Tuesday, October 7, 2014

"An honest economic forecast would have likely sunk Medicare"

"Don't let dead cats stand on your porch." This famous quotation, attributed to President Lyndon Johnson during his strenuous and ultimately successful efforts to pass the 1965 bills that established the Medicare and Medicaid programs, embodied his approach to arguably the most important U.S. health care legislation until the 2010 Affordable Care Act. According to David Blumenthal and James Morone, authors of The Heart of Power, it meant that the best strategy for passing health care (and other potentially controversial) legislation was to act quickly and move bills along in the Congressional process before political opponents or outside advocacy groups had time to organize themselves.

Remarkably, Medicare was fully implemented only 11 months after the bill's signing, overcoming obstacles such as hospital segregation in the South, resistance from physician organizations such as the American Medical Association, and the logistical issues involved in issuing insurance cards to 18 million eligible seniors. As Medicare approaches its 50th anniversary, it faces huge budgetary challenges driven by increasing costs of health care and the demographics of the enormous "Baby Boom" generation, the first member of whom became eligible for Medicare benefits in 2011. This short video produced by the Kaiser Family Foundation summarizes changes that occurred in the program in the intervening years.

Liberal legislators saw Medicare as the first step toward enacting federally-administered universal health insurance for all Americans, while others saw it as a program, like health programs for active-duty military, veterans, and Native Americans, whose benefits were appropriately limited to specific groups and therefore must be defended against encroachment by future wide-ranging health reforms. Princeton professor Paul Starr has called this resistance to change by protected groups the "policy trap" that contributed to the defeat of the Clinton health reform proposal in 1994 and the near-defeat of the Affordable Care Act 16 years later.

Is it true that "an honest economic forecast would have very likely sunk Medicare," as the authors argued? Like every federally financed health insurance initiative to come, Medicare ended up costing substantially more than initially projected. (In fact, the reason that most provisions of the ACA, passed in 2010, didn't take effect until this year was to allow the Congressional Budget Office - which didn't exist in 1965 - to artificially score it as deficit-reducing over a 10-year time period.) Ethical or not, Lyndon Johnson's decision to "lowball" the estimated costs of Medicare was essential to getting it through Congress.

Was President Johnson - the last President to previously hold the position of Senate Majority Leader - a political anomaly, or can lessons from his deft management of the Congressional process be applied to national health care policy today? What do you think about Blumenthal and Marone's lessons for future Presidents, listed below? How well has President Obama adhered to these principles?

1. Presidents must be deeply committed to health reforms.
2. Speed is essential. Waiting makes reforms a lot harder to win.
3. Presidents should concentrate on creating political momentum.
4. Presidents must actively manage the Congressional process.
5. Know when to compromise and know when to push.
6. Pass the credit.
7. Muzzle your economists. First expansion, then cost control.


An earlier version of this post first appeared on The Health Policy Exchange.

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