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Lawrence R.Jacobs Chapter 4 The Implementation and Evolution of Medicare: The Distributional Effects of "Positive" Policy Feedbacks In the early 1950s, a small group of stalwart reformers concluded that the failure to establish universal access to health insurance under Franklin Roosevelt and Harry Truman required a change in strategy. Passing universal health insurance in one fell swoop was unlikely to succeed, they reasoned, because of the public's general philosophical uneasiness with "big government" and the mismatch in organized pressure in Congress-the constitutional process created numerous opportunities for delay and obstruction by wellorganized narrow interests such as the American Medical Association (AMA) that intensely opposed health reform while reform advocates lacked encompassing organizations to represent and garner the support of the diffuse public that would benefit from national health insurance (Poen 1979; Jacobs 1993). Instead of achieving universal access in a single legislative moment, reformers opted in the early 1950s for an incremental strategy that would take a series of gradual steps over time to extend health insurance to all Americans-a form of "salami slicing" (as one reformer put it)-and to build public and elite confidence in national government administrative capacity to operate the program.! The starting point would be establishing hospital insurance for Social Security beneficiaries-what later became known as "Medicare." This approach-"Medicare incrementalism"-identified a popular and narrow set of recipients (seniors) and health services (hospital care), built on an existing government program that Americans strongly supported and was not tarnished as "big government " (Social Security), and rallied a relatively well-organized group of advocates that intensely supported government health insurance (Social Security beneficiaries). Following Medicare's passage, reformers stuck to their strategy of incrementally expanding the pool of those eligible for the program. From 1965 through 1968, officials in the Johnson White House and in the Department of Health, Education, and Welfare (DHEW) formulated and advocated an expansion of Medicare to include new segments of the population, children, and additional health services to meet the new demand. By 2004, however, national health reform advocates no longer concentrated on using Medicare as a platform for reaching universal coverage: major reform efforts focused on expanding benefits to existing population groups and avoided Medicare as the foundation for expanding access. The incremental strategy that gave rise to Medicare has had decidedly mixed results. On the one hand, Medicare is a programmatic success for its beneficiaries. The rights and treatment of its beneficiaries are universal (trumping the selectivity that characterizes much of the American welfare state), its coverage of medical care has steadily expanded 78 Remaking America (most recently with the passage of a new drug benefit in 2003), and its basic operating structure has been largely stable. Attempts to restructure Medicare continue, but its durability as a cornerstone of the American welfare state and as a mechanism for redistributing money and government authority to its target population is significant. On the other hand, the prospective strategy of using Medicare to ignite a steady march to achieving national health insurance for all Americans has failed in big and small ways. The proposals during the Johnson administration to expand the program's beneficiaries to include children failed. Instead, health insurance for children was distanced from Medicare when it was introduced three decades later: it was established as a voluntary program run by states as part of its public assistance system rather than run by Medicare as part of a national social insurance system. In addition, proposals to incrementally expand Medicare (the principal objective of reformers in the 1950s) failed to receive sustained attention from authoritative government officials during America's episodic efforts at comprehensive health reform. During the 1993 and 1994 debate over comprehensive health-care reform, the Clinton administration and Congress rejected the proposal of several leaders in the House of Representatives to use Medicare as a foundation for reform. The failure of Medicare to serve as the launching pad for expanding access to health insurance in the early 1990s illustrates both the contemporary neglect (until quite recently) of Medicare's original strategy for incrementally expanding eligibility and the significance of strategic choices by reformers. Contrary to the expectations of its original designers, Medicare has become targeted at a discrete segment of the population, which receives ever more funding and services (epitomized by the new pharmaceutical benefit) even as the number of Americans who lack health insurance rises.2 This chapter has two purposes. The first is to explain a stillborn strategy for expanding access...

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