In May 1965, just weeks before Lyndon Johnson signed Medicaid into law, his administration launched Head Start, an enrichment program for pre-school aged children from poor families.
The program’s administrators were appalled by the poor health of their students. In Jacksonville, more than half of participating children were anemic, and between one-quarter and one-third suffered hearing and sight problems. In Beaufort County, South Carolina, 90 percent of kids presented with hookworms and roundworms. In Boston, almost one-third of Head Start youngsters showed signs of physical or mental health illnesses.
Rotting teeth, vitamin deficiency, chronic infections—50 years ago in the United States, this was how many three- and four-year-olds from poor families lived.
Then came Medicaid – an afterthought tacked onto the administration’s Medicare bill, and one that LBJ scarcely mentioned when he signed both measures into law. Medicaid’s roots were humble, its ambitions modest. As originally conceived, the program provided health insurance to poor children, poor pregnant women and some qualifying parents. In its first year, its budget was less than one billion—about $7.7 billion in today’s dollars.
Over 50 years, successive congresses and presidential administrations vastly expanded the program’s scope to cover 80 million people, or almost one-quarter of the population. Its budget last year was $378 billion. To be sure, it has never enjoyed the popularity of Medicare, which covers a much more political powerful constituency: seniors. But it has proven highly durable. Despite the GOP’s preference for smaller government and lower taxes, for many decades, Medicaid enjoyed broad backing from Republican leaders.
That was then. Now, congressional Republicans have proposed taking a hacksaw to Medicaid—a move that will, according to the Congressional Budget Office, leave many millions of poor people uninsured. For Democrats, the Senate GOP’s Better Care Reconciliation Act (BCRA), which ends Medicaid’s entitlement status, is a “monstrosity.” For many Republicans, it is nirvana. “You and I have been dreaming of this since I have been around, since you are I were drinking at a keg,” House Speaker Paul Ryan told Rich Lowry, editor of the National Review, earlier this year. That position isn’t widely popular: Amid much public outcry, the Senate postponed its anticipated vote on BCRA this week. But it testifies to the GOP’s full metamorphosis from the Party of Ronald Reagan to the Party of Ayn Rand.
Still, there’s more to the story. Republicans are right to observe that Medicaid was never supposed to grow as big as it did. Its framers intended the program to help a small few who were unable to capture the full benefits of America’s postwar prosperity. In their hubris, 1960s liberals assumed that a booming economy would continue to grow in perpetuity. They didn’t anticipate industrial decline, growing inequality, an explosion of single-parent households or the contraction of America’s unionized workforce and, with it, employer-based health insurance.
For 50 years, Medicaid proved a highly elastic band aid for many of America’s economic wounds. Its desecration will leave us in an unfamiliar and dangerous place.
Though many conservatives regard the Great Society as a radical exercise in wealth and income redistribution, in fact, LBJ did not generally support quantitative measures like cash transfers or a guaranteed minimum income. Instead, his administration assumed that in a robust and growing economy, qualitative measures like education, job training and access to health care and food security would ensure that every American had an opportunity to share in the nation’s prosperity. For those temporarily or permanently unable to capture a share of this affluence, the government would provide compensatory assistance.
This thinking reflected conventional postwar exuberance. In recent memory, the United States had clawed itself out of the Great Depression, mobilized its economy to defeat fascism on two continents, and generated unprecedented, sustained growth. “A generation ago,” observed the veteran journalist Walter Lippmann in 1964, “it would have been taken for granted that a war on poverty meant taking money away from the haves and turning it over to the have nots … But in this generation a revolutionary idea has taken hold. The size of the pie can be increased by intention, by organized fiscal policy and then a whole society, not just one part of it, will grow richer.”
The debate over health care followed this same trajectory. Twenty years earlier, in the waning days of the New Deal era, liberals fought unsuccessfully to extend universal health coverage to all Americans. At every turn, powerful opposition from the American Medical Association and congressional Republicans stymied their efforts. But by the 1960s it was no longer clear that they even needed to pass national health care. After World War II, major employers began extending unionized employees such benefits as paid vacations, annual cost-of-living raises and private health insurance. What liberals once assumed government would need do for its working-class citizens, private industry now offered on a contingent basis. By 1960, 100 million Americans – 56 percent of the country – enjoyed access to private health plans.
In light of this reality, liberals scaled back their efforts and focused on two discrete categories of people: senior citizens, who by definition did not have access to employer-based insurance, and the very poor – especially children and single mothers – who were likewise left behind. Medicare and Medicaid were quintessential Great Society programs: limited in ambition in scope and designed to help groups of citizens who could not, by virtue of their age or condition, capture the advantages of prosperity.
The Social Security Amendments of 1965 – the official name of the bill that established both programs – passed Congress with bipartisan support. In the House, 65 Republicans supported the legislation; 73 GOP members joined Southern Democrats in opposing it. In the Senate, Republicans voted 13 to 14 in favor of the bill. Though many conservative Republicans agreed with Reagan that Medicare represented “a short step to all the rest of socialism,” a large number of moderate and liberal GOP members openly supported government health care for the oldest and poorest Americans.
In the quarter-century that followed, Medicaid expanded both in scope and size. With strong bipartisan support, Congress extended the program to include disabled adults who qualified for Supplementary Security Income and allowed states to care for those in need of psychiatric care or suffering mental disabilities. Richard Nixon signed both measures into law. Reagan tried unsuccessfully to convert Medicaid into a block-grant program in 1981—meaning it would no longer be funded according to the number of people who qualified for it (much like other entitlement programs, including Medicare or the federal home mortgage deduction). Instead, it would receive a fixed level of funding. If need surpassed available funding, states would be forced to cut enrollment or services. But Reagan later changed course. With overwhelming bipartisan support in Congress, he signed a series of bills that sharply raised the income eligibility level for women and children, created new categories of mandatory or optional coverage, and made it easier for people who lost eligibility due to rising incomes to remain in the program during a transition period.
All told, the number of Medicaid recipients rose from 4 million in 1966 – the year of its inception – to 35.8 million in 1992. Most of that expansion occurred under Republican presidents and with the strong support – or at least consent – of GOP members of Congress.
Indeed, Republicans didn’t set their sights on Medicaid until the mid-1990s, when Newt Gingrich’s conservative revolution turned the party’s caucus to the hard right. That trend accelerated during the presidency of George W. Bush, as the GOP attempted – to no avail – to privatize Social Security and convert Medicaid into a block-grant program. Since the passage of the Affordable Care Act, which vastly expanded Medicaid, and the advent of the Tea Party, Republicans have existed in a perpetual state of war with Medicaid.
But it wasn’t always so.
Medicaid grew by congressional and presidential fiat, but also by virtue of sweeping economic change.
It was originally intended to serve a small population of individuals unable to avail themselves of America’s seemingly boundless prosperity. But after 1973 the economy began to sputter. Military spending on the Vietnam War, as well as a series of supply shocks in the food and energy sectors, generated a decade of runaway inflation. Inflation was accompanied, in turn, by rising unemployment, particularly in the manufacturing sector, which had for many years had formed the backbone of America’s prosperous, postwar middle class. Increasingly, it seemed that compensatory measures would not help poor people in urban ghettos, declining coal towns in Appalachia, or post-industrial cities capture prosperity that simply no longer existed.
During the decade in which John Kennedy and Lyndon Johnson governed, the American economy expanded at an average annual rate of 7.5 percent each year. The country has not seen growth like this since. When Donald Trump promised to deliver 4 percent annual growth, one expert surmised that it would be a “monumental task” to achieve anything near those results.
To be sure, in the years since LBJ left office, America has experienced periods of sustained economic expansion. But the blessings of limited economic growth have accrued principally to the wealthiest Americans. Between World War II and 1973, real wages grew steadily at an annual rate of between 2 and 3 percent, enabling millions of American workers to enjoy unprecedented upward mobility. After 1973, average wage growth slowed dramatically. Over the next three decades, household wages remained essentially flat, but only because more women entered the workforce even as men’s wages fell. Families with two wage earners were just able to maintain parity and then some; families headed by single parents fell behind.
The problem is that the structure of the American family has changed markedly since 1965, when roughly 5 percent of all children were born out of wedlock. Today, roughly 40 percent of all children – including 67 percent of black children, 25 percent of white children and 42 percent of Latino children – are born into single-parent households.
At the same time, record-setting numbers of working-age adults have slipped out of the work force; they are neither employed nor seeking employment, a trend that has alarmed conservatives and liberals alike. And those who are employed are much less likely to belong to unions or to enjoy access to defined benefits pensions and health insurance. Between 1999 and 2014, the percentage of non-elderly Americans enrolled in employer-based insurance fell from 67 percent to 56 percent. Only 37 percent of persons living below the poverty line even have access to such coverage.
Medicaid was designed, and by increments expanded, to help certain disadvantaged groups: struggling single parents and their children, disabled workers, impoverished older people not yet eligible for Medicare, the underemployed, the working poor. But 50 years ago, no one expected the number of people in these categories to total one-quarter of the nation. It is a testament to the program’s elasticity that it has been able to paper over the inequities of the modern American economy for so long.
Medicaid is an entitlement program and has been since its inception. Its funding varies depending on how many people qualify for it at any given time. In this sense, it is counter-cyclical. During economic downturns, more people need it, and more people receive it. Over two-thirds of its spending benefits children, the elderly, or the blind and disabled. It covers costs for 64 percent of seniors in nursing homes and almost half of all births. It keeps afloat hundreds of rural hospitals, whose clients are disproportionately poor and elderly.
We don’t need to guess what will happen when many millions of qualifying poor and elderly people are denied access to Medicaid. We already know. We need look no further than the first class of Head Start students – three- and four-year-olds with worms and anemia. Or elderly citizens who testified before the Senate in 1959 – seven years before the launch of Medicare and Medicaid. One retiree from Tampa wondered what would happen if he or his wife should require long-term care. “I will have to seek some charity institution and submit to the humiliation of what they call a necessity, and pronounce to the whole world that I am only a pauper, a beggar,” he bitterly informed the committee. That was what happened when elderly people who worked hard all their lives exhausted their resources and couldn’t afford the cost of a nursing home.
To be sure, Medicaid has grown far beyond its original mandate. Perhaps that’s OK, given the structural changes to the U.S. economy since 1965. Or maybe we should devise a better way to ensure that people who are struggling economically can see a doctor or receive necessary care. But that’s not the discussion we’re having. The Senate bill is the Fahrenheit 451 of health care. It isn’t an attempt to insure more people – or the same number of people – with greater efficiency or better outcomes. It throws people off insurance to pay for tax cuts benefiting the wealthiest Americans, as Republican skeptics like Maine Sen. Susan Collins have noted.
The problem isn’t simply that the Republican Party opposes higher taxes or state-sponsored health programs. Some of its leaders can’t even get their heads around the idea of insurance—the means by which people mitigate risk, together. In the year 2017, GOP members of Congress honestly wonder aloud why men should be compelled to buy into plans that cover prenatal services. Shared risk and shared reward: It’s a concept so simple—so fundamental to living in a society – that they teach it in preschool. It’s why women who have children pay into insurance plans that also benefit men who develop testicular cancer. But today’s Republican Party has grown radically anti-social in outlook. It no longer resembles in the slightest degree the party of Everett Dirksen, Hugh Scott or Norris Cotton—Jacob Javits, Clifford Case or Margaret Chase Smith. All voted for Medicaid in 1965.
Working from a blank slate a half century ago, Republicans and Democrats created Medicaid, together. Over the next 25 years, they expanded it, together.
If Republicans dismantle the program this week, they will do so alone. It will then fall to Democrats to pick up the pieces. When they do, they may no longer feel bound by economic assumptions that guided postwar liberals – assumptions about a forever growing economic pie that no longer reflect our diminished national economic reality. In devising their solution to the problem, Democrats may propose – and the electorate might endorse – measures far more radical than conservatives can possibly imagine.
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