Entitlement Politics

Medicare and Medicaid, 1995-2001

David G. Smith

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351328029
• Edition: 1
• Topic: Medicina
• Subtopic: Salud pública, administración y atención

Entitlement Politics describes partisan attempts to shrink the size of government by targeting two major federal health care entitlements. Efforts to restructure or eliminate entitlements as such, and to privatize and decentralize programs, along with more traditional attempts to amend and reform Medicare and Medicaid have radically transformed policymaking with respect to these programs. However, they have failed to achieve fundamental or lasting reform.Smith combines historical narrative and case studies with descriptions of the technical aspects and dynamics of policymaking to help the consumer understand how the process has changed, evaluate particular policies and outcomes, and anticipate future possibilities. His account intentionally goes at some length into the substance of the programs, the policies that are involved, and the views of different protagonists about the major issues in the dispute.One unhealthy consequence of politicizing Medicare and Medicaid policy has been to separate public debate from the technical and organizational realities underlying issues of cost containment or program structure. Smith considers this development unfortunate, since it leaves even informed citizens unable to evaluate the claims being made. Ironically, strife over Medicare has complicated the political and policy issues in American life. Only a serious and genuine bipartisan effort bringing forth the best efforts of both political parties--and some of the best industry leaders and policy experts in the field--is likely to achieve genuine reform. The more people and parties know about the history, politics, and policies of these programs, the better our prospects for devising workable, equitable, and lasting solutions. This volume leads the way toward that understanding.

1

Introduction

Medicare and Medicaid politics have seldom been dramatic. Along with Social Security, they are the biggest entitlement programs and, as such, are generally regarded as established institutions. They are vitally important to their beneficiaries and other stakeholders. As programs, they are technical, multilayered, and complex. Because of these characteristics, both Medicare and Medicaid have, for the most part, developed incrementally, along lines established by the original legislation, and with few surprises or major changes. The year 1965, when Medicare and Medicaid were first enacted was, by contrast, a year of major change and of drama. Thirty years later, in 1995, when the Republican party took over both the House and the Senate and challenged settled presumptions about the role of government in society, they brought high drama to their campaign against entitlements.

With budget balancing and reducing or eliminating entitlements key to the Republican strategy, the Medicare and Medicare programs were hauled on stage, so to speak, and became reluctant participants in a drama that led in December and January to the shutdown of the federal government and a constitutional crisis (Drew 1996:Chs. 17, 18).

The constitutional crisis was resolved for a time, and Republicans and Democrats shifted to more traditional modes of legislative behavior, passing a genuinely bipartisan though relatively minor health care bill in 1996.¹ In 1997, Congress and the president negotiated a critical summit agreement, after which they enacted the Balanced Budget Act of 1997 (BBA 97), the legislative vehicle for a huge and dense body of amendments, entitled “The Medicare, Medicaid, and Children’s Health Provisions.”² These amendments were strongly supported by the president and bipartisan majorities in both the House and Senate. They have been described as a major victory for bipartisanship and as the most fundamental changes in the Medicare and Medicaid programs since their inception. Yet change does not always solve underlying problems or achieve lasting agreements. In fact, the preliminary summit agreement took issues of entitlement and fundamental structure off the table for consideration as part of the budget reconciliation. For Medicare, especially, BBA 97 postponed these issues rather than resolving them. Medicaid is a different story, and provides an instructive contrast—but more of that later. Had a Democrat won the presidential election of 2000, then BBA 97 might have become the more or less settled program structure, to be modified over the years, by cycles and epicycles of incremental change.

The election of November 2000 put the Republican party in power for the first time in nearly fifty years, though with a minority president, lack of a popular mandate, a Senate divided 50—50, and a majority of only five in the House. Declining invitations to form a peacetime “national unity” government, the Republicans decided that they would govern and that to govern they needed their conservative base. They affirmed again the conservative Republican goals of the first Reagan administration and the 104th Congress: cutting taxes and the budget; reducing the size of the central government; and decentralizing or privatizing government programs. For now, specific intentions with respect to entitlements remain in doubt, though governors have renewed protests against Medicaid restrictions,³ and both President Bush and Republicans in Congress have said on several occasions that they would “reform” Medicare, along lines recommended by the Bipartisan Commission.⁴ Despite campaign rhetoric of “compassionate conservatism,” many Republicans spoke of continuing the “revolution” that Ronald Reagan began in 1980 and that they failed to complete in 1995. And the Bush administration and the Republican Congress committed themselves to a tax and budget-cutting strategy that seems likely to revive, sooner or later, the central controversy over Medicare/Medicaid entitlements.

Developments since the terrorist attacks of September 11 do not seem likely to end the conflict over these entitlements. The stimulus package that ultimately failed to pass the Senate, late in December 2001, did so in part over an entitlement issue: whether health benefits for unemployed workers should take the form of tax credits or premium subsidies and Medicaid expansion (Toner 2001b). In the coming months, a potent combination of rising health care costs and recession will increase the strains upon private insurance, the health care entitlements, and federal and state budgets. Politically, Democrats will have strong incentives to defend and extend these entitlements and Republicans to curb or transform them.

If the Republicans succeed in their long-term strategy of transforming Medicare and Medicaid, then—counting welfare—they will have radically changed entitlements in the United States.⁵ An achievement of this magnitude, without some major crisis driving it, would be remarkable under any circumstances, and seems even more so because, at no time—including the first Reagan administration—have the Republicans had full control of both Congress and the presidency. Divided government, bare majorities, and lack of a popular mandate for change have characterized the politics of entitlement from the first Reagan administration to the present. But Republicans have managed, then as now, to mobilize, leverage, and use the political power they did have. The account in subsequent chapters explores the meaning of this statement in detail, and what this kind of mobilization politics has meant for Medicare and Medicaid politics and policy.

As noted, the larger issue has been not budget reduction or entitlements as such, but the role and size of the federal government and the balance between public and private responsibilities. Medicare and Medicaid were targeted in 1995 because of their size and because they were more vulnerable than Social Security. As they were central to much of domestic politics, especially between 1995 and 1997, the controversy over them provides a good illustration of policymaking in this era of high political and partisan mobilization. The complement of this proposition is even more important for students of Medicare and Medicaid politics and policy, for Medicaid and Medicare have been swept into the turmoil of national politics, and what has happened and is happening to these programs cannot be understood without taking into account the larger context of national politics.

To say that Republicans deliberately used a strategy of political and partisan mobilization in their attack on entitlements is not to suggest that this approach was confined to Medicare and Medicaid nor used by Republicans alone. In the 104th Congress, the new speaker of the House, Newt Gingrich, and the House conservative leadership launched their campaign with the Contract with America and moved from that to welfare reform before settling on an omnibus reconciliation bill with Medicare and Medicare specially featured. Before the 104th Congress, a mobilization strategy had some precedents in President Clinton’s campaign for health care reform in 1993–94; and much of the response by the Clinton administration to the Republican’s initiatives in 1995 and beyond was to counter with a strategy and tactics similar to those employed by the Republicans.

The Bush administration and the congressional Republicans seem deeply committed to completing the conservative revolution begun in 1981 and renewed in 1995, combining goals common to each of these episodes with a strategy and tactics of political mobilization resembling in important ways that of Newt Gingrich and the House Republicans of 1995. This time, the Republican party controls the presidency, which makes an enormous difference. But the earlier history of BBA 95, which was vetoed, and of BBA 97, which passed, are important for understanding this relatively new game of high political and partisan mobilization, the moves and countermoves that characterize it, and the consequences it has for Medicare and Medicaid policy.

The Republican party has been systematic and more successful in adapting to and taking advantage of this mobilization style of politics and, as noted, has used it to make the most of its narrow majorities. In Medicare and Medicaid politics since 1994, four elements or constituents seem to be most important: (1) commitment to a long-term strategy; (2) enforcing party discipline; (3) combining tax cuts and budget reduction; and (4) employing a campaign mode of legislation. Some comment on each of these will help to illustrate their use and importance.

One notable characteristic of the contemporary Republican party has been the time and effort it puts into developing long-term strategies and goals— much more, for instance, than the Democratic party.⁶ This commitment to a long-term strategy helps the national party leadership raise money, recruit candidates, fund conferences and research, and center its energies on a few critical messages and policy options. Strategy also guides tactics, which can be important—in war or politics—especially if the opponent fails to see the relationship between them or lacks an effective response. We can leave aside the philosophical issue of whether it is good for national parties to have long-term strategies. However, the amount of strategizing and counterstrategizing over the Medicare and Medicaid entitlements has increased deception, maneuvering for strategic advantage, and the use of tactical ploys, leaving residues of anger, cynicism, and mutual distrust.

Strengthened congressional party leadership and party discipline have been other factors enhancing Republican legislative effectiveness. This development was historically complex but the House reorganization of 1994–95, led by Speaker Newt Gingrich, institutionalized the transformation, affected the Senate in turn, and continues to shape Medicare and Medicaid policy today. Leaving the details aside for now (see pp. 32–34) this change shifted much of the control over the legislative process in the House from the regular legislative committees to the speaker, the party leadership institutions, and the chairs of some key committees. It also tightened party control over the legislative agenda and over the membership and staffing of the committees. The Senate did not go so far, but has still moved in this direction. An important point is that most of these changes have lasted and continue to affect the policy process throughout the continuing entitlement disputes.

Shifting power toward the party leadership can promote strategic and tactical effectiveness and may help overcome the particularism and snail-paced incrementalism of the legislative committees. But this kind of partisan mobilization also generates important tensions when directed toward programs like Medicare and Medicare. These programs are technical in nature, affect beneficiaries’ lives and the livelihoods of powerful providers, and are invested with both mystique and pathos. Much of the book is about what occurs under such conditions.

Budget discipline and tax reduction are important in themselves, as direct expressions of a long-term Republican commitment to reduce the size and reach of the federal government. One powerful method of enforcing fiscal discipline is through the budget reconciliation process. Following this procedure, House and Senate first agree upon a budget resolution, setting budget targets (with savings) in broad categorical terms. This is followed by a reconciliation bill in the process of which legislative and tax committees recommend changes to bring authorizations and revenues into conformity with the budget resolution. Reconciliation does not by itself shrink the budget or reduce deficits, but when backed by a strong resolve to achieve these ends and additional mechanisms such as CBO scoring, offsetting requirements, and sequester procedures,⁷ it can be enormously powerful.

The reconciliation process has been important for Medicare and Medicaid for two paramount reasons. One is that reconciliation provides a sensitive and comprehensive method for reducing budget outlays. Medicare and Medicaid are perennial drivers of budget increments; and they are complex and technical. The reconciliation process was not specifically designed for this kind of challenge, but it might well have been since it combines great coordinative power with the capacity for fine adjustment. In addition, Medicare and Medicaid require a lot of tinkering—for which the reconciliation procedure is well suited since it brings together budget constraints with legislative amendment. Since increments for one activity may be offset with reductions from another, reconciliation can be readily adapted for program enhancements as well as for cuts in authorizations or outlays. As a consequence, the budget reconciliation process has been uniquely important for the Medicare and Medicaid programs. In fact, most major changes in Medicare or Medicaid from 1982 to the present⁸ have been made, or sought, through a series of omnibus budget reconciliation acts (OBRAs), including the vetoed BBA of 1995 and the BBA of 1997, which passed.

The budget reconciliation process is highly adaptable and, in addition to budget reduction and incremental program changes, can be used for major restructuring or combined with other strategies, such as cutting taxes. In the first Reagan administration, for instance, budget reconciliation was combined with a tax-cutting strategy and used to initiate a major campaign against entitlements (Jones 1988:37ff.). This is a precedent that worries Democrats as they contemplate President Bush’s ten-year $1.6 trillion tax cut. Reconciliation can also be used in combination with other legislative strategies to restructure programs comprehensively. At one point, the Clinton administration briefly considered, though later abandoned, a proposal to make the monster Health Security Act of 1993 part of a reconciliation bill. And the Republican Congress, both in 1995 and 1997, chose the budget reconciliation procedure as a vehicle for comprehensive restructuring of Medicare and Medicaid, a project almost as daunting in its complexity and difficulty as Clinton’s health care reform.

As the Reagan example suggests, some of the less manifest objectives of the budget reconciliation process may be as much sought after or even more important than the declared ones (Jones 1988:38). In a word, budget reconciliation can be a way of mobilizing collective energy and getting a lot done in a hurry. For an item, it sets common goals and a series of deadlines. It puts a premium on overall strategy and coordination and tends to legitimate centralization of power in the leadership and key committee chairs. Finally, it brings together budgeting, taxation, and authorization in a way that facilitates high-level negotiation and sends the message that policy will be primarily leadership driven rather than “bubbling up” from the authorizing committees in the time-honored, traditional fashion.

The centralizing of leadership initiative and the pursuit of long-term strategic goals provide incentives to use and to strengthen the reconciliation process. In general, though, budget reconciliation tends to be relatively undisciplined and ineffective, especially as a way of cutting the budget or reducing program outlays, without some major impelling force such as rapidly escalating program costs or yawning budget deficits. One way of supplying this external impetus, especially when deficits are relatively small or nonexistent—as in a period of budget surplus—is with a large tax cut, which can be used either to discourage additional spending or to create a sense of fiscal stringency. This was a strategy pursued by the first Reagan administration and one that seems to have commended itself to the present Bush administration as well.

Another practice that has grown over the last decade has been to treat legislation more and more like a campaign. The first Reagan administration and President Clinton’s health care reform were precedents for this kind of behavior. More recent instances have been the Republican Contract with America of 1994–95 and the BBAs of 1995 and 1997. Despite the Medicare and Medicaid reforms of 1997–which were generally seen as a major settlement and a triumph of bipartisan politics—this approach to legislating has carried over into subsequent debates over additional Medicare coverage, a pharmaceutical benefit, and a patients’ bill of rights. Given the narrow margins in Congress, which have put a premium upon mobilization tactics, the campaign mode of legislating is likely to be a lasting phenomenon.

“Campaign mode” is an ambiguous term, intended to suggest resemblances to both political and military campaigns. This complex of activities developed especially from a history of divided government, the growing importance of campaign finance, the Clinton administration, and the 104th Congress. Divided government or even weak majorities encourage strategic moves to maximize a political advantage: for instance, the self-declared mandate and “seize and hold” strategy of the first Reagan administration. In addition, divided government tends to encourage a continual campaign, with both sides seeking to bolster their power by appealing to a present public or future majority. Modern elections require almost continuous campaigning, especially to raise money, even with pseudoevents, and to hold together labile electoral support (Dionne 1998). In the first Clinton administration, health care reform especially took on the intensity and nationwide appeal of a plebiscite. And the 104th Congress, with the House under Speaker Gingrich’s leadership, continued the campaign style, adding a great deal of military rhetoric and tactics. It is dangerous behavior because it incites response in kind and tends to escalate out of control. Unfortunately, it is much like war: seeking surprise and strategic advantage; mandating secrecy and “nonfraternization” with the “enemy.” mounting propaganda and “disinformation” campaigns; and putting electoral victory above legislative achievement or ultimate reconciliation.

As popular and well-entrenched entitlements, Medicare and Medicaid were strategically and symbolically important to both Republicans and Democrats. Changing them radically would require a major political effort—so that mobilization techniques such as those described were seen as necessary, especially for winning on some of...

Table of contents

• Cover Page
• Title Page
• Copyright
• Contents
• Acknowledgments
• 1 Introduction
• 2 Historical Background
• 3 Medicaid and the Balanced Budget Act of 1995
• 4 Medicare—1995
• 5 A Year of Transition—1996
• 6 Medicare and Medicaid, 1997
• 7 Implementation
• 8 Old Business and New
• 9 Postscript
• Appendix
• Glossary
• Bibliography
• Index