by Joshua Zeitz
Under Keppel and his successor, the Office of Education underwent sweeping personnel changes. It would take another decade and a half before Congress unraveled HEW and created a cabinet-level Department of Education, but in that time the Office of Education developed the operational know-how to oversee a growing budget, as successive Congresses grew the federal government’s aid budget and established over a hundred new buckets of categorical assistance, including grants for migrant children, students for whom English was a second language, delinquent children, and children with physical and mental disabilities. As Cater and Keppel anticipated, the administrative burden associated with managing these programs—issuing annual guidelines for individual programs, monitoring eligibility and compliance, negotiating with states and school districts to ensure proper maintenance of effort, and, most notably, compelling schools to integrate their student and faculty bodies—would demand a more muscular and activist staff. In the first year after the enactment of the administration’s education programs, the office’s personnel grew by an astonishing 50 percent. LBJ’s White House advisers were attentive to the art of governance and, in ways that were often invisible to the public at large, built capabilities that would ensure the lasting success of the administration’s domestic policy achievements. In so doing, they also oversaw rapid growth in the federal bureaucracy that would later open them to sharp criticism.
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As early as 1934, when Franklin Roosevelt’s Committee on Economic Security first contemplated but ultimately rejected including health insurance in the original Social Security Act, liberals aspired to make access to affordable health care a fundamental right of citizenship. In the 1940s, Senator Robert Wagner and Congressmen John Dingell Sr. and Reid Murray introduced legislation that would have established a national program for hospital and medical insurance. It went nowhere, as was also the case with Harry Truman’s efforts after 1949 to achieve the same result. At every turn, powerful opposition from the American Medical Association (AMA) and its Republican supporters in Congress stymied progressive efforts. The AMA alone showered $1.5 million on lobbyists and public relations professionals to defeat Truman’s program—a staggering sum in its day. In 1952, when the GOP platform roundly denounced “federal compulsory health insurance, with its crushing cost, wasteful inefficiency, bureaucratic dead weight, and debased standards of medical care,” Dwight Eisenhower—the very model of moderation—scored Democrats who would foist “socialized medicine” on an unsuspecting public. There was little room for bipartisan compromise.
It did not help the liberal argument that increasing numbers of working-class voters who might have been inclined to support national health care no longer needed it. After World War II, major employers began extending unprecedented benefits to workers—blue-collar and white-collar alike—including paid vacations, annual cost-of-living adjustments to wages, defined benefits pensions, and private health insurance. Liberal industrial unions endorsed this new model for labor-management relations. During the Great Depression, the United Auto Workers had staged dramatic sit-down strikes and demanded shop-floor democracy in the form of employee representation in management decisions. Now, reflecting the new reality of postwar prosperity, in 1950 the union signed a pathbreaking contract with General Motors—dubbed “the Treaty of Detroit”—which offered controls against strikes in return for generous employee benefits. “GM may have paid a billion for peace,” wrote the sociologist Daniel Bell, then a columnist for Fortune, “but it got a bargain.” What many liberals once assumed government would need to do for its working-class citizens, private industry now offered on a contingent basis. By 1960, 100 million Americans enjoyed access to private health plans.
While many Americans did not enjoy access to such perquisites—including most African Americans, Latinos, and women; most nonunionized workers; the unemployed; and children of uninsured adults—ardor cooled within organized labor on the subject of comprehensive health insurance. Instead, by the mid-1950s, Democrats turned their focus to a narrower subset of the population that, by definition, would not benefit from employer-based health programs: senior citizens, most of whom were no longer in the workforce. At a hearing in 1959, a retired blue-collar worker from Tampa told a Senate subcommittee that he and his wife got by on just $1,500 each year. “Well, we are old people and we don’t require much,” he offered. “But I want to ask you . . . what do we do if . . . we need medical 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.” A seventy-five-year-old woman from Boston shocked the panel with her tale of waiting “in line like a lot of cattle” at a charitable clinic, because she and her husband could not afford to spend $7 to visit a private doctor. “We pay $1.75 or $2 for a ticket to get in,” she complained. “Then they write out a prescription. . . . $11 prescription. How in the world can I pay $11 for a prescription?” As a Senate aide to Lyndon Johnson, George Reedy had urged the majority leader to take up the cause of health care for the elderly. The “problem of aging amounts to a collective responsibility,” he insisted. “America is no longer a nation of simple pioneer folk in which grandmother and grandfather can spend their declining years in a log cabin doing odd jobs and taking care of the grandchildren.”
Legislation providing hospital insurance for the elderly first surfaced in 1951 and bore the common sobriquet Medicare as early as 1950. The bill that John Kennedy first proposed would have updated the 1935 Social Security Act by establishing a contributory hospital insurance program for every recipient of Old-Age, Survivors, and Disability Insurance—OASDI, or what is commonly known as Social Security. Workers would pay an additional payroll tax and enjoy the benefit upon retirement. Even this stripped-down proposal drew the angry opposition of the nation’s physicians. The AMA spent $50 million—and hired seventy publicists and twenty-three full-time lobbyists—to kill the legislation. Every member of the organization—which is to say, most doctors in America—received a propaganda poster, SOCIALIZED MEDICINE AND YOU, intended for prominent display in their offices, as well as a supply of informational literature to place in the hands of patients. When the American Nurses Association broke with the physicians and endorsed the bill, individual members reported widespread, “rather unethical pressure” from their doctor-employers. The AMA’s campaign worked. Though Kennedy tried to appeal to the country’s generous spirit—“I can’t imagine anything worse . . . to sap someone’s self-reliance than to be sick, alone, broke,” he declared—like the rest of his domestic agenda, his Medicare bill died prematurely in Congress.
Even in the aftermath of LBJ’s landslide victory in 1964, when it became clear that the president would enjoy majorities sufficient to push Medicare through the House and the Senate, the AMA opted for vocal opposition rather than accept a seat at the drafting table. “We do not, by profession, compromise in matters of life and death,” the organization’s president announced. “Nor can we compromise with honor and duty.” But the die was cast. Through labyrinthine negotiations between Wilbur Cohen and Wilbur Mills, the chairman of the House Ways and Means Committee, the final legislation combined three different concepts into one bill: Medicare Part A, which provided automatic hospital insurance for all recipients of OASDI. Under this section, seniors were entitled to ninety days of hospitalization per year, per illness, with a $40 deductible to cover the first sixty days and $10 per each subsequent day of inpatient care. The hospital insurance was financed by an increase in Social Security taxes. Medicare Part B, originally a Republican alternative to the Kennedy-Johnson plan, provided voluntary medical insurance to cover physician visits; for $3 each month, Americans over the age of sixty-five, whether eligible for OASDI or not, could buy coverage, which the government further subsidized. Finally, the bill established Medicaid insurance for indigent Americans of all ages, including dependent children; states would administer the program,
with a sliding-scale match from Washington, D.C.
Officially called the Social Security Amendments of 1965, Medicare and Medicaid glided through Congress in early July. With the exception of southern holdouts, Democrats overwhelmingly supported the plan; Republicans in both the Senate and the House were more evenly divided. Johnson insisted on staging the formal bill signing at the Truman Presidential Library in Independence, Missouri, as a tribute to the aging former president but also to emphasize the continuity between the New Deal, the Fair Deal, and the Great Society. Several of LBJ’s aides, including Busby, Cohen, and Cater, urged Johnson to relocate the ceremony to the White House or, as an alternative, to Hyde Park, given the upcoming thirtieth anniversary of Social Security. Truman’s original bill had been a “close parallel to Great Britain’s ‘socialized medicine,’” Buzz observed. (Indeed, at the time, the AMA had deemed it a “monstrosity of Bolshevik bureaucracy.”) After years of positioning Medicare as a moderate program well within the boundaries of existing political norms, the symbolism behind traveling to Independence would pose a “grotesque distortion with unhappy and impolitic overtones.” Busby was particularly concerned that the AMA might shun both the ceremony and the program itself—a fear grounded in reality: the Ohio Medical Association, with a membership of ten thousand physicians, had already endorsed a Medicare boycott, as did most of the twenty-five thousand AMA members who had convened the prior month in New York for the association’s annual conference. Moreover, Truman was renowned for his extreme candor. There was no telling what jabs he might throw at the medical profession in return for its years of stubborn opposition. Johnson insisted on his original plan. Neither was he particularly concerned about the possibility that the AMA would attempt to kill Medicare before its implementation.
“George, have you ever fed chickens?” the president asked George Meany, the president of the AFL-CIO who shared Cohen’s concern about a physician boycott. “No,” replied Meany. “Well, chickens are real dumb,” LBJ explained. “They eat and eat and eat and never stop. Why they start shitting at the same time they’re eating, and before you know it, they’re knee-deep in their own shit. Well, the AMA’s the same. They’ve been eating and eating nonstop and now they’re knee-deep in their own shit and everybody knows it. They won’t be able to stop anything.” When the organization’s leaders gathered at the White House on June 29—weeks before the signing ceremony—the president delivered the full “Johnson Treatment.” He flattered his visitors, rained praise upon their chosen vocation and calling, and applauded their patriotism. Referencing the war in Vietnam, he asked whether the AMA would honor its civic duty by endorsing a voluntary initiative to send doctors for short tours of duty to help build the local medical infrastructure in South Vietnam. “Your country needs your help,” he implored. “Your president needs your help.” When the doctors signaled their agreement (for what else could they have done?), Johnson snapped for the press corps. A reporter led with the obvious question—would the AMA cooperate in the execution of Medicare?—and the president, as though on cue, feigned anger. “These men are going to get doctors to go to Vietnam where they might be killed,” he lectured the newspapermen and broadcast outlets. “Medicare is the law of the land. Of course they’ll support the law of the land.”
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Nothing like Medicare had ever been attempted in the United States: a new national health-care plan, financed by payroll taxes and voluntary contributions, offering roughly twenty million seniors automatic hospital coverage and an affordable, government-subsidized insurance program to cover doctors’ visits. Not long after he signed Medicare into law in July 1965, LBJ cautioned John Gardner, who replaced Anthony Celebrezze as secretary of health, education, and welfare in August 1965, that the department’s successful implementation of the program would be every bit as critical as the legislative achievement itself. “If you’re wrong in your calculations,” LBJ warned, “we’re both going to look like the worst kind of damn fools.”
The possibilities for failure were vast. In a day when “communications technology” meant printed mail and the rotary telephone, the new Medicare administration would have to find those seniors, tell them about the program, and get them to sign up. Some wondered whether the government could ever achieve its critical enrollment targets. Others, like the New York Times reporter Nona Brown, wondered if there would be “lines of old folks at hospital doors, with no rooms to put them in, too few doctors and nurses and technicians to care for them.” It was by no means clear that doctors would participate, given the AMA’s staunch opposition, and individual physicians were under no obligation to accept Medicare insurance—or that it would be possible to establish a working reimbursement system in so short a time. As Johnson later recalled, “There were predictions . . . that the system would collapse under its own weight.” Yet after it launched, on July 1, 1966, no such calamity ensued. On the contrary, by the start date over nineteen million senior citizens had enrolled and immediately enjoyed the security of knowing that they would not go bankrupt by getting sick. Hospitals and doctors joined the Medicare network, and private and nonprofit insurance carriers stepped in to manage disbursements. In short, the system worked.
In constructing Medicare, the Johnson administration faced a number of daunting challenges. Though all Social Security recipients would be automatically enrolled in Medicare’s hospital insurance program (Part A), roughly eight million seniors were not eligible for Social Security, either because their job sector was excluded or because they hadn’t worked or accrued credits. These seniors needed to be located and registered. All seniors were also eligible to enroll voluntarily in the doctors’ insurance program, Part B, which gave them access to routine medical care at a cost of $3 per month, but they, too, would have to be signed up one person at a time. Additionally, officials had to work with tens of thousands of scattered nursing homes, hospitals, and home health agencies to certify them and bring them into the system. Then there were the doctors—more than 200,000—who could elect to participate in Part B. They, too, needed to be briefed and enrolled.
In these days before mass electronic record keeping, it required vast human efforts to reach potential Medicare recipients. Under the leadership of HEW, multiple government agencies—including the Social Security Administration, Public Health Service, Internal Revenue Service, Civil Service Commission, General Services Administration, National Park Service, and Postal Service—dedicated tens of thousands of professional staff members to the challenge. The career officials who helped draft and implement the law brought decades of collective expertise to the task. They chose July 1, rather than January 1, to launch the program, because hospitals were often strained to capacity during the winter months, when senior citizens were likely to suffer from weather-related illness. The Postal Service hung billboards at each of its locations, announcing enrollment deadlines and processes. The Forest Service sent rangers into woods in search of remote, off-the-grid men and women who could not be reached by mail. The SSA sent over 19 million punch cards out to seniors and, at peak, processed 800,000 each week, routinely checking the responses against the Bureau of Data Processing and Accounts’ magnetic tape records, so that eligible seniors who had not replied could be canvassed either in person or by mail.
Wilbur Cohen, whom LBJ elevated to the position of undersecretary of HEW, called it the most sweeping governmental maneuver since D-day. By July 1, 1966, between 90 percent and 95 percent of eligible individuals (nineteen million) were enrolled in both Part A and Part B. “I doubt if ever in history has there been such a comprehensive and successful program of communication with older people,” crowed one official. At the same time, federal officials selected and prepared private insurance carriers to administer the new systems for hospital and doctor payments, consulting with groups as diverse as the American Nurses Association, the American Hospital Association, and Blue Cross organizations to help medical facilities meet the program’s stan
dards.
At first blush, the Johnson administration’s success in launching Medicare in just eleven months—even as it took on the simultaneous task of desegregating health facilities throughout the South—seems to stand in sharp contrast to the trouble that successive administrations experienced in enacting various health-care reforms. But Johnson’s White House worked from a position of comparative advantage.
For one, LBJ was able to rely heavily on state governments for cooperation. The White House asked governors—Democrats and Republicans, southern and northern alike—to designate state agencies to govern certification of insurance carriers in their jurisdictions. Even in the face of enforcement of Title VI of the Civil Rights Act, which many governors loathed, the states promptly stepped in to assume these administrative responsibilities. By contrast, half a century later, when Barack Obama implemented the Affordable Care Act (ACA), many Republican governors dug in their heels and flatly refused to implement it. Thirty-five states refused to establish health exchanges where, as the law intended, citizens could buy private health insurance plans and instead relied on Washington to operate exchanges for them; nineteen states also refused federal dollars to expand Medicaid coverage for poor residents, as the act also encouraged. Many governors refused to use state resources to enroll eligible citizens, and some even took the Obama administration to court. As divided as the country was during Johnson’s term in office, this magnitude of political obduracy was largely unthinkable in the political culture of the day.
