Johnson Signs Medicare into Law

The name “Medicare” was originally given to a program providing medical care for families of individuals serving in the military as part of the Dependents’ Medical Care Act, which was passed in 1956. President Dwight D. Eisenhower held the first White House Conference on Aging in January 1961, in which creating a health care program for social security beneficiaries was proposed. In July 1965, under the leadership of President Lyndon Johnson, Congress enacted Medicare under Title XVIII of the Social Security Act to provide health insurance to people age 65 and older, regardless of income or medical history. Johnson signed the bill into law on July 30, 1965 at the Harry S. Truman Presidential Library in Independence, Missouri. Former President Harry S. Truman and his wife, former First Lady Bess Truman became the first recipients of the program. Before Medicare was created, approximately 60% of people over the age of 65 had health insurance, with coverage often unavailable or unaffordable to many others, as older adults paid more than three times as much for health insurance as younger people. Many of this latter group (about 20% of the total in 2015) became “dual eligible” for both Medicare and Medicaid with passing the law. In 1966, Medicare spurred the racial integration of thousands of waiting rooms, hospital floors, and physician practices by making payments to health care providers conditional on desegregation.

Medicare has been operated for a half century and, during that time, has undergone several changes. Since 1965, the program’s provisions have expanded to include benefits for speech, physical, and chiropractic therapy in 1972. Medicare added the option of payments to health maintenance organizations (HMO) in the 1980s. As the years progressed, Congress expanded Medicare eligibility to younger people with permanent disabilities and receive Social Security Disability Insurance (SSDI) payments and to those with end-stage renal disease (ESRD). The association with HMOs begun in the 1980s was formalized under President Bill Clinton in 1997 as Medicare Part C (although not all Part C health plans sponsors have to be HMOs, about 75% are). In 2003, under President George W. Bush, a Medicare program for covering almost all self administered prescription drugs was passed (and went into effect in 2006) as Medicare Part D (previously and still, professionally administered drugs such as chemotherapy but even the annual flu shot are covered under Part B).

The government added hospice benefits to aid elderly people on a temporary basis in 1982, and made this permanent in 1984. Congress further expanded Medicare in 2001 to cover younger people with amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease).

Yaron Brook of the Ayn Rand Institute has argued that the birth of Medicare represented a shift away from personal responsibility and towards a view that health care is an unearned “entitlement” to be provided at others’ expense. (Wikipedia)

James Madison said:

“The powers delegated by the proposed Constitution to the federal government are few and defined.”  (Federalist Papers #45)

The 10th Amendment reads:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” 

Mike Rappaport says Medicare is unconstitutional just like the Social Security:

Government social insurance creates some of the most serious problems in western style democracies.  At best, these government insurance programs place tremendous strain on the economy and reduce work incentives.  At worst, they may result in the bankrupting of the society.  In the United States, Social Security pensions and Medicare are the worst culprits.

There are, moreover, alternative arrangements that would avoid these problems.  Some people may favor a fully voluntary system.  Others may favor more government involvement, such as a compulsory private system in which individuals are required to save certain amounts for their retirement or are required to purchase health insurance on some kind.  (For a discussion in the context of unemployment insurance, see here.  For a book comparing private and government insurance more generally, see here.)

While there are arguments for each of these systems, the important point is that they would not involve redistributions.  In particular, they would not require the massive redistributions that these existing systems make from one generation to another – redistributions that are unfair, inefficient, and cause serious political problems. 

While these private alternatives to government insurance are relatively well known, what is less clearly recognized is that the Constitution’s original meaning would have prevented the existing redistributive Social Security and Medicare systems from being established.  These programs are enacted under Congress’s so called spending power.  Under this power, Congress is said to have the power to spend for the general welfare.

But I don’t believe there is a spending power.  The constitutional provision states that “Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.”  In my view, this Clause merely confers on Congress the power to tax.  The money is then to be used to further the other enumerated powers, which are briefly characterized as “for the common defense and general welfare.”  If this reading, which was held by James Madison is correct, Social Security and Medicare would be unconstitutional.  (I should note that some originalists disagree with this reading of the Constitution, but I think they are mistaken. For my defense of this reading, see here and here.)

Of course, government old age pensions and medical insurance could have been enacted at the state level.  But these programs could not have been established in the form that they took at the federal level.  If young people were taxed 12.4 percent for old age insurance (6.2 percent on the employee and the same amount on the employer) which conferred the poor returns that the federal program provides, they would have left the state that imposed the tax in droves.  Massive redistributions could not occur at the state level.  The states could impose less redistributive systems, but those systems would thereby avoid the significant problems caused by these government programs.

Now that we have had Social Security and Medicare for generations and people have relied upon them, I don’t think that the original meaning can be enforced to hold them unconstitutional.  Precedent should allow them to continue.  But it is worth remembering that these programs would have never taken their pernicious form if the Constitution’s original meaning had been followed in the first place.

The Constitution Party, a small U.S. independent political party that believes in strictly abiding by the constitution as laid out by the founding fathers, opposes the governmentalization and bureaucratization of American medicine.

They say,

“Government regulation and subsidy constitutes a threat to both the quality and availability of patient-oriented health care and treatment. Hospitals, doctors, and other health care providers should be accountable to patients – not to politicians, insurance bureaucrats, or HMO Administrators.

If the supply of medical care is controlled by the federal government, then officers of that government will determine which demand is satisfied. The result will be the rationing of services, higher costs, poorer results – and the power of life and death transferred from caring physicians to unaccountable political overseers.

We denounce any civil government entity using age or any other personal characteristic to: preclude people and insurance firms from freely contracting for medical coverage; conscript such people into socialized medicine, e.g., Medicare; or prohibit these people from using insurance payments and/or their own money to obtain medical services in addition to, or to augment the quality of, those services prescribed by the program.

We support the right of individuals to choose between private retirement and pension programs, either at their place of employment or independently.”

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