What is Medicare?

Liam Heffernan: 00:00:01

59 years ago, President Lyndon B. Johnson created Medicare, providing essential medical insurance to those most in need.

Those of us in countries such as the UK may think a publicly funded health program is expected, but in the US, Medicare remains a divisive issue. So we're going to find out a little bit more about what it is, how it works, and why some people really don't like it. As I ask, what is Medicare?

Welcome to America, a history podcast.

I'm Niam Heffernan, and every week we answer a different question to understand the people, the places and the events that make the USA what it is today. To discuss this, I'm joined by two of the authors of Medicare and Medicaid at 50 America's entitlement programs in the age of affordable care.

And I'll link to that in the show notes as well if you do want to read it.

Firstly, a best selling author and professor of history and public affairs at Princeton University who the history news network named as one of the top young historians in the country. He's regarded as one of the pioneers of the revival of american political history. So it's a real pleasure to welcome Julian E. Zelitzer. Hi, Julian.

Julian Zelitzer: 00:01:29

Hi there. Thanks for having us.

Liam Heffernan: 00:01:31

Great to have you. And we're joined by one of Julian's colleagues and co authors, also a professor of history and public affairs at Princeton.

He's formerly vice dean of the School of Public and international affairs and formerly the president of the American association for the History of Medicine. His research straddles history and health policy, touching on drugs and drug policy and the politics of race and health as well. Hello. Keith Awelu.

Keith Wailoo: 00:01:56

Good to be with you.

Liam Heffernan: 00:01:57

It's great to have you both on the podcast. And I realize I didn't check the pronunciation of your surnames before we started recording, so hopefully I didn't butcher them.

Keith Wailoo: 00:02:06

No, you got it right.

Liam Heffernan: 00:02:08

Wonderful. First test passed.

So I guess, you know, I really want to start by taking the politics out of it for a second because, you know, we'll come back onto all of that. But Keith, I'm really interested to just understand a bit more about exactly what Medicare covers and what it doesn't and who is covered by it.

Keith Wailoo: 00:02:28

Medicare, which was passed in: 1965

What Medicare is, is a national health insurance program for people over 65.

As you said, it was signed into law by Lyndon Johnson and it's funded by payroll taxes designated specifically for this program in your paycheck as a working american, as well as by general revenue. And as a result, it has this kind of veneer of a program that people pay into. Right. A payroll tax proportion.

The program has long carried this idea that people are putting into the system, and then when they turn 65, they are recouping. Now, it's actually not that kind of system.

You're not recouping what you put in, but you are putting money into a general fund that is designated for healthcare costs. As a result, it's kind of defied characterizations as a welfare program, which big government programs often have.

The key question isn't so much who it covers, it's changed.

It started off covering just the elderly, and then in 72, it expanded to cover the disabled, and in 72, also carved out another group that was entitled people with kidney failure for giving them access to end stage renal dialysis. The key question is also, what is covered? Right. And this has changed over time in increments. So.

And those increments have been shaped by political shifts. At first, there was part a, which covered hospital stays and home health visits, and part b, that covered doctors visits and outpatient visits.

ly more things like dialysis.: 1990

recently, George W. Bush. In: 2006

he Inflation Reduction act in: 2022

Liam Heffernan: 00:05:30

I have a question here, as a fairly naive Brit, on the technicalities of all of this, because in the UK we have a similar sort of scheme in that it's deducted from our paychecks as a tax to the government, and that funds a national public health service, but everyone is eligible, no matter what treatment or care is needed. It's a kind of catch all system. It's there to just provide healthcare to all who can't afford any sort of private alternative.

It doesn't feel like that's entirely the case in the US.

And in which case, is there a kind of argument that people who are maybe paying into it, who are then not able to claim from it, have a bit of a right to be a bit aggrieved about that.

Keith Wailoo: 00:06:17

So let me clarify. You are eligible for Medicare regardless of whether you've paid into it.

Liam Heffernan: 00:06:24

Okay.

Keith Wailoo: 00:06:25

So it's a system that is supported by payroll taxes by those who are employed, but everyone, when you turn 65, are eligible for the coverage.

Now that said, you know, when it was first passed, the proponents thought that this was going to be a step towards precisely what you just described the NHS does.

er Truman, Ted Kennedy in the: 1970

But there was always this sense early on that Medicare would lead towards what some proponents called Medicare for all, that once people saw the benefits of what Medicare could be for the elderly, there would be this sort of like, movement towards coverage of other people that leads in an american fashion, incrementally towards what. What you're describing as, like, commonplace and, you know, accepted as the norm in the UK.

Liam Heffernan: 00:07:28

And, you know, I guess we'll get onto that because it's mad to me that people have an issue with that sort of system, but there are issues with that.

But, Julian, you know, I think from the offset, it feels like from the outside that Medicare has always been politically quite divisive subjects, and it certainly always seems to be used nowadays as a campaign tool. People claiming that they'll do this or that or scrap this and that. How did this ever get over the line in the first place?

Julian Zelitzer: 00:07:57

al Security system created in: 1935

And it was an effort to overcome some of the resistance in the United States, both in 65 to healthcare and in 35, just to social safety net programs more broadly.

st proposed, it's in the late: 1950

Health care, yes, national health care had failed under President Harry Truman. The American Medical association was deeply opposed to the program. They called it socialized medicine.

Conservatives like Ronald Reagan made this a signature issue as well.

er Kennedy is assassinated in: 1963

Doctors mobilize throughout the country, ranging from full blown lobbying effort in the districts of key members of Congress to putting up posters and sending messages to physicians. So they made clear to their patients they were against what they called socialized medicine.

And so the challenge for Lyndon Johnson, for the democratic Congress, was, how do you overcome this very deeply entrenched resistance here to a public health care system, the kind you're describing? And also, how could you move this through kind of the fragmented political system?

And the structure of Medicare reflects all those political concerns.

Liam Heffernan: 00:10:15

But what were those arguments against Medicare?

Julian Zelitzer: 00:10:19

Two arguments.

One was that if you put Medicare, which was simply initially hospital coverage for elderly american, 65, or overdose, this would open the door to socialized medicine in the United States, and it would open the door to socialism more broadly.

Ronald Reagan, again, famously makes this argument on a record that opponents of Medicare love to play when they would get together to try to build opposition to the program.

The second argument by fiscal conservatives in Congress was, since you were going to put this program in the Social Security system, you would essentially force Social Security taxes to reach a point, then consider 10% that was too high, and it would create opposition to Social Security, which was a popular program and ultimately bankrupt the entire thing. So those were the two principal arguments put forward by the opposition in 64 and 65, when this is getting hashed out in Washington.

Liam Heffernan: 00:11:21

So then, who were the real champions at the time that really got this over the line that maybe we don't give enough credit to nowadays?

Keith Wailoo: 00:11:30

Well, I think that there are a couple of champions.

this into the context of the: 1960

I mean, one of the things we need to understand about this time period is the fact that healthcare was booming as an enterprise, and there was a sense that the healthcare system had much to offer Americans. And in the course of World War two, access to health insurance had become tied to employment, and we could get into how that had happened.

But the idea, therefore, is that the elderly who are no longer working are locked out of this system, and people who are poor are locked out of this system, and the unemployed are locked out of this system. And so you might say, pressure begins to grow through the forties into the fifties.

For what do you do about these people who are locked outside of the riches of the, the kind of the growth of an enterprise that is ensuring and providing access to healthcare? And so the press is, the pressure really comes from these kinds of more liberal forces that argues that it's government's role to expand access.

And so there are two pieces of legislation that emerge from that. Medicare, but also Medicaid. Right. And the Medicaid program is a poor person's program.

In the early days, the idea that, and it's organized around a different financial logic, which is the federal government puts in money and it's matched by individual states who buy into this program. It's regarded as a poor person's program, and as a result, a poor program that will provide basic layers of basic levels of coverage.

two were vying for primacy in: 1965

And, you know, one might argue that one of Johnson's, you know, brilliance, or is to say, well, let's just pass both of them. So there's an interesting set of stories about how these two things came to pass.

But the contentiousness over Medicaid, you know, is important because what this meant was you had this poor person's program and then you had this other program that was adorned with the idea of paying in and then taking out. And all of these two things. Arguably, I would say Medicaid has been much more contentious politically than Medicare has.

s would have come from in the: 1960

The other thing I want to highlight about Medicare is that once, and people make this argument in political science and elsewhere, once you actually create these entitlement programs, it actually hands a certain kind of political force and power to the elderly who vote in order to protect their access to this particular entitlement.

So in some ways, some political scientists argue that Medicare creates a kind of more active elderly voting population that then politicians both on the left and the right need to respond to. And you see it this year, and you see it every election year.

Julian Zelitzer: 00:15:27

If I could jump in and I'll just add, I think Keith captured it very well. And then a few specific people I always think about. There were members of Congress who were important.

California Democrat Cecil King and a New Mexico Democrat named Clinton Anderson were the two members of Congress who were really pushing for Medicare before Kennedy was in office, before Johnson was in office. And they keep the drive going, really make this an issue of their own. There's a guy in the Social Security Administration.

He's one of these lifetime civil servants who everyone in Washington knew.

Outside Washington, few people knew, named Wilbur Cohen, who really takes this on from inside Washington and lobbies very hard, both in the White House and also on Capitol Hill, dealing with opponents of the program, like Wilbur Mills, who's the chairman of the Ways and Means Committee. Until Mills finally turns, unions were also very important.

Walter Reuther, who's the president of the UAW, the AFL CIO, all throw their weight behind this program. And it's quite important in creating a kind of grassroots force to complement what was going on in Washington.

And obviously, President Lyndon Johnson, you know, as soon as he takes office, this is one of the civil rights bill, and this are the two big issues he wants to push right away. And part of it is this drive Johnson has to do what the predecessors who he admires greatly, including FDR and Truman, were unable to do.

And he says this to his advisors. So there's others, but just in terms of some of the people who are the movers behind the legislation, I think they're important.

it year in and year out after: 1965

And ironically, he becomes an architect of this grand compromise that includes what we call Medicaid today and both parts of Medicare covering hospitals and physicians. So it's a lot of interesting players, I think, who ultimately are part of the mix that results in this historic legislation.

Keith Wailoo: 00:18:09

Could I add one other thing to that? Because Julian mentioned the Civil Rights act in the volume.

There's a lovely essay by David Barton Smith, who tells the untold story of how the Civil Rights act and Medicare are connected historically and why they have should be told as stories that are connected.

evious year. And so more than: 6000

It was itself very controversial in the Civil Rights act, but it forbids the flow of federal funds to any institution or program that discriminated on the basis of race.

So you can see how Medicare and the Medicare funding that would be beneficial to hospitals, because, after all, what you're doing with Medicare is you're turning millions of people who are elderly and poor and don't have access to healthcare into purchasers, into sources of profit for hospitals. But you're saying if you want access to this pool, you have to comply with these federal laws.

And so it became a kind of a tool for the desegregation of southern hospitals, hospitals that had been segregated up until this point. So there are all of these interesting ironies, you might say, or underlying stories.

grows phenomenally after the: 1960

People with heart problems who are older and people who need heart procedures of various kinds that are reimbursable now through this program.

So there's a lot of sort of, at the same time, you get programs like physicians who still continue to complain about the Medicare program even though they themselves are now benefiting from, from it.

Liam Heffernan: 00:20:30

I think it's so easy to look at the politics and the economic systems behind healthcare in America. But I'm really interested to actually know what the impact of Medicare is. Has it actually improved the mortality rate?

What impact has this had on people's lives?

Keith Wailoo: 00:20:48

Well, what I would say is I've sort of looked at some of the, you have individual economic studies of things like the impact of Medicare part D, the prescription drug coverage.

And I think the argument is more of a common sense argument that access to healthcare, access to drugs, access to insulin to manage your diabetes, will improve your morbidity, will improve your quality of life.

Whether it improves mortality is a, is a tougher argument to make because there's so many other factors besides access to healthcare that improve mortality, housing, food access. Oh, things like an epidemic, for instance. So these are the kind of factors.

But I think, by and large, translating people who are poor and have no access to healthcare into purchasers of healthcare unquestionably have an impact on the health and well being and the quality of life economically. There's been these huge implications for the healthcare system. Medicare financing pays for the supporting elderly. There's a financial logic.

the Medicare benefits are in: 2021

That is a huge boon to supporting hospitals, to supporting doctors and supporting drug companies, et cetera, et cetera.

Julian Zelitzer: 00:22:40

And I just add, I mean, I think, you know, there's the particulars, but some of the basic elements of why Medicare and Medicaid were created to provide a floor for elderly Americans, Americans 65 or over, and that age has shifted to some extent, is just a huge transformation from where you were in 63 or 64, where that kind of basic element of healthcare was not guaranteed to many old americans, and that's no longer a part of american life. There's flaws, there's limits, there's gaps in the program, but the program's really a watershed change.

Equally important is hospitals, doctors, all of the initial opponents of Medicare have all greatly benefited from the funds that flow from this program, as have many states who, in recent years, even conservative states in the US, are somewhat reluctant, many parts of the government, even though they're conservative, to reject increased Medicaid funding. This is literally kind of been integral to the bloodstream of our healthcare system. And in that respect, I think it's been pretty successful.

And our book also has a number of authors who argue that overall, the money's been pretty efficiently used compared to how we see things play out in the private healthcare system.

Liam Heffernan: 00:24:06

So then, when there's a clear benefit here and clear use cases for Medicare that have been demonstrated over the last near 60 years, is it really just more of an ideological issue that divides people on things like Medicare? As a Brit looking at America, there seems to be a real pushback on sort of federal taxations of any kind of kind.

This idea that, you know, you have what you earn and give as little as possible back to government, you know, and it feels like that's really the crux of the, the issue here.

Keith Wailoo: 00:24:44

So let me just say that there's a little bit of a confusion in thinking about american healthcare politics between Medicare, which in some ways has become more like Social Security, as regarded as sacrosanct and on both sides of the political aisle. So, for instance, this year, you have Trump claiming credit for reducing the costs of insulin during his administration.

He did it as a temporary one year thing that expired, whereas part of the inflation Reduction Act, Biden did it. And now the federal government is negotiating drug prices and has reduced insulin prices across the board.

But they're both arguing no, no, no, I did that. No, no, no. I did that. And that's because the elderly make up 21% of the population in Florida. They make up 19% of the population in Pennsylvania.

And all of these political parties want to make the argument, no, no, no, I have your back. I'm taking care of you.

Medicaid, which was expanded under President Obama to become labeled Obamacare, is that much more contentious poverty program that expanded. And states like Kentucky said, we don't want Obamacare.

But when they expanded, realizing that the benefits were too good to pass up, they expanded it. And they called it Kinect care. K y for Kentucky nect because. And so here you have a different kind of politics of health care. Right.

And I think it's important to understand then that, and when Obamacare was being expanded, there were Medicare beneficiaries who said, I don't want Obamacare.

I want the government out of my Medicare, which doesn't make any sense in a, in a kind of a literal, it doesn't make any actual sense, but rhetorically, it tells you a lot about people's sense of entitlement.

So I do think that a lot of what we're seeing is ideological and the importance of maintaining this notion of ideological purity regardless of, you know, the actual benefits that we derive from government.

Liam Heffernan: 00:27:13

I'm just struggling a bit with all of this in that, you know, I also see a lot of arguments about how, you know, I mean, healthcare insurance is, is a sort of non negotiable part of, you know, salary packages in America because, you know, you need some sort of healthcare, and private healthcare seems to be getting more and more expensive. And on the other end, you've got systems like Medicare and Medicaid which are trying to make healthcare more affordable.

And there seems to be a resentment of the cost of private healthcare and a resistance from not everyone but some people to expand Medicare and Medicaid. Is there some sort of common ground in the middle that can make everyone happy?

Julian Zelitzer: 00:28:00

Probably not. I mean, our colleague at Princeton, Paul Starr, has really written the best book on the healthcare system.

And one of his main points is this Jerry built system that we have develop, which is a combination of private and public and within that, many different kinds of public programs. So it's a bit of a mess. The idea of undoing it all, though, seems very unlikely.

And the lesson of health care reform, really, I think from Johnson, but certainly from the Clinton era through President Obama, was working within this complex system that makes middle grounds often difficult because people are complaining or frustrated, often rightly so, with different elements of the programs, it's very, very difficult.

And so what we see from at least liberals and healthcare proponents and even many Republicans at this point is trying to find fixes within different gaps. I think Medicare still remains one of the common grounds, though I think Keith's absolutely right.

And we see again and again, you know, pretty strong support for this relative to other parts of the social safety net. You don't see many Republicans, even today when the party has really radicalized, clamoring to get rid of Medicare.

They're not even doing that with the Affordable Care act. But Medicare, that's kind of, you know, pretty solid ground.

it's a remarkable story since: 1965

So I think, you know, maybe the common ground still actually, these programs are something of a common ground within an entire system that's pretty much a mess and I think will continue to be so for years to come.

Keith Wailoo: 00:30:17

Yeah, I would add that. So Julian's quite right. Right. Medicaid covers 80 million people.

And then we added at one point children's health insurance program called CHIP, which is very popular, which covers about 7 million. Then we have Medicare, which is over 60 million. And altogether we're talking about almost 150 million people who fall somewhere under this.

And the debate about Obamacare was, you know, what they did was they increased eligibility so that what had been just a poor person's program now is a kind of like a middle class program. And so the idea that made it really contentious, but that's like close to half the population that is covered this way.

So the way one observer once explained this to me, and I think it has some kind of resonance, is that Americans often are committed to this kind of rhetorical individualism, right? This rhetoric of, you know, anti big government, against socialism.

So Medicare is popular because, as this guy said, I don't want to be responsible for taking care of my parents when they get to 65. I don't want, I want them to be independent. And so I like Medicare because they have health insurance. I don't have to be responsible for them.

And we both get to complain about government, right? So it's the, this kind of, you know, distrust of government while accepting it.

And you see this all over like Republicans who vote against the infrastructure act.

But then when the money comes to their locality to help build bridges, they're there at the groundbreaking ceremony, you know, saying, look what we're doing for you to help communities go better. So to me, that's the kind of logic at work.

But I think Medicare, as Julian has pointed out, is now a kind of program where everyone wants to take some kind of credit for it. And it's no longer just a big government program. It's a program that your constituents believe in and want to see you defend it.

So the best thing you can do as a political actor these days is to attack the other guy or woman for going after Medicare or going after Social Security. And that's the state of play, I think, right now.

Liam Heffernan: 00:32:48

g this, it's early September,: 2024

Had this been a couple of months ago, I would have asked you what difference, you know, a Trump second term would have on, you know, all of this. Perhaps now we don't know if it's going to be Trump or Harris.

I think it's a lot closer than it was a couple of months ago when Biden was running, but it doesn't seem to have been a real topic of debate so far. Do you think that either result in this election will have a major impact on the current programs?

Julian Zelitzer: 00:33:24

Well, I mean, I don't imagine either candidate is going to make this a big issue other than supporting it. They don't want to anger not just the popular program, but a program that benefits elderly, high rates of voting Americans.

But look, I think if we are imagining what the difference of an administration might be once it's in place, probably proponents of Medicare would still be more comfortable with the Harris administration because generally Democrats have been much more reluctant to even try or want to try really cutting into Medicare. And there are ways in which, without gutting a program, we've seen the erosion of programs.

Funding is not updated, new benefits are not provided, or simply attention and nurturing of policy doesn't happen. And so if you're making a calculation, where is the risk higher?

There is a history since the: 1980

And so that would be where the higher risk, in my opinion, would certainly be.

Keith Wailoo: 00:34:40

Yeah, I agree with that. And, you know, one of the things I'd say is some of the politics of Medicare in particular are sometimes unpredictable. For instance, it was George W.

Bush and a Republican Congress that established the prescription drug coverage benefit.

I don't think anybody saw that coming, except it emerged at a time of increasing dissatisfaction among the elderly about the high cost of drugs, that piece that had been growing as a cost that they had to pay, that had been left out of Medicare coverage. And so they both, both Gore and Bush promised that.

And that was a, you know, Bush won Florida by, you know, well, you could argue that determined the election, right? And it was a small number of votes. And I would argue that if Bush had not offered that, he would not have won Florida. Right.

That's a, that was an electoral move. So that tells you a lot about why it is that Trump is trying to say, no, no, I'm the one who lowered insulin costs in Medicare, and these are costs.

It's not unlike the logic of payroll taxes, people, when you go to pick up your drugs at the pharmacy, you have a copay. And it really matters if that copay is $35 or if it's dollar 250 or dollar 400, and they both want to claim credit for that.

So I feel like that's how Medicare politics kind of seeps into politics. And it's a level of small symbolic things like how much do you pay for the drugs when you go to the pharmacy?

And I suspect that that's the kind of thing that will continue to ensure that Medicare continues to be a really important program to protect, even though fiscally republicans have been more likely than democrats to say, how do we scale this back? How do we limit it? How do we shrink it?

Liam Heffernan: 00:36:48

Yeah.

And I think we've probably only just scraped the surface on all of the conversations to be had around that intersection between politics, finance and healthcare in the US.

But as a Brit who's incredibly naive in all of this, I've certainly had my eyes opened on how the mechanics of that sort of work on a really basic level, I think this conversation has been incredibly useful, and I thank you both for joining me for this. But we're going to wrap up this episode here. And again, thanks to Julian Zelitsa and Keith Whaley for joining me.

We'll put some useful links in the show notes, also to your book, which is amazing. So go and read that if you're listening and want to know more. But if anyone wants to connect with either of you. Where can they do that? Keith?

Keith Wailoo: 00:37:37

Oh, well, they can go to the history department at Princeton and find my email address, which is kwayloorinston.edu and shoot me an email.

Liam Heffernan: 00:37:48

Awesome. And Julian, same with me.

Julian Zelitzer: 00:37:50

Just go to the history department, easiest way to reach me.

Liam Heffernan: 00:37:54

Great. And you can find me if you care to on X. I'm still there at this is the Hef and on LinkedIn as well.

And if you enjoy the podcast, please go and leave us a rating and a review wherever you're listening to this and give us a follow so that all future future episodes just appear magically in your feed as well. Thank you so much for listening and goodbye.

Julian Zelitzer: 00:38:13

Thank you, thank you.