Medicaid and the Costs of Federalism, 1984-1992

Jean Donovan Gilman

• Publisher: Taylor & Francis
• Year: 2020
• Print ISBN: 9780815332787
• eBook ISBN: 9781317733249
• Edition: 1
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Rapid growth in health care expenditures has plagued America since 1965 when Congress first created medicare (health care insurance for the elderly) and medicaid (health care assistance for the poor). This study looks into developments since.

CHAPTER TWO
Politics of Medicare and Medicaid: 1965 to 1983

From the beginning, medicare has enjoyed stronger, broader, more consistent support within Congress than medicaid. Congressional loyalty to medicaid has fluctuated, producing a “support and flail syndrome”¹ in which Congress has been quite willing to take credit for benefits, but prone to abandon medicaid beneficiaries in the face of rising costs and state opposition. As a social insurance program, medicare furnishes uniform benefits to a large, well-organized constituency and appeals to widely held values in society. Medicaid, on the other hand, is a welfare program that provides health assistance to the poor, a notoriously unpopular and weak constituency. This difference in popularity was apparent even in the administrative design and funding of the two programs, and as costs mushroomed, it became increasingly evident. While no organized opposition to the medicare program arose, this was not so for medicaid. Fiscal conservatives in Congress sought to curtail the scope of the program, and the states sought greater freedom from its mandatory requirements. Because of the difference in the popularity of medicare and medicaid, Congress adopted dramatically different approaches in dealing with them between 1965 and 1983. This chapter will illustrate and offer explanations for the contrast in the congressional treatment of these two programs.

CONTRAST IN DESIGN OF MEDICARE AND MEDICAID-1965

Differences in the congressional approach to these programs are apparent from the beginning in the way Congress laid out their administrative and financing arrangements. One of the major reasons that Congress chose to create two separate health care financing programs in 1965—one for the elderly and one for the poor—was because of the fundamental difference in popularity of these two groups. While a single health care financing program encompassing both populations would have been simpler, the lack of support for the poor meant such a proposal was never even considered at the time. Monypenny explains the rationale for federal state programs such as medicaid. He writes,

Federal aid programs are an outcome of a loose coalition which resorts to a mixed federal state program because it is not strong enough in individual states to secure its program, and because it is not united enough to be able to achieve a wholly federal program against the opposition which a specific program would engender (1960, 14).

The medicare program was created as a national, nearly universal, program for the elderly, with uniform benefits throughout the nation. Its funding and administration were linked to the powerful and widely popular Social Security Administration, and it was considered the “darling of the politicians and the electorate” (Stevens and Stevens 1974, 115). Medicaid, by contrast, was nobody’s darling. Although it served a broad range of poor and near-poor recipients,² it was most closely associated with welfare recipients. Rather than assigning it to the Health component of the Department of Health, Education, and Welfare (HEW), Congress designated it to be administered by the newly created Medical Services Administration, within the Division of Medical Services (DMS) of the Bureau of Family Services, a part of the Welfare Administration. This helped to assure it “would inevitably be regarded as an intrinsic part of the administrative system of federal welfare grants to the states” (Stevens and Stevens, 1974, 77).

In addition to being firmly identified with the less powerful Welfare Administration, medicaid was further handicapped by anemic funding for personnel in its first decade, which did not help it win high marks for effectiveness among Congress and the public. When medicaid was created, only 35 positions were added to the meager 23 already employed in the DMS. This paltry crew was charged with the daunting task of designing and implementing the complex medicaid program. It had to “implement poorly drafted legislation, negotiate with powerful states, and administer a budget that was soon consuming a fifth of all federal expenses in health care—a sum running into billions of dollars” (Stevens and Stevens 1974, 78). Not surprisingly, administrative problems emerged, and instead of receiving increased funding, medicaid became a lightning rod for congressional criticism. Senate hearings in 1969 and 1970 that investigated both medicare and medicaid were especially critical of medicaid’s administration (Senate Finance Committee Hearings 1969, 1970). Despite a consensus in 1970 that the DMS was severely hampered by inadequate staffing, Congress only “grudgingly increased the personnel allotment” (Thompson 1981, 121).

CONTRAST IN CONGRESSIONAL TREATMENT OF MEDICARE AND MEDICAID

The difference in the popularity of the medicaid and medicare programs was evident, not only in the design and institutional arrangements of the programs, but in the treatment of their beneficiaries between 1965 and 1983. Members of Congress consistently treated beneficiaries of medicare more generously than those of medicaid. First, they freely enlarged medicare’s benefits and eligibility, and then, as costs burgeoned, they expended great energy to find adequate funding for the program while protecting beneficiaries from the effect of cutbacks. Medicaid beneficiaries did not fare so well. Sizable opposition to that program’s expenses emerged almost immediately after its creation. Consequently, Congress was much less generous, awarding it relatively few and minor expansions. Congress curtailed medicaid’s funding to the states, decreased benefits and eligibility among that program’s most vulnerable, and granted the states increased freedom to do the same. In general, Congress failed to protect medicaid beneficiaries nearly as well as those of medicare.³ (See Figure 2.1 for a comparison of the treatment of these two programs).

Sources: Congress and the Nation, Vols 2–8; Health Care Financing Review Medicare and Medicaid Statistical Supplement, 1995; Social Security Bulletin, Annual Statistical Supplement, 1993.

Figure 2.1: Comparison of Medicaid and Medicare Policy 1965–1983

Methodology

In order to contrast the congressional treatment of medicaid and medicare, their legislative histories were examined in depth. Provisions dealing directly with recipients and the financing of the two programs were the primary focus of this investigation. Given the number and complexity of amendments to Titles XVIII (medicare) and XIX (medicaid) between 1966 and 1983, and because the selection of provisions required a judgment about the importance of certain provisions, and not merely a count of their number, a strategy was employed that assisted in the selection of the most substantial and relevant measures. Those measures included in Congress and the Nation (C&N) were deemed to be the major changes in the medicaid and medicare programs since 1965. However, because of the great number of changes included in most social security amendments, even the editors of that journal occasionally failed to include a measure which later proved significant (e.g., The Early and Periodic Screening, Diagnosis, and Treatment Program adopted in 1967 was not highlighted by C&N that year.) Consequently, C&N’s list was supplemented with other references, principally the Social Security Bulletin, Annual Statistical Supplement, 1992. In addition, other secondary sources (Rosenbaum 1993b; Stevens and Stevens 1974; and Thompson 1981) assisted in identifying important medicaid provisions that altered benefits, eligibility, or funding not featured in the above works.

In this way, a concise picture of the character of congressional treatment of beneficiaries and of changes in medicaid and medicare funding was shaped. A summary of the expansions and reductions in eligibility and benefits, as well as changes in funding for both programs, has been outlined in tables. Also, in order to give the reader a better sense of the trends in congressional treatment, these have been analyzed numerically as wel...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgements
• Abbreviations
• Introduction
• Part One: Congressional Treatment of Medicaid
• Part Two: The States’ Treatment of Medicaid
• Conclusion
• Appendix A: Major Medicaid Legislation 1965 to 1990
• Appendix B: Major Medicare Legislation 1965 to 1990
• References