The History of Medicare

In this economics lesson, students will learn that Medicare was the fulfillment of what was believed to be Social Security.

Warm-Up

Write the following question on the board. Read this question to students and relay that this is the essential dilemma of the day:

Was the Medicare Act of 1966 indicative of Lyndon Johnson’s “American way” or Ronald Reagan’s “advance wave of socialism”?

Show students the graph in Poverty Rates by Age: 1959 to 2014 which is also found in on Slide 2 of the History of Medicare PowerPoint. Help students understand how to read the graph, but otherwise, provide minimal introduction. Ask students what they see and if they notice, in particular, any great changes in the poverty rate during those years. Direct students’ attention to the line for people 65 years and older and ask them what they find interesting or perplexing. Make a note of their observations on the board. If some students think they know what caused the shift that took place in the late 1960s when poverty rates for the elderly decreased, let them explain. If not, tell students the decrease in those poverty rates is correlated with the implementation of a program called Medicare, the topic of the lesson.

Modeling

Explain to students that in 1966, with the active leadership and support of President Lyndon B. Johnson, Congress passed Medicare, a program of government-sponsored health insurance for those age 65 or older (and, starting in 1972, the disabled). Versions of federally sponsored healthcare insurance had been unsuccessfully put before Congress three times under President Truman and three additional efforts were made while John F. Kennedy was president. President Johnson presented Medicare as part of his larger set of Great Society initiatives—initiatives that demanded an end to poverty and racial injustice as “just the beginning.”

Although a 1965 Gallup poll showed that 63% of Americans supported the idea of Medicare (Twight, 1997), the American Medical Association (with then–private citizen Ronald Reagan as one of its spokespersons) opposed it. Medicare’s bi-partisan passage in the House and Senate may have reflected an unwillingness on the part of Republicans to oppose a popular bill that they knew would pass without them (Beam, 2009).

Was Medicare, a program that had previously been rejected six times by Congress, “the American way”? Was it the expression of a core American value, an agreed-upon commitment by society to help the elderly live above the line of poverty when they could no longer work? Or, did the government reach beyond its responsibility for the lives of individual Americans by providing a publicly run health insurance program?

Confirm that students understand Medicare was introduced as an extension of Social Security, the government-sponsored pension plan passed in 1935, and that it offers coverage for hospital bills and doctor fees. Poll students about whether, based on what they know so far, they think this role is a proper one for the federal government to play. Explain that they will be reading points of view that might influence them to change their mind, so these ideas are a point of reference they can return to later in the lesson.

Explain to students that today there continues to be a range of opinions on this question, and the discussion has intensified as the future of the Medicare program faced with what continues to be an exponential rise in the cost of medical care.

Present the quotes from Lyndon Johnson and Barry Goldwater found in Points of View from Presidential Contenders handout, which is also found on Slide 3. Goldwater was the Republican Party nominee for the presidency and lost to Johnson in the 1964 election. To frame the debate about whether or not to create a medical insurance program for the elderly, ask students to compare and contrast the position of each speaker.

Group Activity

Without much explanation, show students Your Social Security handout which is also found on Slide 4. This is a 1968 poster intended to inform senior citizens about the Medicare program that had been added to Social Security in 1965. Ask students to “read” the picture and text and then list as many facts (both explicit and implicit) as they can from the resource, including the being introduced, the intended audience(s), and related programs.

Answer: Students might report that Medicare is a federal government program (small print in the lower right corner); the intended audience is probably people over the age of 65; Medicare might have been a relatively new program when this document was created, because the information is very basic (and because it is connected to an older program people would already know about, Social Security); based on the photograph, Medicare might be a program that is hospital based; also based on the photograph, middle class people are eligible to receive Medicare benefits.

Ask students to read the excerpt in President Johnson’s Remarks on the Medicare Bill handout. As students read, ask them to underline phrases or terms with which they are unfamiliar. Display Slide 5 and use the provided questions to guide the discussion.

1. Why might the older population need health insurance, such as Medicare?
Answer: Student answers will include that many older people are no longer able to earn a living, either because they can no longer perform a physically demanding job, because employers won’t hire them, or because of poor health and disability.

2. How is the Medicare program going to be funded?
Answer: Students should understand from Johnson’s speech that the workers and their employers are to fund the program through additional contributions to their Social Security payroll plan.

3. According to President Johnson, what will be the benefits of the program?
Answer: Johnson details that the insurance will pay for hospitalization and home health care and, beginning in 1967, 100 days of care in a nursing home. He refers to a separate plan to cover doctor fees. Johnson says the significance of this is that families will no longer be financially “crushed” by the uncovered medical expenses faced by older Americans.

4. What role is the government playing in providing Medicare?
Answer: Medicare is providing elderly and disabled people with insurance coverage for hospitalization, prescription drugs, and care by physicians and other healthcare providers. The government funds Medicare with general revenues, payroll taxes, and premiums paid by beneficiaries of the program.

5. Why would President Johnson refer to this program as “the American way”?
Answer: Students might note that Johnson used that phrase to promote the program, probably countering claims that Medicare was socialized medicine. Older Americans were not usually covered by health insurance, and often were unable to afford good care, so Johnson believed the program was fair and just—and American.

Tell students that despite the data, the introduction of Medicare was not without controversy. Many citizens saw the introduction of government health care as the right way, “the American way” of taking care of the elderly, but others saw Medicare as anti-American and a shift towards “socialism”.

The “American way” is a term that can be used in many, many ways. For example, winning at all costs and playing fair have both been called the American way. Ask students to take 5 minutes and write down what they think of when they think of “the American way.” This could be framed as, “What do people mean by ‘the American way’?” or “What does ‘the American way’ mean to you?”

Record responses on the board and ask students what they notice about the statements. Do any of them belong together because they say the same or similar things? Are any of them the opposite of each other?

Answer: Student responses to this task, as well as their observations about the results, may vary widely. Students might notice that many of the responses use the word “freedom,” but not always in the same way. Some of the statements might emphasize material goals, “the American dream.”

Now provide students with one final opportunity to identify any other attributes they might wish to add to the two lists. Tell them that they will have a chance to come back to this list of attributes at the end of the lesson after examining how the American way was defined during the Medicare debate in the early 1960s.

Just as the class has multiple visions of the American way, so do political leaders. It is the American way to advocate for particular public policy options on the basis of their expression of essential American values; however, interpretations of those values vary widely. Although there are many ways in which American values find their way into political and public policy debate, this lesson focuses on the role of government vs. the responsibility of the individual.

Individual Activity

The purpose of this activity is to associate two different perspectives of the meaning of the “American way” with different views on the proposed 1964 Medicare legislation. Students will read one of four different perspectives on the need to create Medicare and determine which “American way” the speaker is most closely aligned. Display Slide 6 and present Varying Points of View handout, containing statements from four prominent politicians of the day: Congressman Morris Udall, President Lyndon Johnson, California Governor Ronald Reagan, and US Senator Barry Goldwater.

Additional context:

1. Congressman Morris Udall: A 1965 statement by Morris Udall, a congressman from Arizona, explaining that he supports the Medicare bill because he has determined it is supported by a majority of his constituents.
2. President Lyndon Johnson: The partial transcript of a March 25, 1965, conversation between President Johnson and his press secretary, Bill Moyers. In the conversation, Johnson is explaining why he favors a retroactive payment to Social Security recipients and how he would present the request to Congress. (He rejects the idea that it should be presented as a stimulus to the economy.) Even though this excerpt quotes President Johnson on the specific subject of Social Security, it reflects the sense of obligation he feels towards the elderly—a sentiment he transfers to his work on Medicare.
3. Governor Ronald Reagan: A statement by Ronald Reagan from a recording of remarks made in 1961 in which he warns that Medicare will lead to socialism.
4. Ronald Reagan was governor of California from 1967 to 1975 and President of the United States from 1981 to 1989, but these remarks were made when he was still a citizen and actor.

Senator Barry Goldwater: An excerpt from a 1964 campaign speech and an excerpt from “The Conscience of a Conservative,” a 1960 warning against the power of the federal government. Barry Goldwater was a U.S. senator from Arizona from 1953 to 1965, and from 1969 to 1987. He ran for president against Lyndon Johnson in 1964.

Distribute one of the four readings from Varying Points of View handout to each member of the class. Also, provide a copy of The American Way: Two Perspectives. “Set A” statements in Varying Points of View handout are usually associated with those who hold politically conservative views and who would have, in this case, opposed the Medicare legislation. “Set B” statements are usually associated with those who hold politically liberal views and who would have, in this case, supported the Medicare legislation.

Ask students to read their selection from President Johnson’s Remarks on the Medicare Bill handout twice and, on the second reading, compare what each of their writers is saying with the two sets of American way values in the Slide 7. After choosing the set that most closely matches the views of each author, students are to pick the two or three values each author would say are most important, and underline evidence in their paragraphs to support their selection.

Ask students to form groups to report on the results of their close reading. While each student reports, one student should write some of the most important values on the board. At the close of the reports, tell students what they have already determined in their groups—that Johnson and Udall supported Medicare whereas Reagan and Goldwater opposed it— and ask them what they notice about how the different American way values do or do not reflect those different positions on the legislation.

Use the political cartoons in Medicate: Visualizing the Debate, which is also found on Slide 8, to identify how the current debate about Medicare is framed. Ask student the following questions:

How does the drawing seem to anticipate current debates about the cost of Social Security and, to a greater extent, Medicare?

Answer: Students should see that the drawing of a young person carrying a very comfortable and relaxed-seeming elderly person suggests that some solutions to the care of the elderly put an unfair burden on the younger generation.

Look closely at the labeling on the pill bottle in the second cartoon. What point is the artist, Drew Sheneman, making about proposed cuts in the Medicare program?

Answer: The artist is using the labeling conventions for warnings on medication side effects to describe the possible consequences of cuts to the Medicare program. Students will probably not know that the elderly poor have been reported to resort to drastic measures to cut down on expenses.

Activity 1

After the “matching” discussion, bring the lesson to a close by asking students one or more of the following questions.

1. What more would you need to know (or perhaps already know) to put the views of Johnson, Udall, Goldwater, and Reagan in a historical context?

Answer: Students might associate talk of socialism with the strain of the cold war, or trace President Johnson’s populist views to growing up poor himself. Build on this discussion in ways that connect with what else students are studying or will be studying.

2. Do these sets of American way values relate to the way in which politicians discuss current public policy issues?

Answer: Consider asking students whether the value sets are useful ways of differentiating points of view, or if they become irreconcilable positions that make it hard to debate a proposal on its own merits. Use examples from current policy debates to ground this discussion in specifics, or consider referring students back to the readings, including the last paragraph in the Goldwater reading. Be prepared to reference some current public policy debates. Ideally, bring in relevant newspaper headlines.

3. Look back at the American way values you generated at the beginning of the lesson and consider whether you want to revise them based on new ideas you have gotten from the perspectives introduced by Senators Udall and Goldwater or Presidents Reagan and Johnson, or from classroom discussion. What more would you need to know to decide which of these values are closest to your own point of view?

Answer: Lead students to consider evaluating the actual outcomes of different policy positions.

PowerPoint Slides

Poverty Rates by Age 1959 to 2014

Points of View from Presidential Contenders

Your Social Security

President Lyndon B. Johnson’s Remarks on the Medicare Bill

Varying Points of View

The American Way Two Perspectives

Medicate Visualizing the Debate