Guns or Butter

by Bernstein, Irving;

  But this was only one of AMA’s problems. The Ohio Medical Association, representing 10,000 doctors, had already adopted a resolution to boycott Medicare. Some 25,000 physicians gathered in New York on June 20, 1965, for the AM A convention and there was widespread support for a boycott, including the outgoing president. Nine state delegations introduced boycott resolutions. But cooler heads prevailed. Dr. James Z. Appel, the incoming president, warned against “unethical tactics such as boycott, strike, or sabotage.” The trustees, concerned about pushing Congress to take even more drastic action, put together the votes to elect Dr. Charles L. Hudson of Ohio as president. Though a strong Goldwaterite, he was a moderate on Medicare and had opposed his state’s boycott proposal. The House of Delegates then adopted a resolution authorizing its officers to meet with the President to discuss legislation with “a view to safeguarding the continued provision of the highest quality and availability of medical care to the people of the United States.”

  The meeting took place at the White House at noon on June 29. AMA sent its eleven top officers: Dr. Appel, Dr. Hudson, four members of the board of trustees, the chairman of its committees on legislation and medical service, the executive vice president, and his assistant. On July 26 Cohen had submitted a memorandum listing the ten important points that he urged the President to make. The meeting was memorable. “I’d never seen anything like it,” an administration official said. He gave this account:

  The President made a powerful, moving appeal to the doctors to accept the new law. … He went on in that way for some time, and then he began talking about what wonderful men doctors were, and how when his daddy was sick the doctor would come over and sit up all night with him, and charge a pittance. … Then, suddenly, he got up and stretched. Of course, when the President of the United States stands up, everybody stands up. They jumped to their feet, and then he sat down, so they sat down, too. He started off again, with another moving statement about this great nation and its obligation to those who had helped make it great and who were now old and sick and helpless through no fault of their own. Gradually, he moved back to the cornfield, and then he stood up again, and again they jumped to their feet. He did that a couple more times—until they were fully aware of who was President—and then he turned to a memorandum on his desk. He read the statement in the bill prohibiting any government interference in any kind of medical practice at any time, and also the statement guaranteeing freedom of choice for both doctors and patients, and assured them there would be no government meddling in these matters. Next, he explained that Blue Cross and private insurance carriers, who are the administrative middlemen under the law, would determine the bill’s definition of “reasonable charges” on the basis of what was customary for a given area. Naturally, the doctors went for this, because they have great influence with most of those outfits. Toward the end, he asked for their help in drawing up regulations to implement the law. Then he got up one more time, and said that he had to leave. Before he went, he turned to Cohen, who is the A.M.A.’s idea of an archfiend, and, shaking a huge forefinger in his face, he said, “Wilbur, I want you to stay here with these gentlemen, and work things out according to my instructions—no matter how long it takes you.” Afterward, I heard one A.M.A. man say to another, “Boy, did you hear how he talked to Cohen.” Of course, Wilbur had written the memorandum.

  The demands for a boycott within the AMA continued to resonate, but gradually died out by July 1, 1966, when Medicare took effect. The formerly irate doctors learned that they would, indeed, continue to deal with familiar intermediaries and that no bureaucrats would tell them how to practice medicine. Moreover, they would enjoy a flood of new business at higher fees. Medical heartburn subsided.

  “The application of Medicare to twenty million people on July 1,” Wilbur Cohen said, “was perhaps the biggest single governmental operation since D-Day in Europe during World War II.” Robert M. Ball, the Commissioner of Social Security, was a superb administrator and this was his master performance. He started planning eleven months before the program went into operation. At the suggestion of I. S. Falk, Cohen and Ball chose to begin on July 1 rather than January 1, 1966. Hospitals admit 10 to 20 percent more patients in January because of winter ailments and the first week in July includes the holiday of the Fourth, when many people are on vacation. “So,” Cohen observed, “we started at a point where the congestion is the least.”

  Social Security, using special funds appropriated by Congress, created a new Bureau of Health Insurance. It took on 9000 permanent employees and 3000 temporaries, the latter to handle the initial load. Beyond the regular field system of 622 offices and 3500 itinerant service points, 100 new offices and 21 service centers were opened. Massive computers were installed to keep the records.

  An immense mail, press, radio, and TV barrage notified eligible persons of their benefits and the enrollment procedure before March 31, 1966. It was remarkably successful. Prior to the deadline, Ball wrote, “we had reached individually … just about all of the 19.1 million people who will be 65 or over on July 1 of this year.” By early May 1966, 16.8 million, 88 percent, had voluntarily enrolled for medical insurance. “I doubt,” Ball wrote, “if ever in history nearly 17 million people, in the course of 7 months, signed up to pay $3 a month for anything.” Old-age pension recipients were automatically covered for hospital insurance, over 20 million people. By early May over 90 percent of the nation’s accredited hospitals and more than 80 percent of the nonaccredited had applied for participation in the program. Agreements were quickly negotiated with Blue Cross, Blue Shield, and the insurance companies to act as intermediaries. The American Medical and American Hospital associations were cooperating fully.

  Social Security anticipated that Medicare would increase the hospital load by about 5 percent nationally, but with an uneven distribution, thereby creating local shortages of hospitals, doctors, and nurses. Congress was asked to enact comprehensive legislation to push up supply. During 1965, 30,000 hospital beds and 40,000 nursing home beds were added, and the numbers went up in 1966. The systems of nursing homes and home health services were expanded to ease the load on hospitals. Eight new medical schools opened their doors and the number of graduate nurses rose sharply.

  Responding to careful planning and outstanding organization, Medicare opened its doors to the public on July 1, 1966, without a hitch. The newspapers put reporters on the steps of hospitals all over the country to report, in Kermit Gordon’s words, “the inevitable bungling confusion and chaos.” They expected a “massive surge of old people … jamming the hospitals, paralyzing the hospitals. … It never happened.” Social Security immediately began to pay off millions of hospital and medical bills routinely.

  Gordon was Director of the Budget, was intimately familiar with federal agencies, and looked on their efficiency with a skeptical eye. The Medicare law created a Health Insurance Benefits Advisory Council to track the new operation and make recommendations to the secretary of HEW. Gordon, who was chairman of the council, had an insider’s view of the administrative performance. “The cunning of Wilbur Mills,” he said, had created a program that was “twice as difficult to administer as it needed to be.” Nevertheless, Gordon concluded,

  This was one of the most brilliant administrative performances I have ever seen in the United States government or anywhere else—the most brilliant. Social Security, which happens to be one of the tightest and smoothest operations in the federal government, was ready for this. … It went off with almost astonishing smoothness. …

  With a mere nine months to prepare, administratively this was the largest and most complicated thing the … government had ever done outside the military field. … It turned out to be a real jewel in the crown of the federal government.6

  Medicare stands alongside the Civil Rights Act as the two most significant and enduring legislative monuments of the Kennedy-Johnson era. It would help to transform the status of old people in American society from a majority who l
ived in or near poverty and could not afford health care to a majority who were comfortably off and were able to qualify for hospital and medical care under this program.

  Who deserves the credit for this triumph? Lyndon Johnson comes first. He won the indispensible electoral landslide and he waged an unrelenting campaign to push the legislation through Congress. President Kennedy also played an important role by introducing the original bill in 1961 and by educating the public to accept the idea. The two Wilburs made formidable contributions. Wilbur Mills closed the loop by providing the formula for consolidating the significant bills, most important by adding medical to hospital coverage. Wilbur Cohen was the supreme advocate, tireless in his command of both ideas and technical details at every step of the legislative process. Robert Ball’s careful planning and administrative skills were critical in erecting the administrative structure for Medicare. The AFL-CIO and its shock troops provided the necessary counterforce to the AMA. Finally, in a backhanded way Barry Goldwater deserves credit for guaranteeing the Johnson landslide and the massive Democratic majorities in Congress.

  7

  Breakthrough in Education

  NO President prior to John Kennedy had exercised leadership on federal aid for education. By the sixties the need was clear. The huge baby boom generation was rolling into the schools and straining the capacity of the states and cities to bear the costs. Kennedy perceived this and staked out a strong position. Theodore Sorensen wrote, “The one domestic issue that mattered most to John Kennedy: education.” If faith in education was a passion for Kennedy, it was an obsession with Lyndon Johnson. He said to Francis Keppel, his commissioner of education, “I want to see this coon-skin on the wall.”

  For a boy from the hardscrabble hill country of Texas schooling was the escape route to the large world, to the promise of American life. It offered equality of opportunity, a level playing field, to young people who lived in poverty, to blacks, to Mexican-Americans, and to women, an appealing concept to a democratic populist. He had attended Southwest Texas State Teachers College in San Marcos. He had devoted a year to teaching Spanish-speaking fifth, sixth, and seventh graders in God-forsaken Cotulla in the South Texas brush country. He had taught speech and debate for fifteen months at Sam Houston High School in Houston. In both schools he had thrown himself into teaching with passion and had enjoyed striking results. He knew what education could accomplish.

  In addition, Johnson seems to have been moved by the need to compensate for his shame over the inadequacies of his own education. As a child he hated to go to school, was a discipline problem, and had academic difficulties. A record of his attendance for 1920 showed that of 180 days of school he was absent for 50 and tardy on 30. He resisted his parents’ insistence that he go to college and ran away to California. “My daddy always told me,” he told Doris Kearns, “that if I brushed up against the grindstone of life, I’d come away with far more polish than I could ever get at Harvard or Yale. I wanted to believe him, but somehow I never could.” Southwest Texas State Teachers College, Robert Dallek wrote, was “a small provincial school with little standing in the world of higher education.” It had won accreditation only two years before he entered. By contrast, Lady Bird was a graduate of the University of Texas. Johnson would always feel uncomfortable with the people he called “the Harvards,” who included John and Robert Kennedy and many of his own White House advisers. He did not want others to feel his shame,1

  In the interregnum between his election and taking power, Kennedy had appointed a task force on education of which Frederick L. Hovde, the president of Purdue, was chairman. Other members included John Gardner, president of the Carnegie Foundation, and Francis Keppel, dean of Harvard’s School of Education. Among its key recommendations were financial support for public, but not private, schools with the amounts skewed in favor of low-income states with poor school systems and ghetto schools in the big cities. Keppel was proud of the fact that this was the first concrete proposal to give special assistance to inner-city education. Another important recommendation was for grants and loans to colleges to construct academic facilities.

  In 1961 Kennedy sent up bills incorporating these ideas and many others. The key primary and secondary education bill foundered on the church-state issue. While there were many private schools, the Catholic Church operated 85 percent of them for its more than 5 million pupils. The National Catholic Welfare Conference insisted that, if Congress was going to support education, the parochial school pupils must get their fair share. Two powerful lobbies, the National Education Association, representing close to a million teachers, and the National Council of Churches, speaking for 31 Protestant denominations, opposed any support for parochial schools. The bill cleared the Senate but sank on the church-state reef in the House Rules Committee.

  In 1962 the President tried again, but with no better result. The parochial school issue had not cooled and the House declined even to consider the basic bill.

  Kennedy realized that something must be done to move the legislation and in late 1962 persuaded Keppel to become commissioner of education. He put together about two dozen proposals in a single bill, which he expected Congress would break up. By the fall of 1963 the individual bills began to clear both houses. The most important was the Higher Education Facilities Act; there were five others. Kennedy lived to sign one; Johnson put his name on the others shortly after the assassination.

  Except for progress on some of the secondary legislation, the year 1964 was a time for regrouping. Keppel was convinced that another expert study was needed and, along with everyone else, felt that nothing could be done on basic primary and secondary education until the religious issue was resolved.

  The President agreed with Keppel on both counts. A new, hard look in 1964 could take account of recent developments, among them the relationship of the Civil Rights Act and the poverty program to federal aid for education. Further, Johnson was confident that he would win the election handsomely and bring in large Democratic majorities in both houses in 1965. This would allow him to accomplish far more in 1965 than either Kennedy or he had been able to do so far.

  In his commencement address at the University of Michigan on May 22, 1964, the President had both announced his Great Society and had suggested how he would go about reaching it:

  We are going to assemble the best thought and the broadest knowledge… . I intend to establish working groups to prepare a series of White House conferences and meetings—on the cities, on natural beauty, on the quality of education, and on other emerging challenges. And from these meetings and from this inspiration and from these studies we will begin to set our course toward the Great Society.

  On May 30 Walter Heller and Kermit Gordon proposed 14 task forces on policy issues, including education. They suggested that the members should be experts who “possess the gift of originality and imagination.” They insisted that the task forces should be small, that they work “quietly,” and that their reports should be submitted immediately after the presidential election in November. That is, they would form the basis for the Great Society’s legislative program that would be submitted to Congress in January 1965.

  The President was enthusiastic and announced the plan to his cabinet on July 2. Since the task forces would be encouraged “to think in bold terms” and “to strike out in new directions,” they must function “without publicity”:

  I attach great importance to this effort. I believe you share my desire that this be an activist Administration, not a caretaker of past gains. I want to get the advice of the best brains in the country … and I want their help in devising the best approach. … I want these task forces to question what we are now doing and to suggest better ways of doing it. You and I will still have the final task of accepting or rejecting, of making the judgments of what is feasible and what is not. But I want to start with no holds barred.

  Johnson felt that some of Kennedy’s task force reports had been undermined by their release to the press.
Joseph Pechman’s task force on intergovernmental fiscal cooperation in 1964 became a front-page story in the New York Times before the President had seen the report. Thereafter the White House insisted on secrecy. The education study would not be released until 1972.

  Bill Moyers was in charge of launching the task forces and he devised a common formula. Education was probably its most notable and successful example. The task force consisted of 14 experts drawn from the various levels of education, public and private, secular and sectarian, white and black. Keppel was a member. Richard Goodwin was the White House liaison and William B. Cannon was the Bureau of the Budget expert on education financing. Moyers sent instructions to 13 task forces on July 6 (Shriver had already created his own and the poverty law was enacted on July 2, 1964). The deadline for the report was November 10.

  Moyers also sent Goodwin a big think issue paper on education policy written by the Bureau of the Budget. The statutes enacted between September 1963 and February 1964 had a combined financial impact of only $750 million, less than the subsidy to universities for research alone. The defects in the educational system demanded much greater support—$2 billion at the start and $6 to $8 billion annually by the fourth year.

  In the past, Budget noted, legislative proposals had come from the educational establishment and reflected the aims of the interest groups—teacher salaries, classroom construction, vocational education, state departments of education. Such programs were too particular and too small to do much good. Thus, the task force must think big. The education program should follow the example of the poverty program by stressing the “value of developing human resources” which met the “needs of people.” “A single comprehensive education program can serve as a rallying point for all pressure groups.”