Changing Politics of Federal Health Insurance Programs

In 1965, when Medicare and Medicaid were enacted, concern about access to the health care system for the elderly and poor overrode concerns about cost. The legislation focused on removing financial barriers to health care for these groups, and implementation of the legislation was a matter of reaching agreements with hospitals and physicians over reimbursement and administrative procedures with the objective of insuring that health care resources would be available to the beneficiaries of these new federal health insurance programs (Wolkstein, 1984). Ideological conflict and the alignment of interest groups are central to understanding the politics of Medicare. The intense disagreement over public versus private financing of medical care, and of universal coverage versus covering only the needy (i.e., social insurance versus charity), were key points of contention that established the context within which Medicare and Medicaid were developed, debated and enacted. Labor unions led the liberal organizations and those representing the elderly in advocating a universal, non-income tested federal health insurance system. The American Medical Association (AMA) led the health industry, business and conservative groups in opposing federal financing of personal health care. The intense opposition of the health providers and political conservatives to a universal federal insurance system led the national health insurance advocates to shift to an incremental strategy, the objective of which was to achieve a universal federal health insurance program in stages, beginning with a payroll-tax-financed Medicare program covering all (not just low income) elderly who were eligible for social security pension benefits.