Academic journal article Generations

Out of Balance: Medicare, Interest Groups, and American Politics

Academic journal article Generations

Out of Balance: Medicare, Interest Groups, and American Politics

Article excerpt

Medicare was born of interest group politics The hostility of the American Medical Association (AMA)-the fiercest lobby in Washington from the 1930s to the 1960s-convinced advocates of public health insurance to start with the most vulnerable and difficult-to-insure segment of the population, the elderly. It also convinced Medicare's advocates and early administrators to foreswear serious instruments for cost control that were in use in other rich democracies, such as fee schedules and restrictions on capital expenditures.

Once Medicare became law, however, its relationship to interest groups changed dramatically. As the great political scientist E. E. Schattschneider (1935) observed three decades before Medicare's passage, "New policies create a new politics." Medicare pulled hospitals and doctors into its orbit, making them both recipients and implementers of a vast new stream of federal spending. Even more fateful, Medicare essentially created the modern interest-group organization of older Americans. Prior to Medicare's creation, older adults were a sympathetic constituency, but not an organized force. After its establishment, they became formidable players in the scrum of organized interests surrounding federal health policy.

Medicare's relationship with interest groups has followed a long arc from accommodation to constructive engagement and back toward accommodation of a different sort. The early years of Medicare witnessed passivity in the face of interest-group claims that gelled perceptions of the program as unaffordable. But for roughly two decades, Medicare grew stronger and more autonomous, implementing payment changes that diffused throughout the private sector and slowed cost growth.

These positive developments reflected a balanced politics-balanced between beneficiaries and providers, and between Medicare and its claimants. An observer who had cut into Medicare's interest-group history around 1990 would have concluded that the program was on track to become increasingly effective at controlling costs and managing the overlapping but distinct interests of Medicare beneficiaries, Medi- care providers, and American taxpayers. In a word, Medicare looked "corporatist"-a system of patterned, stable bargaining among relatively equal partners, with the interests of taxpayers brought in through the growing focus on overall budget constraint.

Today, however, the interest-group politics of Medicare looks far less favorable. The last two decades of Medicare's development have weakened the program's independence from the concentrated interests that profit from it, including interests that had little role within Medicare at its inception. What was once a relatively stable corporatist arrangement now looks like a messy scrum of ever more competing interests, deploying ever more money and lobbyists (ever more of whom are former public officials). At the same time, the program's main constituency, older Americans, has fragmented. Growing inequality among beneficiaries, the increasing availability of private insurance options, and the overall movement of Medicare's beneficiaries to the right-all have made it more difficult for the groups representing older Americans to speak with a relatively unified voice. Medicare's interest-group politics have, in short, become deeply imbalanced. The closing section of this article considers where this "new new politics" of Medicare may take us.

How Medicare Reshaped Interest Groups

The role of interest groups in Medicare's passage was mostly negative. With the AMA and large business associations fiercely opposed to what they decried as "socialized medicine," the main outside group pushing for action was organized labor. As the bill's passage transited from impossible in the 1950s, to improbable in the early 1960s, to inevitable with Lyndon Johnson's landslide victory in 1964, a few previously skeptical groups climbed on board. The hospital insurance giant Blue Cross, for example, quietly bought in after brokering a central role in administering the new benefits. …

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