COVERED: With Deft Legislative Move, Mills Clears Way for House Approval of Major New Health Plan

Welcome to Covered: A Week-by-Week Look at the 1965 Politics that Created Medicare and Medicaid. Bob Rosenblatt, a Senior Fellow at the National Academy of Social Insurance, former Los Angeles Times Washington correspondent, and editor of the website HelpWithAging will blog on the maneuvers that led to the enactment of Medicare and Medicaid on July 30th, 1965 the first major expansion of U.S. social insurance to health care.

With Deft Legislative Move, Mills Clears Way for House Approval of Major New Health Plan

March 6, 1965

By Bob Rosenblatt

Washington, DC – Surprising everyone at a House Ways and Means Committee meeting, Chairman Wilbur Mills (D-AR) announced that he would combine three rival health care plans, creating what one observer called a “three-layer cake.”  It combines the Johnson Administration’s proposal for Medicare with competing proposals for more targeted and scaled-back coverage from Republicans and the American Medical Association (AMA).

The chairman’s proposal marks a dramatic change in the debate over health insurance, opening the door to a much more expansive approach. “It is,” one observer noted, “the political equivalent of pulling a rabbit out of the hat.”

At a closed-door committee hearing on March 2^nd, Mills proposed combining the disparate proposals into one bill that contains these key provisions:

• People over 65 will be covered with a new benefit offered through the Social Security system. The plan will pay for 160 days of hospital care, 210 days of nursing home care and 240 days of home care visits. The insurance will pay for $15 a day in the nursing home, with $10 paid by the government and $5 by the patient.
• For doctors’ bills, the patient will pay the first $100 a year, and then 30% of additional bills, with 70% covered by insurance. The cost of this voluntary program will be $6 a month, with $3 paid by the individual and $3 by the federal government from general tax revenues. People enrolled in Social Security can have the $3 a month deducted from their retirement checks.  The $3 a month will be collected from people with income over $1,000 a year.
• Poor people over age 65 will have the full $6 paid by the government for the coverage of doctor bills.

This new approach combines the President’s plan to expand the Social Security payroll tax to directly pay hospitals for care provided to the elderly with a Republican plan to expand the voluntary private insurance system for this population. It also adds an AMA proposal to provide additional federal revenues to expand the Kerr-Mills program that helps the states pay for the medical bills of poor people.

Mills proposal for combining the programs left members of the committee pleased.

It is “a considerable improvement and I’m very happy,” Rep. Cecil King (D-CA) sponsor of the original Administration bill in the House, said after the closed-door meeting.

Mills’ surprise plan disarms much of the political opposition and likely paves the way for a successful passage through Congress, according to Wilbur Cohen, the Administration’s chief staffer on the issue. By incorporating Republican ideas, the Administration’s Medicare plan will become “unassailable politically” from any serious attack, he told the President in a memo written just after the March 2^nd committee meeting. By absorbing the proposal of various constituencies in this debate, the chairman effectively neutralized the opposition, Cohen noted.

Mills, an adroit veteran of the legislative process was praised for his surprise offering by his colleagues. “It was fantastic — it was Wilbur Mills at his best. His maneuvering was beautiful. He had just said, why don’t we take it all,” according to one member of the committee.

By offering his new plan, Mills may be trying to avoid a long drawn out fight and deliver major legislation this year. He is also responding to the results of the 1964 elections – a landslide victory for Johnson – as Democrats added to their already large majority in Congress.

According to Cohen, the White House was stunned by Mill’s maneuver. But Mills may have been encouraged in this maneuver as a result of private conversations with the President, who according to one source has pushed Mills to take an aggressive approach in seeking expanded coverage by promising him political cover. Talking about Medicare as long ago as last year, even before the election, Johnson reportedly told Mills of the importance of this initiative. “There is not anything that has happened in my six months, or that will happen in my whole term, in my judgment, that will mean more to us as a party, or me or you as individuals than this piece of legislation,” Johnson told Mills. If Mills could reach a deal,  “I’ll come in and applaud you,” Johnson promised.

While a skeptical Mills either could not or would not let a Medicare bill get out of the Ways and Means Committee in 1964, things look politically very different this year. More pro-Medicare liberal Democrats were elected to Congress, and the make-up of the committee and of the House leadership is different. The ratio of Democrats to Republican members has increased, making a solid majority for the plan. The result is that Mills is now leading the legislative parade on health care.

(Special thanks to David Blumenthal and James A. Morone, whose “The Heart of Power: Health and Politics in the Oval Office” provided new information on conversations between Mills and Johnson.)

► See the next post in the COVERED series: “Johnson Fearful About Medicare Price Tag,” March 13, 1965

► Directory of COVERED posts

► Learn more about the Academy’s celebration of the 50th anniversary of the enactment of Medicare and Medicaid