Guns or Butter

by Bernstein, Irving;

  Mills had a deserved reputation for being a world-class staller, but now he was all business. He told the White House that he intended to have the bill ready for voting in the week of March 15. Since the version before the committee came to 253 pages and it was read page by page, this was a formidable task. And there were complications. Gardner Ackley, chairman of the Council of Economic Advisers, pointed out that the increase in payroll taxes would create a “large fiscal drag on the economy in the first half of 1966.” This led to extended discussions between the Council, the Treasury, HEW, and Mills to shift the timing of collections and disbursements in order to reduce the drag. There was also a sharp disagreement over whether the bills of radiologists, anaesthesiologists, pathologists, and those in physical medicine should be paid under the hospital or the medical program. The administration, concerned about rising costs, urged the hospital route. But Mills, Cohen wrote, was “absolutely adamant … He wants to be able to say on the House floor that physicians are not covered under the social security part.” At this time the chairman was in complete control and he overrode the opposition. The revised bill, now grown to 296 pages, was completed on March 19, 1965.

  Mills called the Ways and Means Committee to vote on H.R. 6675 on March 23. It went 17 to 8. All the Democrats, including those from the South, followed the chairman and all the Republicans opposed him. Mills had always insisted that important legislative work be performed in committee and he demanded large majorities. This action fitted his preferences snugly.

  The “debate” on H.R. 6675 was desultory and took only one day. In fact, it was Wilbur Mills Day. When he walked to the rostrum in the well of the House he received a standing ovation from both sides of the aisle. Mills presented a masterful summary and analysis of H.R. 6675, only rarely glancing at his notes. There was nothing left but the voting and it was overwhelming—313 to 115. The bill gained the support of 248 Democrats and 65 Republicans; it was opposed by 42 Democrats and 73 Republicans. The northern Democrats were solid—189 to 2. Mills carried with him a majority of the southern Democrats—59 to 40. The President immediately phoned congratulations to the House leadership and to Mills, King, and John Dingell, the son of one of the authors of the Wagner-Murray-Dingell bill of the forties. He was unable to reach Aimé Forand, who first introduced Medicare and who would have been extremely pleased.

  The Senate, without strong leadership, dragged its way through H.R. 6675. The President wanted no trouble from Senator Byrd and gave the crusty Virginian a big shove. On March 26 he called a group of leaders of both houses to the White House for a televised press conference. All those who attended except Byrd, who was installed in a chair on Johnson’s left, strongly supported Medicare. The President started at his right and asked each individual what he thought of the bill. Everyone thought that it was great and that it would soon be enacted. He then asked the embarrassed Byrd to “make an observation.” He said he had none to make because the bill had not yet reached the Senate, but there would be hearings. “And you have nothing that you know of that would prevent that coming about in reasonable time, not anything ahead of it in the committee?” Byrd gulped, “Nothing.” Johnson summarized: “You will arrange for prompt hearings and thorough hearings?” “Yes.” Carl Albert said, “That was the best example of ‘The Treatment’ in public that anyone ever got.”

  In return, the Virginian used an opening to embarrass the administration. The Civil Rights Leadership Conference wanted to be certain that hospitals which participated in Medicare would administer their programs without discrimination based on race, creed, color, or national origin. The question was whether Title VI of the Civil Rights Act of 1964 would apply to Medicare. If it did, they would not jeopardize the bill by offering an amendment. If it did not, they would insist upon one. On April 13 Byrd wrote Secretary Celebrezze to ask whether Title VI would apply to H.R. 6675.

  The problem was legally complicated and was turned over to Lee White, the President’s counsel on civil rights. Celebrezze’s instinctive reaction was to say that Title VI was inapplicable because the law expressly excluded insurance and Medicare was an insurance program. But the Department of Justice wrote a memorandum concluding the opposite. On the other hand, White wrote the President, “They could support a theory that the Title does not apply if it is desirable to do so.” Larry O’Brien reckoned that the addition of a nondiscrimination amendment would cause trouble in the Finance Committee and would reduce the majority on the floor to a shaky 51 votes. White, supported by Moyers, strongly urged that Celebrezze write Byrd that Title VI applied to Medicare and should so testify before the committee. He did both.

  The hearings before the Finance Committee took place from April 29 to May 18, 1965. Old spokesmen went over old ground and no one seemed to pay attention. But in the deliberations of the committee hell broke loose. In part this was due to the enormous pressure on the committee and on the Senate itself in May and June from Lyndon Johnson’s gigantic legislative program. Manatos wrote on June 16:

  The Senate this week has passed Foreign Aid, Excise Tax Repeal, Saline Water, Debt Limit, Wheat Agreement Extension, Grand Coullee Power-house, and Cigaret Labeling (7 bills). It takes up Silver Coinage tomorrow, and could probably clear the decks the balance of the week to make ready for Community Mental Health Centers Staffing, Drug Abuse Control, Health Research Facilities, and Regional Medical Complex (Heart, Cancer and Stroke) next week.

  While this was an immense burden, its main effect on Medicare was to cause delay (the President typically insisted on having it both ways—a huge program and speedy action). The much nastier problem was Russell Long.

  The senator from Louisiana, with Clinton Anderson’s support, had, indeed, become majority whip and, after Kerr’s death, was the ranking Democrat on the Finance Committee. Further, the leadership with the approval of both the New Mexican and the White House had installed Long as floor leader on Medicare because Anderson’s energy had been sapped by illness.

  But Long had his own game to play, by his own rules. Under strong presidential pressure, he had cast his ballot for the contemporaneous Voting Rights bill, which had damaged him politically with the rednecks in Louisiana. He used H.R. 6675 to demonstrate back home that he was not Lyndon Johnson’s errand boy. Whether he intended it or not, the AMA accepted his ploy as a means of creating a deadlock in the Senate-House conference and so supported his proposals despite the fact that they were substantively anathema to organized medicine.

  Long offered an omnibus amendment that would kick out King-Anderson and would (1) combine the hospital and medical programs; (2) broaden the benefits to provide longer hospital stay, payment for drugs, and payment for many additional medical services; (3) eliminate the $3 monthly charge on individuals and stick the Treasury with the whole cost; and (4) change the $40 and $50 deductibles to 10 percent of the individual’s income up to a maximum of $1000. Wilbur Cohen was appalled and had an extended session with Long on May 5, but was unable to change his mind.

  Long, of course, grabbed the spotlight and was delighted with the publicity he aroused. He enjoyed himself by telling key people that he was only putting on a show or that he was in dead earnest. He certainly made suckers out of the innocent liberals.

  For a long time Long did not have his proposals printed in order to prevent other senators from seeing them. He explained them orally to liberal Democrats, assuring them that they were modest. Since he represented the administration, they assumed that he had the President’s approval. As the committee was adjourning for lunch on June 17, he appeared suddenly and orally set forth his amendments. He said the present bill was a political time bomb and that he would save them from defeat. There were a few minutes of discussion, which Richard Harris described as perhaps “the most casual treatment of a major piece of legislation in Senate history,” and Long called for the vote. He won 7 to 6! Anderson then cast Fulbright’s proxy, making it a tie, which was defeat. Long said Fulbright had changed his mind and that he had a later prox
y. The clerk verified the date on the paper. The vote was 8 to 6 in favor and the committee adjourned for lunch. Anderson, puzzled, got the proxy and while the date was indeed later, discovered that it was for another bill. That afternoon, Anderson and Fulbright, both incensed, confronted Long and demanded a new vote. Mansfield later denounced him at a Democratic policy meeting. Paul Douglas had voted for Long’s bill. When he got back to his office, he figured out what it meant and was staggered. Aside from busting the bank and being administratively unworkable, it would turn the nation’s hospitals into warehouses for the senile. He joined the ranks of the outraged. The President by telephone on June 18 demanded that Long withdraw his amendments. He refused. Johnson called him to the White House on June 21. But the Texas Treatment did not work in Louisiana.

  By June 30, when the final vote was taken, everyone knew what Long was up to. It went 12 to 5 in favor of H.R. 6675. There were several amendments, all of which, Cohen wrote, could be “satisfactorily adjusted in Conference.” The majority consisted of six liberal Democrats—Anderson, Douglas, Gore, McCarthy, Hartke, and Ribicoff—four southern Democrats—Smathers, Talmadge, Fulbright, and Long (!)—and two Republicans—Dirksen and Carlson. This was, Manatos wrote, “the first Medicare bill to come out of Finance.” Six of those in the majority—Long, Smathers, Talmadge, Fulbright, Carlson, and Dirksen—“had never before voted for Medicare.”

  When the committee bill reached the floor, Long’s disease had become catching. Some liberal senators, certain that Mills would tolerate no nonsense in conference, played to their constituents and won majorities. As floor manager, Long welcomed these amendments. Anderson, completely out of patience, wrote the President imploring him to impose discipline on the Democrats. The White House feared that Long was deliberately making H.R. 6675 unacceptable to the House and the President instructed him to halt. Long immediately called for more amendments! Hartke introduced one that would have defined blindness so broadly that anyone with poor eyesight would qualify. Ribicoff’s amendment would offer unlimited hospitalization. Another was a laugher. The AMA, which opposed coverage for doctors, had refused to poll its members on whether they wanted Medicare for themselves. Thus, they were left out. But state medical society polls showed that they wanted to be included and an amendment was proposed. Gore said, “The A.M.A. has made such a fine contribution to the enactment of Medicare that I think it has earned the right to come under its benefits.” It passed.

  On July 6 Manatos made a head count which showed a minimum of 58 senators for H.R. 6675. In addition, there were a number of uncertain southerners, Democrat Frank Lausche of Ohio, and a group of Republicans who might join the majority. Obviously, he expected a handsome victory. He was right.

  H.R. 6675 laden with amendments passed the Senate on July 9, 1965, by a vote of 68 to 21. Fourteen Democrats, mainly from the South, and Lausche switched their votes from 1964. A fat group of Republicans joined them.

  Mills totally dominated the six meetings of the conference committee and he swung a meat cleaver. He said with satisfaction that he chopped away at least 95 percent of the Senate amendments. Long, who stood by helpless, said that Mills would have opposed the framing of the Constitution that “created the U.S. Senate.” Thus, the final bill was essentially the one that the House had adopted. On July 27, 1965, that body accepted it by a vote of 307 to 116. The Senate followed the next day 70 to 24. The President quietly signed Public Law 89–97 on June 30, 1965, in order to protect $30 million in benefits for widows and orphans which would have been lost in the new fiscal year. He would have his big party a month later.4

  The Voting Rights Act and Medicare were passed at virtually the same time. The President wanted to have a Texas-style ceremony to celebrate the passage of H.R. 6675. On July 16 he instructed six members of his staff to choose appropriate locations for the signings. They recommended the Capitol for voting rights. “Sign Medicare in Independence, Missouri in the presence of President Truman. Signifying the relationship between the first call for Medicare and its final passage. We would carry with us in the President’s plane the Congressmen and Senators who ought to be at the signing.” Johnson approved both. Horace Busby was in charge of arrangements.

  Busby soon convinced himself that Independence was “inadvisable.” Truman in 1945 had urged health care for the entire population, not just the elderly. Meeting in Independence would suggest that Johnson wanted to extend Medicare to all Americans. The AMA might respond with a boycott. Truman, known for his tart tongue, might make some “distasteful remarks … about the medical profession.” Cohen noted that August 15 would be the thirtieth anniversary of the Social Security Act. Why not honor FDR with a ceremony at Hyde Park? But Busby thought Johnson should not play Roosevelt because that would enhance his image of “vanity, self-centeredness.” He preferred the White House. Cohen was talking of a guest list which might reach 700, and they could be accommodated at the executive mansion. “A quest for publicity” in Independence “might unhappily coincide with somber decisions or news relative to Viet Nam.” But the President insisted and Independence it would be.

  On the sunny afternoon of July 30, 1965, the two Presidents stood on the steps of the Truman Library before a large crowd. The old man was delighted, used his tongue graciously, and was a splendid host. In a brief speech Johnson managed to mention almost everybody from the old-timers like FDR, Wagner, Murray, Dingell, and Forand to the current Democratic leadership, including Russell Long for his “effective and able work”! He merely listed Wilbur Cohen (this was mainly legislators’ day) while he spoke of the “legislative genius” of Wilbur Mills. “But it all started really with the man from Independence.” It was quite a party.

  Public Law 89–97, officially the Social Security Amendments of 1965, now grown to 400 pages, was comprehensive and, as Cohen and Robert M. Ball, the Commissioner of Social Security, wrote, “embodied] the most far-reaching social security legislation to be enacted since the original Social Security Act was passed 30 years earlier.”

  The most important change, of course, was the introduction of health insurance for the aged, both hospital and medical, which became the new title XVIII of the Social Security Act. Present and future recipients of old-age pensions at age 65 (most of those presently uncovered would be brought in by 1968) would be automatically covered by hospital insurance. It would provide care for up to 90 days for each illness. The patient would pay a $40 deductible for 60 days and $10 a day thereafter. It would also provide posthospital extended care, outpatient diagnostic services, and posthospital home health services with similar payment arrangements. The worker and his employer would contribute throughout the former’s working life to the Hospital Insurance Trust Fund at the combined social security rate of 7 percent in 1966 (rising thereafter to 11 percent in 1973–75) of the first $6600 of annual earnings. Social Security would contract with “providers of service” (Blue Shield, insurance companies, Kaiser, etc.) for hospital care at prices based on “reasonable costs.”

  Medical insurance was voluntary and available to anyone 65 or over. The individual would pay $3 a month and the Treasury would pay a like amount from general revenues. The money would be banked in the Supplementary Medical Insurance Trust Fund. Enrollment would take place between September 1, 1965, and March 31, 1966; benefits would start on July 1, 1966. They would cover physicians’ services, home health services, and numerous other medical and health services. The plan would cover 80 percent of the doctor’s bill. HEW would contract with insurance carriers to administer the program. The charges must be “reasonable,” defined as those no higher than others were charged and those prevailing in the locality.

  Old-age, survivors’, and disability insurance benefits were raised 7 percent across the board, retroactive to January 1, 1965, with a minimum of $4 a month for retirees. This would require part of the increased contributions by employers and employees noted above.

  A new title XIX of the law would replace Kerr-Mills for the aged medically needy,
defined to include as well the blind, the disabled, and families with dependent children. The states would administer the program with federal matching funds ranging from 55 to 83 percent, the states supplying the remainder.

  There were a great number of amendments of lesser importance, many relating to children. Among them, of course, and with a certain irony, was Medicare coverage for self-employed doctors of medicine.5

  On July 27,1965, just before the party at the Truman Library, the President appointed Anthony Celebrezze to the Court of Appeals for the Sixth Circuit and John W. Gardner as Secretary of the Department of Health, Education, and Welfare. Celebrezze had long held the ambition of becoming a federal judge. Gardner, the president of the Carnegie Corporation and a distinguished authority on education, would be in general charge of launching Medicare. There were two immediate and formidable problems: winning the cooperation of the AMA and erecting a massive administrative structure for the program.

  Cohen set out the complicated situation with organized medicine, an analysis the President fully shared:

  I knew that the only way that you could provide medical care in this country is through doctors. Government people don’t give Medicare; it’s an individual doctor. The doctors … were feeling a sense of complete frustration and complete betrayal by the Congress. They could not understand what happened to them because their indignation was self-righteous. They had been led to believe that they were right and everybody else was wrong. … With their defeat they expected to be kicked around by the government as if they were a vanquished enemy in a great battle. … I … sent notice to Chicago that … we would be glad to meet with them. … “You fellows can be on the inside.”