The Evolution of Medicare

Introduction

MORE than 200 prominent people gathered in the small auditorium of the Harry S Truman Memorial Library in Independence, Mo., to witness the signing of the Medicare bill. On stage, next to a lectern decorated with the Presidential seal, a large table had been set up to accommodate the official, "enrolled" copy of the bill, which was bound in a rich leather folder. At about 2:30p.m., President Johnson and his party entered the auditorium and, to the accompaniment of the traditional Presidential anthem, "Hail to the Chief,"made their way to the stage to begin the proceedings.

The time-honored ritual that was about to begin marked the end of the legislative debate over the Medicare bill and the beginning of its implementation. Yet, in a larger sense, the bill-signing ceremony was merely a benchmark, a point of transition in the total process by which an idea was transformed into a fully operative social institution. For, at the heart of every major piece of social legislation there lies an idea, or a vision of how to effect a change in our social, economic, or political environment. As Secretary of Health, Education, and Welfare Wilbur J. Cohen, expressed it in a recent article on political action,(1) the basic idea is the "irreplaceable, irreducible first essential in the political process." In the case of Medicare, for instance, the basic idea consisted of a plan for a new Government service for the American people--health insurance protection under social security. For this reason, a full discussion of the Medicare debate must begin with the origins of the idea.

Before President Johnson signed the Medicare bill, he paid tribute to former President Truman (who was present at the ceremony) as the first Chief Executive to endorse health insurance under social security, 20 years before. Commenting on Mr. Truman's historic role, President Johnson observed: "We marvel not simply at the passage of this bill but that it took so many years to pass it."

In fact, the debate had been going on far longer than the President suggested. The issue of Government health insurance was first raised in this country almost 60 years ago, and the underlying principles are considerably older than that. Historians of social welfare are fond of citing the German compulsory health insurance program, inaugurated in 1883 by Chancellor Otto von Bismarck, as the historic seed of modern social security programs. However, the German program was itself but a step in the long trial-and-error process through which our modern social welfare programs have evolved.

The basic idea of individuals' pooling their resources in order to spread their economic risks can be traced to the so-called funeral societies of ancient Greece. Originally established to pay members' funeral costs, these societies ultimately came to have a variety of social and relief functions. In the same way, medieval craft guilds, precursors of modern labor unions, often set up welfare funds for the assistance of sick or needy members. And, in more recent times, a variety of mutual aid societies, as well as individual employers and labor unions, have provided sickness and other forms of insurance for workers. (2)

The notion that the government should share some of the responsibility for health care also has a long history, going back at least to the Greek city-states, where citizens enjoyed the ministrations of tax-supported public physicians.

Even the principle of compulsory participation is very old. In 1798 the U.S. Government set up a Marine Hospital Service (forerunner of the Public Health Service) ,and required the owners of merchant ships to contribute 20 cents a month into a sickness fund for each seaman in their employ. In the 19th century, as the industrial revolution gathered momentum, a number of labor unions and individual employers required that their workers join relief funds, many of which eventually came under government regulation.

The first broad-gauged compulsory health insurance law, moreover, was enacted in the state of Prussia in 1854, 29 years before Germany was united under Bismarck. The chancellor was thus able to draw upon this precedent in 1883, when he persuaded the German Reichstag to extend compulsory health insurance to workers throughout the German nation.

Bismarck's compulsory health insurance program proved highly successful. It soon spread to other European countries, notably Great Britain, and eventually expanded into the comprehensive system of worker protection we know today as "social insurance."

At the beginning of the 20th century, Britain was at the height of her power. As the hub of a great world empire, she was much admired and emulated in the United States. Consequently, acceptance by the British of social insurance, coming as it did in the midst of a wave of reform in this country known as the progressive movement, had a profound effect upon some American political and intellectual leaders. A movement to enact social insurance (starting with health insurance) on a State-by-State basis began in this country almost immediately after the passage of the British National Health Insurance program in 1911. Because the first round of the public debate on Government health insurance--from 1912 to 1920--crystallized attitudes and shaped the whole character of the subsequent half-century of contention on this issue, it is necessary to begin this case history by describing that debate and examining some of the reasons why the proposal was not enacted at that time.

Footnotes to Introduction

(1) Wilbur J. Gohen, "What Every Social Worker Should Know About Political Action," Social Work, Vol. 11, No. 3, July 1966.

(2) In the latter half of the 19th century, lumbering, mining, and other industries in remote areas frequently provided sickness benefits for workers. The first union in the United States to do so was the Granite Cutters, in 18'77. Among immigrant groups, those from Eastern and Southern Europe were especially significant in fostering fraternal insurance associations.