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Why Every Single US Presidential Candidate Could Expand Medicare and Medicaid

Today marks the 50th anniversary of Medicare and Medicaid. And despite 50 years of threats and criticism from both the right and the left, the programs will only continue to grow.

by Keith Wailoo
Jul 30 2015, 2:20pm

Photo by John Raoux/AP

In 1961, Ronald Reagan made a 10-minute-long spoken-word vinyl record on which he railed against the idea of Medicare. Decrying it as a path to socialism, he predicted the government health insurance program for people over 65 would lead to a world where "you and I are going to spend our sunset years telling our children and our children's children what it once was like in America when men were free."

Fast-forward to his presidency 20 years later. Reagan had continued to criticize big government programs, but in the interim, Medicare — passed into law in 1965 — had produced an entire generation of active and engaged elderly voters who were protective of their health care benefits. In the 1980s, those voters were seeing their out-of-pocket costs rise as gaps in coverage emerged, and so Reagan signed into law costly (and ill-fated) coverage for so-called catastrophic health care and prescription drugs. In other words, by the end of his presidency, Reagan had actually expanded Medicare.

And no matter who wins the presidency in 2016, both Medicare and its companion, Medicaid, will continue to expand.

Reagan's anti-Medicare speech

Today marks the 50th anniversary of the two government programs being signed into law by Lyndon Johnson, and both programs continue to come under attack. Last week, Jeb Bush suggested Medicare should be "phased out" for younger people to allow for a "move to a new system." During the past five years, Republican House budgets have proposed converting Medicaid — a shared commitment of federal and state governments — into a block grant program for the states to promote spending flexibility, which critics say opens the door for misappropriation and undermines Medicaid's mission. And this year, charges of fraud and over-billing in Medicare have made headlines, prompting worries on both sides of the aisle.

But ultimately, political pragmatism tends to trump ideological rhetoric. Reagan, for instance, was just one of many Republicans to support the expansion of Medicare benefits. Congress has done so repeatedly, Richard Nixon did it in the 1970s, and George W. Bush championed Medicare's expansive prescription drug benefit in 2003 — meaning a small-government Republican from Texas became the architect of one of the largest and most costly expansions in Medicare's history.

That kind of strangeness mirrors America's fundamentally split personality when it comes to government: Americans cherish their independence, but they also value government support during vulnerable times.

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Before Medicare's passage, the elderly had been a major face of poverty in America, in part because of high health care costs. Medicare created a sense of independence, providing some measure of freedom from reliance on one's children. Perhaps ironically, Medicare also fostered a sense of freedom from the government because the program is financed by dedicated payroll taxes young workers pay in exchange for medical coverage later in life. So each individual Medicare beneficiary can say that the dollars he or she puts in are simply being returned later in life. (In truth, the average Medicare beneficiary currently receives far more back in benefits than he or she contributes to the program.)

This confusion over government's role in the entitlement programs was perhaps never more evident than during a 2009 town hall meeting when one Medicare beneficiary said to South Carolina Republican Congressman Robert Inglis, "Keep your government hands off my Medicare."

Medicaid's 50-year history has been rockier than Medicare's, but here too pragmatism has triumphed time and again over small-government ideology. Consider Bill Clinton's time in office. Still stung by the failure of his national health care reform in 1994 and the Republican takeover of Congress in 1995, Clinton famously conceded in his 1996 State of the Union address that "the era of big government is over." Medicare and Medicaid were about 30 years old at the time, and the two big programs of the Great Society era seemed in peril. Critics cited their rising costs and bemoaned the expansive role of government in people's lives. The brash new Speaker of the House, Republican Newt Gingrich, suggested that Medicare might be allowed to "wither on the vine."

Yet the next two decades saw expansion, not contraction, in both Medicare benefits and Medicaid eligibility. Clinton established the Children's Health Insurance Program with the help of a Republican-controlled House and Senate. Pressed to reform Medicaid, Clinton also used executive waivers to give states greater flexibility to cut costs, innovate, and experiment with coverage and services. His success at moving families from welfare to work actually put more children at risk, so Medicaid eligibility expanded to fill the void.

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Medicaid began as the smaller and weaker of the two programs, a fragile agreement between the federal government and each of the states to share the costs of covering health care for people below and just above the poverty line. Many states were slow to sign on to the stigmatized federal-state partnership, regarding it as little more than so-called "welfare medicine." In 1969, four years after passage, 12 states still hadn't joined; Arizona was the last to do so in 1982.

Over time, Medicaid's reach and constituency grew; nursing homes, hospitals, and managed care organizations now rely on Medicaid dollars. In 2013, Arizona was again caught in a political Medicaid conundrum — whether or not to expand the program under the Affordable Care Act (ACA). And Republican Governor Jan Brewer, pressured both by Arizona hospitals that stood to lose billions of dollars without the federal funding, and by the high cost of treating the uninsured in her state, forced the state's Republican-controlled legislature to accept the Obamacare bargain.

"We have a responsibility," she said. "Other states ought to be following Arizona's lead and deliver good service at the most reasonable cost."

Today, Medicaid, which began its life as a poor program with weak political support, is now larger (70 million people) than Medicare (54 million people), and likely to continue to outpace it in the years to come.

So as the 2016 campaign progresses, don't take the political rhetoric too seriously. The programs have expanded eligibility and benefits and will continue to do so because they provide a vital service. Medicare, for one, has helped turn some of the nation's most vulnerable people — senior citizens — into both healthier people and a strong political constituency.

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Republicans once thought they would be able to win voters by running against Obamacare's Medicaid expansion, but Republican candidates do not speak with one voice. Ohio governor and presidential candidate John Kasich will likely have an easy time explaining why it was fiscally wise to push his state to accept the ACA's Medicaid expansion, while Louisiana governor Bobby Jindal may have a harder time explaining why he refused.

The 50-year journey has been fraught with uncertainty, particularly at times when Medicaid costs outpace state revenues as they have in recent years, and when Medicare's financing model sets off alarms about its long-term solvency. The question of whether LBJ's Great Society promises are worth the expanding costs won't easily be agreed upon, for the simple reason that the question is at once political, fiscal, moral, and deeply personal. But even faced with these concerns, the promise of alternatives to the programs ring hollow when compared to what many Americans have grown to expect: the messy yet popular 50-year commitment to seniors, the permanently disabled, those with end-stage kidney disease, and children and families with lower incomes. 

Keith Wailoo is Townsend Martin Professor of History and Public Affairs in the Woodrow Wilson School at Princeton University, and co-editor of the book Medicare and Medicaid at 50: America's Entitlement Programs in the Age of Affordable Care.