly referred the question to a committee for further study. (21) This setback was re-dressed a few weeks later when the American Public Health Association (representing 40,000 public-health specialists) and the national board of directors of the YWCA both endorsed the King-Anderson bill. Finally, in January 1962, the American Hospital Association moved another step away from the AMA's position, declaring unequivocally that Federal help was necessary and that the source of the funds was "of secondary importance." (22)

In July and early August of 1961, the Ways and Means Committee again held public hearings on Medicare, but the testimony was largely repetitive of the earlier hearings and served only to emphasize the division that still existed. The committee took no further action on the bill, and shortly afterward, House Speaker Sam Rayburn admitted publicly that there were not enough votes for the measure at that point to bring it out of committee. (Some sources reported an informal tally of 15-10 against Medicare--an improvement over 1960, but still three votes shy of committee approval.)

At the end of the 1961 session of Congress, the tempo of the Kennedy administration's Medicare campaign began to pick up. In September the President sent a letter to Senator McNamara, chairman of the Special Committee on Aging, promising to give Medicare "highest priority" in the next session of Congress. A few weeks later, HEW Secretary Ribicoff publicly pledged "a great fight across the land" for Medicare. Medicare was a featured topic around the country in late October, at a series of 14 White House-sponsored regional conferences. Then, in December, an administration task force was set up under Assistant Secretary Cohen of HEW to consider modifications in the King-Anderson bill, in light of criticisms and suggestions made both privately and in the public debate. (23)

When the second session of the 88th Congress convened in January 1962, a major administration push for Medicare got underway. Reports at that time indicated that the President's strategy was to obtain floor action in both houses of Congress, if possible, even if there were not enough votes for passage. The President was said to have concluded that the issue was popular with the voters (Gallup polls showed public support running as high as 69 percent); in the fall campaign, the President was expected to make Medicare his "cutting edge issue"-- the symbol of his whole New Frontier program.

As the session progressed, a feeling of optimism developed among Medicare supporters. The polls continued to show strong public approval. Grass-roots pressures continued to build and mail from constituents was running heavy and favorable. The President was regularly questioned about Medicare in his press conferences. Other administration spokesmen maintained a busy speechmaking schedule. Indications that the administration was willing to make reasonable compromises also improved the congressional attitude, as did a disappointing report, in May, on the first 18 months of the Kerr-Mills Act. The report showed that only a little more than half the States had put the program into operation and only 88,000 elderly people had been helped, mainly in four States.

Another hopeful sign was a split among Republicans and hints of flexibility on the part of the AMA. First, Representative Frank T. Bow (Republican of Ohio) introduced a bill (H.R. 10755) to grant income tax credits of up to $125 a year for persons over age 65, toward the purchase of specified types of private health insurance. (Those who paid less than $125 a year in taxes would have received compensatory "certificates" from the Government.) Soon afterward, Representative John V. Lindsay (Republican of New York) introduced a bill (H.R. 11253) on behalf of Governor Nelson Rockefeller embracing the social security financing mechanism but including a private insurance option. Even more significant was a similar shift by a group of Republicans in the Senate, led by Senator Javits. This group introduced a new bill (S. 2664), calling for social security financing of a program providing three benefit options, one of which, as in the Lindsay bill, would have permitted beneficiaries to use private insurance. (24)

Finally, in a magazine interview, AMA Executive Vice President F. J. L. Blasingame indicated that his organization might ultimately accept Federal subsidies for Blue Cross and Blue Shield coverage of the needy aged. (In other words, AMA leaders were returning to the stand they had previously taken on this traditionally Republican idea, which traced its roots back at least to the original Taft-Smith-Ball bill of 1946 and had found expression in the Flanders-Ives bills of 1949, the Javits-Flemming bills of 1960, and most recently, the Bow bill.)

By far the most important cause for optimism during the spring of 1962, though, was the progress of behind-the-scenes negotiations between administration strategists and the members of the Ways and Means Committee. Several compromise ideas were under discussion.

At one point, a Medicare proposal limited to "catastrophic" coverage was rumored to have won the potential support of three previous opponents on the committee, and, if true, the earlier tally of 15 to 10 against Medicare might have been changed to a 13-12 vote in favor of a modified version. But after several weeks, the negotiations were terminated. Reportedly, the administration was unwilling to accept the terms of the committee members involved--that those elderly persons already retired be required to contribute premiums in order to qualify for benefits, and that the Kerr-Mills program be scrapped. (Whatever its short coming as then conceived, the Kerr-Mills approach had always been viewed by social welfare officials as a necessary complement--though not an alternative--to any insurance-based program.)

These highly technical private discussions contrasted markedly with the public debate, which was becoming increasingly shrill and emotional. Supporters of the King-Anderson bill accused the AMA of "scare tactics" and "irrational tirades," of using "inflammatory labels" and misrepresenting the bill. The Secretary of HEW called the physicians "panicky" and "desperate men." On the other hand, opponents of Medicare charged that the administration was pushing an unnecessary proposal merely for "partisan political gain." One AMA spokesman accused the administration of mounting a "propaganda blitz" to pressure Congress into passing the measure. The Treasury, he said, was being "looted" to subsidize the biggest lobbying campaign the Nation had ever seen.

The climax of the public debate came in the spring of 1962. On Sunday, May 20, President Kennedy spoke to a crowd of nearly 20,000 elderly people in New York's Madison Square Garden, while other administration officials addressed similar rallies in 45 cities. The President's speech was broadcast live over three television networks to an estimated home audience of 20 million persons. Two days later, the AMA's Dr. Edward Annis replied in a network speech broadcast from the same platform used by the President, but with the Garden auditorium dramatically empty, to symbolize the AMA's "underdog" stance.

A week later, the Ways and Means Committee began executive sessions on Medicare. But after 3 weeks, the sessions ended with the bill still bottled up; reportedly the committee remained deadlocked, 15-10 against. At this point, there were two possible ways of circumventing the formidable hurdle of defeat in committee, neither of which was very promising. One was a discharge petition, requiring the signatures of 218 members (an absolute majority) of the House; Medicare supporters did not have the votes for this difficult and unpopular parliamentary maneuver. (25) The other tactic was to bypass the House of Representatives (although under the Constitution the House is the only chamber empowered to originate tax legislation). This tactic would involve attaching Medicare as a Senate amendment to some other House-passed tax measure and then persuading the House to accept the amended bill--most likely through the customary procedure of setting up a Senate-House conference committee to reconcile the differences between the two chambers. The resulting "conference report" would then be submitted for approval in each chamber. However, the objections to this procedure were manifold. First it circumvented a jealously guarded prerogative of the House of Representatives and would not sit well with the members. Second, the House delegation to the conference committee would consist of members of the bypassed Ways and Means Committee, who did not favor the bill, while the Senate conferees would be members of the Senate Finance Committee, who likewise did not favor the bill. (An attempt by Senator Anderson to obtain Finance Committee hearings for Medicare, back in January, had been defeated by a 10-7 vote.) Third, the House Rules Committee, which would have to clear the Senate version of the bill for a conference, did not favor Medicare either. Nor, finally, were there enough votes on the House floor for passage. Nevertheless, many Senators wanted to go on record in favor of the bill; President Kennedy had promised to push it to a vote; Republican Senator Javits was threatening to force the administration's hand by offering his own version of the measure for a Senate vote; and, in any event, a Senate vote would serve to dramatize the issue. For these reasons, when it became clear that Medicare was stalled in the House, administration strategists turned their, attention to the Senate. There they entered into negotiations with Senator Javits and several other GOP Senators whose positions were not far from that of the administration (they now accepted the basic social security principle) and whose votes would be crucial to Senate passage. On June 29, after several weeks of discussion, Senators Anderson and Javits offered a compromise Medicare bill, incorporating some of the features of both the King-Andepson and Javits bills. They presented it as a floor amendment to a House-passed welfare measure (H.R. 10606). (26)

The Anderson-Javits amendment came to a vote on July 17, after two weeks of intensive behind-the-scenes lobbying and head-counting. And, in a tense roll-call before crowded galleries, the mecasure was defeated by two votes, 52-48. (27) Within minutes after the Senate vote, President Kennedy went before television news cameras at the White House and angrily vowed to carry the Medicare issue to the voters in the fall election campaign.

Several factors contributed to this latest Medicare defeat. At the beginning of the year, Senate passage had seemed assured; some observers estimated as many as 60 votes for the bill. But some potential Republican votes had been lost because the bill was brought to a vote in an election year and was thereby tinged with partisanship. Instead of a hoped-for 10 Republican votes in favor, there were only five. More votes were lost because of the stratagem of bypassing the Senate Finance Committee. Such "irregular" procedures for avoiding legislative hurdles exact a toll among "establishmentarians," who are protective--on principle--of committee prerogatives. Others were reportedly dissuaded because the bill stood virtually no chance in the House. A Senate vote for the bill would merely have antagonized the medical profession back home without leading to enactment of Medicare.

Some observers also felt the administration had simply been out-maneuvered and out-generaled by opposition leaders, particularly Senator Kerr. Due to the lateness in the session, the administration had been forced to attach Medicare to an urgently desired bill to extend expiring welfare benefits. By the time the debate got underway, the deadline for expiration had already passed. Some Senators feared further delays (and political distress back home) if the controversial Medicare proposal were tacked on. Opposition leaders played on this worry, as well as other tactical errors by the administration, to break away one or two more potential supporters.

There were also technical arguments that strengthened the hand of those favoring delay on Medicare. Some experts still had doubts about the reliability of the cost estimates for the bill. Furthermore, the insurance industry had only just launched its last-ditch effort to extend private coverage of elderly people. And the Ways and Means Committee, in a little-noticed action during its June deliberations, had approved increased Federal contributions to the States for the provision of medical care to elderly persons on public assistance.

Equally important, however, was the deterioration of the political climate. In the weeks prior to the vote on Medicare, the administration had been buffeted by a number of setbacks. A confrontation with major steel-makers in April over price increases had ricocheted against the President, as did "Blue Monday" (a one-day stock-market panic on May 28th). The President had also suffered a string of congressional defeats on other administration proposals.

On the Medicare issue in particular, organized opposition, especially by mail, had increased significantly after the AMA's reply to the President's TV appeal. Poll support had also sagged to about 50 percent, although some blamed the drop on the wording of the pollsters' questions. Not surprisingly, these troubles were reflected in a general decline of voter support for the administration-from a high of 61 percent to 55 percent, the lowest point since the election.

Early in the summer, a spate of newspaper and news magazine articles pictured the President as being in trouble. Political scientist Andrew Hacker, for example, concluded in a New York Times Magazine article that Mr. Kennedy lacked the prestige and "overall bearing" of other powerful Presidents, and seemed "insecure." Perhaps the most cutting criticism of all, though, came from former President Eisenhower, who charged that the Kennedy administration was "foundering."

On the other hand, political columnist Walter Lippmann concluded that much of Kennedy's difficulty stemmed from the overall mood of the country. There was, Lippmann sensed, no great compulsion for the sweeping proposals the President advocated. "Nobody knows, I suppose, what is the actual division of voters between those who want reforms and innovations and those who do not want any more Federal spending and Federal iactivity. The resistance must, I should guess, be near to half the voters." Later Lippmann added that the President had been overconfident about what he could accomplish when he took office. "We can now see that the promised innovations and reforms would have been politically workable only if the voters, feeling that they were in a great crisis, had turned the Democratic gains of 1958 into a landslide in 1960."

In the wake of the 1962 Senate defeat, Medicare partisans, searching for scapegoats, fell to fighting among themselves. Some became pessimistic and concluded that Medicare was a lost cause. Others, especially those who were closely involved, viewed the setback as only temporary; as the months went by, the arguments in favor of Medicare were growing stronger.

The elderly population was continuing to increase at a rapid rate. Between 1950 and 1963, their number grew from about 12 million to 17.5 million, or from 8.1 to 9.4 percent of the total population. Meanwhile, the cost of hospital care continued to rise at about 6.7 percent a year, several times the annual increase in the cost of living. From 1960 to 1964, average hospital costs increased from about $29 to $40 a day, with no sign of any letup in the rate of increase. As a result, private health insurance carriers were repeatedly forced to increase premium rates (or else "bleed" the coverage of their policies), making private insurance ever more prohibitive (or less adequate) for the many old people who were living on fixed incomes. By 1964 the proportion of the aged who were privately insured for hospital care seemed to be leveling off at about 50 percent. A Senate study that year estimated that only one-half of the policies issued to retirees provided comprehensive coverage (75 percent or more of the average hospital bill). In other words, only about 1 in 4 of the aged had adequate hospital insurance protection. (28)

With the passage of time, many insurance men became resigned to the fact that a Government program might be necessary. Not only were the aged an unprofitable market for private health insurance, but as long as the hospitals were not being reimbursed adequately for the cost of treating elderly patients, there was a tendency to load the cost of "charity" care onto the paying customers and their insurance carriers--thus putting pressure on the whole private health insurance system. Although the insurance industry as a whole never officially withdrew its opposition to Medicare, its antagonism did in fact become attenuated, and a few of the smaller companies actually broke ranks to endorse the measure.

Meanwhile, the Kerr-Mills program continued its slow development. After more than 3 years, only 32 of the 50 States had Kerr-Mills programs in operation, and very few States offered comprehensive benefits. In fact, five States received 83 percent of the Federal disbursements for the program. Several of the poorer States paid for only a token 10 days to 2 weeks of hospital care, while others paid benefits only to those who were in immediate danger of death. With State treasuries already overburdened in many cases, the State legislatures were hard-pressed to find additional revenues.

These developments were paralleled by a further accretion of congressional support for Medicare. In the 1962 election campaign, both supporters and opponents had made aggressive efforts to carry the issue to the voters. The Democratic National Committee and the political operatives in labor's political action arm, COPE, waged a determined campaign in behalf of Medicare supporters. In their canvassing, they appealed particularly to older voters, who normally tended to favor the Republicans but who might be persuaded to switch allegiance on the strength of the Medicare issue.

On the other side, the AMA strove to repeat the 1950 electoral referendum against the Wagner-Murray-Dingell bill. AMPAC, organized medicine's new political action arm, concentrated its fire on vulnerable pro-Medicare incumbents, as well as a few key candidates whose defeats would be a serious psychological blow to Medicare proponents. For example, AMPAC was particularly active in Connecticut, where former HEW Secretary Ribicoff, an ardent Medicare advocate, was running for a vacant Senate seat.

In the aftermath of that election, some of the more fervent supporters claimed a mandate for Medicare, but in truth, the campaign had been dominated more by foreign affairs. The Republicans had seized the initiative with telling thrusts against President Kennedy for his handling of the abortive invasion of Cuba; but just before the election, the Cuban missile crisis broke. The successful outcome, from America's point of view, of that historic facedown with the Russians greatly enhanced Mr. Kennedy's prestige, and his party fared somewhat better than is customarily the case in mid-term elections. All but a handful of Democratic members survived in the House, and, in the Senate, the party actually gained four supporters, including the former HEW Secretary, thus ensuring that Medicare would succeed in that chamber on the next try. (29)

Equally important for the future, two Democratic vacancies had opened up on the Ways and Means Committee. These were filled with men who ultimately agreed to support Medicare under certain circumstances. By 1964, therefore, the division in the committee had narrowed to 13-12 against, and pro-Medicare strategists focused their energies on what became known as "the problem of the 13th vote."

Some observers had believed from the very beginning that Ways and Means Committee Chairman Wilbur Mills would, in the end, be the key to the success or failure of the Medicare bill. Not only does his committee (as the originator of tax legislation) occupy an especially important position in our constitutional system (30), but in addition, Congressman Mills had built a reputation for intelligence, expertise, and personal integrity during his many years of apprenticeship on the committee. For this reason, it was believed that if he agreed to support Medicare, he could convert several more committee members, and perhaps 50 to 75 votes on the floor of the House as well. This conjecture may or may not have been true. But up to 1963, at least, the chairman had remained opposed, and during the 1963-64 session of Congress (as in previous sessions)administration strategists devoted much of their time to trying to convert Congressman Mills.

By comparison with the clamorous public debate of 1961-62, though, the months following the 1962 election seemed like a lull, giving some observers the illusion that the bill had in fact been buried. However, the AMA was not misled. In the spring of 1963, AMA leaders quietly launched an ambitious new campaign called "Operation Hometown." Meanwhile, the National Council of Senior Citizens worked to expand its membership beyond the 1.5 million mark and stir up more support for Medicare among the elderly. Similarly, the Senate Special Committee on Aging kept the issue alive with additional public hearings; particularly notable were staff studies of the effectiveness of the Kerr-Mills program and the extent and quality of private health insurance coverage.

Also during these months, Senator Javits seized the initiative with an effort to find some formula that would win the support of the insurance industry-and, hopefully, break the congressional deadlock. In September 1962, the Senator announced that he was forming a "National Committee on the Health Care of the Aged" under the chairmanship of former HEW Secretary Arthur Flemming (another former HEW Secretary, Marion Folsom, was also a member). But unfortunately, this effort to woo the insurance men was doomed even before it began; the major insurance carriers turned down Javits' invitation to join in the National Committee's deliberations. (31)

The Kennedy administration, by contrast, was pre-occupied during these months with other issues. Although the President did send a special message to Congress on the problems of the aged, along with a slightly revised King-Anderson bill (H.R. 3920 and S. 880) (32) his attention was devoted to the unfolding civil rights revolution, the drafting of a civil rights bill, the trade expansion bill, the nuclear test ban treaty, the drive to enact tax reforms, and other matters.

Late in 1963, the legislative machinery of the Congress once more began to process Medicare. In mid-November, the Ways and Means Committee again held public hearings, in anticipation of subsequent executive sessions in the spring of 1964. However, the hearings were interrupted by an event that would greatly alter the political climate of the country, and the course of history-the assassination of President Kennedy.

One of the many consequences of that tragedy was a surge of public support for the martyred President's legislative program. The new President, Lyndon B. Johnson, a renowned legislative leader, moved quickly to act upon these sentiments. Almost from the outset of his administration, Mr. Johnson began exhorting Congress to act on all manner of issues, including Medicare. In his first speech to Congress, he mentioned Medicare as one of his top priorities. Then, early in February 1964, he sent another special health message to Congress. At about the same time, he told a group of elderly people that the Medicare bill "cries out for enactment." Later in the spring, he promised : "We are going to fight for medical care for the aged as long as we have breath in our bodies."

As the pressure for Medicare thus intensified once again, rumors spread that the necessary 13th vote had been obtained in the Ways and Means Committee and that Chairman Mills would also support some version of Medicare (most likely one giving beneficiaries an option of higher cash benefits or health insurance--along the lines of the chairman's tentative suggestion to the committee in 1960). But in the end, the 13th vote did not materialize and the chairman continued to hold out against the measure, concentrating his opposition against the administration's cost estimates. By the end of March, the President was hinting that Medicare was in trouble.

In a speech before a labor gathering, he remarked, "We are going to pass a medical assistance bill--if not this week, if not this month, if not this year, at the earliest possible date." Behind-the-scenes maneuvering continued for several more weeks. But at the end of June, Representative King sought to avoid another defeat by asking the other members of the Ways and Means Committee to postpone action on the King-Anderson bill. Two weeks later, the committee reported out a bill authorizing only increased social security benefits (H.R. 11865). The bill was quickly passed by the House and sent over to the Senate.

In contrast with 1962, however, the Senate now refused to accept the judgment of the House. At President Johnson's urging, the Senate Finance Committee finally held public hearings on the measure early in August (thus overcoming one more legislative hurdle). And, though the committee failed once again to approve the King-Anderson bill (by a 6-11 vote), there were enough votes on the floor this time to pass the measure (as an amendment to H.R. 11865) even without committee sanction. Thus, the first time in American history, on September 2, 1964, a Government health insurance plan won approval in the Senate of the United States, by a vote of 49-44. The drama of the occasion was heightened, moreover, by the presence of the Republican Presidential nominee, Senator Barry M. Goldwater, who flew in from Arizona expressly to vote against the proposal.

On the heels of Medicare's Senate victory, the administration devised an unorthodox maneuver to force House approval of the measure. Because the Senate had added amendments to H.R. 11865, a Senate-House conference committee was required in order to reconcile the sharp differences between the two chambers. The administration's plan was to obtain a House vote on a resolution "instructing" its conferees to vote for Medicare in the conference committee, even though the measure had not been formally approved by the House. However, this indirect way of obtaining House sanction for the measure in effect bypassed the Ways and Means Committee, much as a discharge petition would have done. Many House members, including Medicare supporters, refused to back such a maneuver, so the administration's plan was quietly dropped.

Conference committees are, by their very nature, exercises in compromise and accommodation. But with an issue as controversial as Medicare, the machinery broke down. After considerable skirmishing (and some wavering), the House conferees, led by Chairman Mills, voted 3-2 against accepting any social security health plan. Conversely, the Senate conferees, steeled by President Johnson's urging, refused by a 4-3 vote to accept any bill that did not include some form of hospital insurance.

Ordinarily, it would have been unthinkable for the administration to risk the wrath of older voters by blocking a social security benefit increase. But in this instance, the administration took that risk in order to sidestep a trap that had been set by Medicare opponents. The cash benefit increase in the pending bill had deliberately been set so high, and the consequent tax hike was so great, that it was feared the Congress would be loathe to raise taxes again soon. Indeed, some thought that the 10 percent tax rate envisaged in the bill would be looked upon by the Congress as a ceiling. This might permanently foreclose the further tax increases required to finance a health insurance program. To forestall this eventuality, the President (with the backing of the AFL-CIO and National Council of Senior Citizens) elected to hold out against the bill unless it included Medicare. On October 2, 1964, therefore, Chairman Mills was forced to announce that the conference committee was hopelessly deadlocked--a rare event in the annals of Congress.

Afterward, The New York Times fretted editorially that Medicare was perhaps destined for "the limbo of perennial issues." But in fact, the final victory was not far off. Just before the conference committee disbanded, Chairman Mills, in a speech to a Kiwanis Club meeting back home in Arkansas, hinted that he might be preparing to change his position. Mills explained : "I want to make it clear that I have always thought there was great appeal in the argument that wage earners, during their working lifetime, should make payments into a fund to guard against the risk of financial disaster due to heavy medical costs. . . . I am acutely aware of the fact that there is a problem here which must be met."

Furthermore, in the course of the conference committee's deliberations, Chairman Mills had intimated that, although he could not accept Medicare through the conference route, he might give favorable consideration to the measure in the Ways and Means Committee, during the next session of Congress.

Even before the election of 1964, therefore, it was becoming clear that Medicare was an idea whose time had come. The need for some program was almost self-evident; the sharp decrease in personal income and greatly increased medical needs of those who had reached retirement age conspired with the rapidly rising cost of medical care to create an imperative. Alternative solutions had been tried or examined and had been found wanting. Consequently, political support for Medicare had gradually increased, while the opposition diminished. Some observers detected a significant fall-off of antagonism toward Medicare within the business community during 1964-65. (33) One sign was the fact that some local Chambers of Commerce reportedly broke with the position of the parent body in Washington, which had always stoutly resisted the proposal. In addition, public support for Medicare rebounded after the brief slump in 1962; polls during 1964 indicated that about two-thirds of the electorate again favored the idea. Professor and Mrs. Somers, who have written extensively on health issues, have concluded that public confidence in the social security system was an important contributing factor; many advocates made a point of stressing that Medicare would utilize the "tested" and "proven" mechanism of social security.

Finally, the political climate was steadily improving. In 1964 public support for the President and the ruling party was at an all-time high. The country was enjoying an interlude of great political stability at home and, in the wake of the Cuban missile crisis, self-confidence in the international arena. The economy was in the middle of the longest and most orderly boom in recent history and Americans were enjoying unparalleled prosperity. That year, the most far-reaching civil rights bill since Civil War days was enacted by Congress. Clearly, a liberal tide was running strongly.

If there were still any lingering doubts about the prospects for Medicare, they were dispelled by the outcome of the 1964 election. President Johnson was returned to office by the largest plurality in history, carrying in on his coattails the biggest congressional majorities since New Deal days. In the House, the Democrats picked up 38 seats, to give the Party a margin of 295-140. In the Senate, where the Democrats already had held a lopsided 66-34 majority, the party gained two more seats.

Medicare was by no means the foremost campaign issue. But the long-standing Democratic commitment was well known, and President Johnson's oft-repeated vow to give the measure top priority if elected underscored this commitment. Indeed, the fact that Medicare was not an overarching issue suggested a climate of acceptance, or at least resignation, among, the voters. (34)

Just after the election, Chairman Mills made another speech, in which he announced: "I can support a pay-roll tax for financing health benefits just as I have supported a payroll tax for cash benefits." Reading between the lines, what Chairman Mills seemed to be saying was that the Johnson landslide had clearly settled the issue, and he would accept the decision that had been made at the polls. (35)

When the King-Anderson bill was submitted anew to the 89th Congress, in January 1965, it was accorded the honor of being the first bill introduced in each chamber (H.R. 1 and S. 1). Immediately afterward, Chairman Mills took charge of re-drafting the bill into its final form. During the next 2 months, the chairman was the focus of a many-sided negotiation process between the various interests that would be responsible for administering the Medicare program, or who had some stake in its operation--physicians, nurses, hospital administrators, nursing home representatives, State health and welfare officials, labor leaders, insurance industry representatives, Federal officials, and many others. Inevitably, there were conflicts over technical matters, some of which had important economic, social, and political implications ; but never during these months was the basic policy decision in doubt, despite last-ditch resistance by organized medicine and some of its allies.

Just after the election, in fact, the AMA held a high level strategy meeting at its Chicago headquarters, at which it was decided to fight on to the very end. Another publicity campaign was mapped. Then, in early January, AMA leaders announced they would support an alternative to Medicare based on the principle of the original Taft-Smith-Ball bill and its many successors--that is, a program operated through private insurance carriers (and the States), with premiums for the low-income elderly subsidized out of Federal and State revenues. "Eldercare," as the AMA's proposal was called, was promptly introduced by two Ways and Means Committee members, A. S. Herlong, Jr., of Florida and Thomas B. Curtis of Missouri (H.R. 3727 and H.R. 3728), and given wide publicity. But ironically, advertising claims that the proposal could provide more comprehensive benefits than Medicare only served to goad the Ways and Means Committee into expanding the scope of the Medicare bill. (36)

Finally, on March 23,1965, the Ways and Means Committee voted 17-8 to substitute a drastically revised committee bill for King-Anderson. (The committee bill, 296 pages long, had 102 separate sections.) The next day, Chairman Mills introduced this "Mills bill" (H.R. 6675) on the House floor, and on April 8, after 1 day of floor debate, the Mills bill passed--without amendment-by 313-l15. (37) It was all very anti-climatic--indeed, almost perfunctory. By mid-1965 public attention had shifted to other issues--the growing racial crisis, the war on poverty and the war in Vietnam. Nonetheless, approval of Medicare by the House of Representatives was a momentous occasion, and President Johnson paused briefly to hail it: "This is a landmark day in the historic evolution of our social security system."

The Mills bill then went to the Senate, where the Finance Committee held hearings in late April and early May, followed by extended executive sessions. The bill was finally reported out--with 75 committee amendments--on June 24 (by a vote of 12-5). During 3 days of debate on the Senate floor, some 250 additional amendments were considered. (38)

Then, on July 9, the Senate passed the measure by a 68-21 vote. A Senate-House conference committee labored for over a week in mid-July to reconcile a total of 513 differences between the two chambers, after which the final bill was approved in the House and Senate, on July 27 and 28, respectively. (39) Thus, America finally joined the many other nations that provided health insurance protection for the aged--in Winston Churchill's phrase, bringing "the magic of averages to the rescue of millions."

Footnotes to Chapter 4-

(1) Murray's internal memorandum on the subject, dated March 18, 1944, begins: "It has occurred to me that me might make a beginning in the direction of providing hospital and medical care by making such protection available to old-age and survivors insurance beneficiaries. . . ."

(2) The Commission proposed that Social Security purchase health service benefits from State plans that met Federal standards.

(3) This was the first of three programs to be dubbed "medicare." The term, apparently coined by some unknown newspaper headline writer, would also be applied to the Eisenhower administration's 1960 counterproposal to the Forand bill (which failed of enactment) and, ultimately, to what most people know today as Medicare.

(4) The first Forand bill provided for up to 60 days of hospital care, as well as surgical and nursing-home benefits, to all social security beneficiaries.

(5) Under the Constitution, Presidential approval follows enactment of a bill by Congress. Technically, this is still the case. But today, when most major bills either originate in the Executive Branch or become "administration bills" at some point in their history, the constitutional sequence has in effect been reversed. In practice, the President usually commits himself to a proposal before the Congress does, making the Presidential signature on an enrolled bill a mere formality.

(6) The Committee for the Nation's Health, which had been the principal standard bearer for the proponents of health insurance during the Truman era, had been disbanded in 1956, 1 year before the introduction of the Forand bill.

(7) Among other steps, AHA officials had also held discussions with Senator Lister Hill (co-sponsor of the Hill-Burton act) regarding the possibility of Federal subsidies for some of the excess cost of providing voluntary health insurance for the aged. But for a number of technical, administrative, financial, and political reasons this proposal never got beyond the discussion stage.

(8) Such hearings indicate that a committee is giving serious attention to the issue. But, in addition, they generate publicity for the issue; they provide a public forum for all interested parties to state their cases; they create a published public record on the issue; and, finally, they satisfy a legislative tradition that is deeply ingrained.

(9) Another early defector from the opposition ranks was the American Nurses Association, which endorsed the Forand bill in the spring of 1955.

(10) Spokesmen for the Blue Cross (nonprofit voluntary insurance) plans disagreed, however, and testified that Blue Cross was actively pressing to extend hospital insurance coverage to people over age 65.

(11) The first major Republican figure to endorse the social security financing mechanism was Governor Nelson Rockefeller of New York (a former Under Secretary of HEW) in a speech before the annual Governors' Conference, in June 1960.

(12) Evidently the AMA had retreated from its earlier interest in this approach, 15 years before.

(13) The discharge petition is a seldom-used and seldom-successful maneuver for circumventing the hurdle of committee approval. (See footnote No. 25).

(14) This plan was the forerunner of what we know today as Medicaid.

(15) On this unique crccasion, the Senate resembled the parliamentary systems in which party leaders sit as members of the legislature and actively lead their partisans in debate.

(16) The Democratic Party made a concerted effort to carry the health insurance issue to the voters with a special campaign operation called "Senior Citizens for Kennedy," headed by Congressman Aime Forand (who had announced his retirement just before Congress adjourned).

(17) This task force recommended that the bill be limited to elderly beneficiaries, as the most easily dramatized group; also, it suggested that doctors' fees be excluded (even for in-hospital surgery), in an effort to make the bill less objectionable to the medical profession. Both recommendations were subsequently incorporated in the administration's bill and were reflected in the final Medicare act. (Although surgical benefits were included in the final act, they were covered in Part B, which was not financed through social security taxes.)

(18) Some liberal strength had been added to the committee after the 1960 elections, but not enough to give Medicare supporters a majority.

(19) Interestingly enough, AMA lawyers sought (and received) from COPE staffers a detailed briefing on how COPE was set up and managed.

(20) While pro-Medicare doctors represented only a small minority of the profession, the physicians' committee did serve to counteract the public image of monolithic opposition to Medicare presented by the AMA.

(21) The study committee, after hearing arguments from both sides, issued a report strongly endorsing Medicare. This, according to one high-ranking participant, ended the AMA's attempts to get various denominations to repudiate the action of the National Council of Churches.

(22) The AHA's new stand was linked to an endorsement of the principle of Federal subsidies for private, nonprofit health insurance (e.g., Blue Cross) for low-income elderly--along the lines of the earlier Flemming and Javits proposals.

(23) Among the issues considered were: whether and how make use of commercial medical plans; whether to include a "cash option" for those who preferred not to be covered by a Government plan; the use of State agencies; the administration of nursing home benefits; the administration of outpatient services; and the formula for hospital reimbursement.

(24) Both Rockefeller and Javits hoped their private insurance option plans would prove sufficiently appealing to the insurance industry to break the impasse. However, insurance men remained

cool to any entanglement with the Federal Government insurance companies are regulated primarily through the States), and they also had doubts about the technical feasibility of the option idea.

(25) A discharge petition is difficult because it requires an absolute majority, rather than a simple majority of those present and voting (as is the case with most legislation). It is unpopular because it amounts to a repudiation of the committee and its chairman. On the infrequent occasions when the discharge petition has been employed successfully, it has usually been accomplished by an aroused majority.

(26) The Anderson-Javits amendment, as later modified by an amendment to the amendment, included benefits out of the general revenues for aged persons .not eligible for either social security or railroad retirement benefits; the use of private organizations (such as Blue Cross, Blue Shield, and insurance companies) as "fiscal intermediaries" between the Federal Government and the providers of health services; and an option under which beneficiaries could choose comparable private health insurance coverage at Government expense. The decision to include the uninsured elderly in the program and to utilize private health insurance organizations, both of which had been under consideration for several months within HEW, were significant struotural changes that were retained in the final Medicare Act.

(27) The test came on a motion to table the amendment. A tie vote would have been sufficient to keep the bill alive by blocking the tabling motion. And, in fact, a switch of only one vote would have saved the bill from defeat, since the second of the two crucial votes in favor of tabling--that of Senator Carl Hayden of Arizona--had been promised to the administration in the event that it became the deciding vote. This incident illustrates the problem of maintaining party discipline.

(28) Significantly, by late 1964, the much-heralded nonprofit State 65 plans had actually been set up in only eight States.

(29) Senate opponents of Medicare were also weakened by the loss of Senator Kerr ("the uncrowned king of the Senate," a colleague once called him) who died just after the 1962 session of Congress was adjourned.

(30) Democratic members of the Ways and Means Committee also serve as the Democrats "Committee on Committees"--that is, the committee that assigns fellow Democrats to the other standing committees of the House. Democratic members of the Ways and Means Committee are therefore doubly influential among their peers.

(31) The National Committee ultimately produced a report recommending a combination of basic hospital insurance under social security and supplementary private health insurance (along the lines of "major medical" insurance) to be provided through a federally chartered pool of private carriers. The "pool" idea was reminiscent of former HEW Secretary Folsom's ill-fated proposal a few years earlier.

(32) Borne of the administration's compromises with Senator Javits in the summer of 1962 were carried-over into the revised King-Anderson bill, but the private insurance option was dropped as technically dubious. On the other hand, a choice of three benefit packages was added. The Anderson-Javits proposal of 1962, including the private insurance option, was reintroduced in 1963 by Senator Javits (S. 849).

(33) Business Week magazine, a bellwether of business sentiment, had endorsed the plan as early as 1960, as did Life magazine.

(34) Two million elderly voters switched parties to vote for President Johnson in 1964, as did many more millions of middle-of-the-road businessmen.

(35) Among the many congressional opponents of Medicare who went down to defeat were three members of the usually well-insulated Ways and Means Committee.

(36) One other significant proposal was made subsequent to the 1964 election--by the ranking Republican member of the Ways and Means Committee, John W. Byrnes of Wisconsin. Congressman Byrnes's plan was to create a federally administered "voluntary" insurance program which the elderly could elect to join. It was to be financed out of the general revenues, but with the individual subscriber also paying scaled premiums (or State welfare agencies paying the premiums in his behalf). The Byrnes plan, in modified form, was ultimately adopted by the committee as the supplementary medical insurance plan (part B) of Medicare (see footnote No. 39).

(37) Actually, the crucial vote in the House came on a motion to recommit the Mills bill, which failed to pass by the relatively narrow margin of 191-236. The reason why no amendments to the Mills bill were offered in debate was that measures originating in the Ways and Means Committee are usually brought to the floor under a "closed rule" limiting floor amendments to members of the committee. Of course, this procedure further enhances the power of the committee.

(38) One suspenseful incident in the Finance Committee involved a surprise move by Chairman Russell Long, of Louisiana. The "Long amendments," which would have altered both the philosophy and impact of Medicare, were approved by the committee, but, after some furious lobbying, the committee reversed itself.

(39) The final Medicare act (officially part of the "Social Security Amendments of 1965") established a two-part insurance program. The "basic" program of hospital and related benefits was financed through social security taxes. Benefits included 90 days of hospital care, 100 days of nursing-home care, 100 home-nursing "visits" in each "spell" of illness, and hospital outpatient service--all subject to "dedutibles," "coinsurance," and other features, as well as certain other conditions. The second part consisted of a voluntary program of "supplementary" benefits, covering 80 percent (above an annual deductible of $50) of physicians' fees, additional home-nursing services, in-hospital diagnostic and laboratory work, certain kinds of therapy, ambulance services, surgical dressings, and so forth. This supplementary plan would be financed initially through a $3 monthly premium from each beneficiary, with a matching amount paid by the Government out of the general revenues. In addition, the act provided for a substantially expanded Kerr-Mills program extending "medical indigency" benefits to other age groups besides those over age 65. Of course, many other changes in the social security system were also included in the act.
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