Happy 60th, Medicare and Medicaid!

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Julie Rovner
KFF Health News

@jrovner

@julierovner.bsky.social

Read Julie’s stories.

Julie Rovner is chief Washington correspondent and host of KFF Health News’ weekly health policy news podcast, “What the Health?” A noted expert on health policy issues, Julie is the author of the critically praised reference book “Health Care Politics and Policy A to Z,” now in its third edition.

On July 30, 1965, President Lyndon B. Johnson signed landmark legislation creating Medicare and Medicaid. Sixty years later, the programs represent a fifth of the federal budget and provide coverage to nearly 1 in 4 Americans. In addition, the way Medicare and Medicaid structure and pay for medical care has set the standard for the private sector as well.

On this week’s special episode of KFF Health News’ “What the Health?” podcast, host Julie Rovner interviews two experts on the history, development, impact, and future of Medicare and Medicaid.

First, Rovner talks with Medicare historian and University of North Carolina health policy professor Jonathan Oberlander. Oberlander is the author of the book “The Political Life of Medicare” and a former editor of the Journal of Health Care Policy, Politics and Law.

Then, Rovner chats with Sara Rosenbaum, professor emerita at George Washington University. Rosenbaum has spent nearly her entire career working on Medicaid policy and has helped shape key priorities at the federal and state levels.

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Transcript: Happy 60th, Medicare and Medicaid!

(Editor’s note: This transcript was generated using both transcription software and a human’s light touch. It has been edited for style and clarity.) 

Julie Rovner: Hello, and welcome back to this special episode of “What the Health?” I’m Julie Rovner, chief Washington correspondent for KFF Health News, and I’m usually joined by some of the best and smartest health reporters in Washington. But this week we’ve got something special for you. It’s an episode marking the 60th anniversary this summer of Medicare and Medicaid, the twin government health programs that have largely shaped the way the U.S. pays for and delivers health care for the past half-century. To bring us the story, I sat down with two of my favorite experts on the subject, University of North Carolina professor Jonathan Oberlander and George Washington University’s Sara Rosenbaum. Here are my chats, starting with Jonathan Oberlander on Medicare. 

I am so pleased to welcome Jonathan Oberlander to the podcast. He’s a professor of social medicine, professor of health policy and management, and adjunct professor of political science at the University of North Carolina School of Medicine in Chapel Hill and one of the nation’s leading experts on Medicare. John, welcome to “What the Health?” 

Jonathan Oberlander: Great to see you, Julie. 

Rovner: So Medicare, to me at least, remains the greatest paradox in the paradox that is the U.S. health care system. It is at once both so popular and so untouchable that it’s considered the third rail of politics, yet at its core, it’s a painfully out-of-date and meager benefit that nevertheless threatens to go bankrupt on a regular basis. How did we get here? 

Oberlander: Wow. Let’s talk about the benefits for a minute. And I think one of the things we can say about Medicare in 2025 as we mark this 60th anniversary is it still bears the imprint of Medicare in 1965. And when Medicare was designed as a program — and the idea really dates back to the early 1950s — it was not seen as a comprehensive benefit. It was intended to pay for the most consequential costs of medical care, for acute care costs. And so when it was enacted in 1965, the benefits were incomplete. 

And the problem is, as you know very well, they haven’t been added to all that much. And here we have, all of us know, as we get older, we generally don’t get healthier. I wish it was true, but it’s not. And older persons deal with all kinds of complex medical issues and have a lot of medical needs, and yet Medicare’s benefits are very limited, so limited that actually a very small percentage of Medicare beneficiaries have only Medicare. Most Medicare beneficiaries have Medicare plus something else, and that may be an individual private plan that they purchase, called a Medigap plan, or maybe a declining number of people have retiree health insurance that supplements Medicare. Some low-income Medicare beneficiaries have Medicaid as well as Medicare, and they’re dual-eligibles. And some Medicare beneficiaries have extra benefits through the Medicare Advantage program, which I’m sure we will have a lot to say. So the bottom line, though, is Medicare has grown. What, about 70 million Americans rely on Medicare. But the benefit package — with some intermittent exceptions that are significant, such as the addition of outpatient prescription drugs in 2006 — really has not kept pace. 

Rovner: So let’s go back to the beginning. What was the problem that Medicare set out to solve? 

Oberlander: Well, it was both a substantive problem and a political problem. The origins of Medicare are in the ashes, the failure, of the Truman administration proposals for national health insurance during the mid- and late 1940s. And after they had lost repeatedly, health reformers decided they needed a new strategy. So instead of national health insurance, what today we would call single-payer, a federal-government-run program for everybody, they trimmed their ambitions down to initially just hospital insurance, 60 days of hospital insurance for elderly Social Security beneficiaries. And that was it. And they thought if they just focused on older Americans, maybe they would tamp down the controversy and the opposition of the American Medical Association and charges of socialized medicine, all things that had really thrown a wrench into plans for national health insurance. 

It didn’t quite work out as they thought. It took about 14 years from the time Medicare was proposed to enacted, and there was a big, divisive, controversial debate about Medicare’s enactment. But it was fundamentally a solution to that political problem of: How do you enact government health insurance in the United States? You pick a more sympathetic population. Now, there was a substantive problem, which was in the 1940s and especially 1950s, private health insurance was growing in the United States for Americans who are working-age. And that growth of employer-sponsored health insurance really left out retirees. They were expensive. Commercial insurers didn’t want to cover them. And the uninsured rate, if you can believe it, for people over age 65 before Medicare was around 50% — not 15% but five-zero, 50%. And so here you had a population that had more medical needs, was more expensive, and they had less access to health insurance than younger people. And Medicare was created in part to end that disparity and give them access to reliable coverage. 

Rovner: So as you mentioned, Medicare was initially just aimed at elderly Social Security recipients. What were some of the biggest benefit and population changes as the years went by? 

Oberlander: So in terms of populations, in 1972, Medicare added coverage for persons who have end-stage renal disease. So people who need dialysis, no matter what the age — it’s a lifesaving technology — they can qualify for Medicare. It didn’t really make sense to add it to Medicare. It’s just it was there. So they added it to Medicare. And also a population we don’t talk nearly enough about, younger Americans with permanent disabilities who are recipients of Social Security Disability Insurance for a couple of years. They qualify for Medicare as well and are a very important part of the Medicare population. Beyond that, Medicare’s covered population has not really changed all that much since the beginning, which actually would be a great disappointment to the architects of Medicare, who thought the program would expand to eventually cover everybody. 

In terms of benefits, the benefit package has been remarkably stable for better and actually probably for worse, with the exception of, for example, the addition of outpatient prescription drug coverage, which came online in 2006, the addition of coverage for various preventive services such as mammography and cancer screenings. But Medicare still does not cover long-term stays in nursing homes. Many Americans think it does. They will be disappointed to find out it does not. Medicare does not cover, generally, hearing or vision or dental services. Traditional Medicare run by the government does not have a cap on the amount of money that beneficiaries can spend in a year on deductibles and copayments and so forth. So really its benefits remain quite limited. 

Rovner: Even to this day we keep hearing about “Medicare for All,” “Medicare for All,” “Medicare for All.” Why has this never happened? And might it? 

Oberlander: Medicare was never intended just to be for older persons. The original vision was enact federal health insurance for the elderly, demonstrate that it works, then expand it to children next. And that way you have people towards the end of life and at the beginning of life covered. And after you do that, carry out essentially a pincer movement and cover the rest, the middle ages, and bring them into Medicare until it’s Medicare for all. 

And so that was their aspiration, and it did not happen that way. Some of it has to do with the costs of Medicare and the unexpectedly high cost at the beginning of the Medicare program. And when Medicare was seen as a fiscal problem, there wasn’t a lot of political space to expand it. Some of that has to do with just history. If you look at the late 1960s when the Johnson administration was considering expanding Medicare to children, which might’ve changed the trajectory of Medicaid and actually of all of U.S. health care policy, the Vietnam War was raging and the costs were really high and they didn’t want to add the expense of that, so they chose not to do it. 

Part of it has to do with a shift in the political winds. And Medicare was enacted at a very liberal time in American political history. And in the 1970s, American politics shifted to the right, so that arguably Jimmy Carter, a Democrat who became president in 1976, he was arguably more conservative on a health policy than Republican Richard Nixon was, the president that preceded him. So as American politics shifted to the right, the idea of Medicare for all through this incremental strategy sort of vanished. And in fact, Democrats largely abandoned that, and they went in a different direction, which eventually culminates in the Affordable Care Act. They went to building on Medicaid and building on private insurance. 

What’s interesting is you have seen in the last decade this resurgence of “Medicare for All,” and of course pushed most famously by Bernie Sanders in the Senate and through his presidential campaigns. And it has a lot of appeal. You look at the public opinion polls, it actually polls pretty well. I think a lot of that is really an indictment of U.S. health care and dissatisfaction with all kinds of things about American health insurance. But it faces so many obstacles. If it was easy to do, it would’ve been done already. And interest group opposition, having to raise taxes, which is not easy in the United States, allegations of socialized medicine in a country that has a strong libertarian focus, dislodging around 160 million people with private insurance and putting them into Medicare — there are just enormous obstacles to Medicare for All. So I suspect it’s going to continue to be part of the debate, but we are a long way from it. 

Rovner: Medicare is also the biggest single payer in the nation’s health care system and for decades has set the standard for how private insurance covers and pays for health care. Is that still the case? 

Oberlander: It is in many ways. Medicare, at the beginning, had very permissive payment policies. It was essentially a blank check to the health care industry, to physicians and hospitals. And not surprisingly, as a result, Medicare’s cost ran up really high in its first decade. When you get into the 1980s, Medicare becomes an innovator in payment reform in the United States. And in the early 1980s, it starts with hospitals and adopts what we call prospective payment for hospitals in the early 1980s, and then a fee schedule for physicians later on at the end of the decade in the 1980s. And Medicare has continued to be an important innovator. It is the home today for experiments in accountable care organizations and other innovations that we would term value-based purchasing. 

And really, if you look at, for example, how many commercial insurers pay, they use Medicare’s physician fee schedule. Now they don’t pay the same amount, because they’re not as big as Medicare. They don’t have the same leverage. And in fact, hospitals on average are paid about twice as much by commercial insurers than Medicare and physicians about 20% to 30%. Commercial insurers use the fee schedule that Medicare has, and then they adjust the dollar amount because they simply don’t have the same kind of influence that Medicare does. 

Rovner: I was going to say we hear a lot about administrative costs for health insurance. Medicare actually has among the lowest administrative costs, right? 

Oberlander: Yeah, Medicare is fairly low in administrative costs. And of course administrative costs are one of the reasons American health care is so much more expensive than other countries. And if you think about it, once you enroll in Medicare, you’re generally enrolled for the rest of your life. And that contrasts with private insurance. It also contrasts with Medicaid, where people turn on and off and it creates all kinds of instability. Medicare is a program that is federally administered, although of course a large share of the program is now delegated out to private insurers, and that is changing the complexity of administrative arrangements in Medicare, among other things. 

Rovner: We should probably go back and talk about how Medicare has so many pieces, A and B and C and D. How did that happen? I mean, I like to say it was not made confusing on purpose, but it was definitely made confusing. 

Oberlander: Yeah. So at the beginning, Medicare was created with Part A and Part B. Part A really was insurance for inpatient services and hospitals, Part B for outpatient and physician services. And there were two reasons for that. One is they were marrying the standard and a lot of private insurance at the time. So we had Blue Cross for hospitals and Blue Shield for physicians, and that was just like Medicare Part A and Part B. The other reason is the original Medicare proposal was really just Part A, as we mentioned before, just for hospital insurance, funded by payroll taxes through the Social Security system. 

Part B, the idea that you would have this insurance that beneficiaries could obtain for physician services that was going to be funded by paying premiums and general revenues, that was added very, very late in the Medicare debate. And so it came at a different time. So it got it added on as Part B. And then eventually we added Part C, which are private plans that beneficiaries can choose now, called Medicare Advantage, HMOs (health maintenance organizations) and PPOs (preferred provider organizations), and the whole alphabet soup, as an alternative to traditional Medicare. And then Part D, and Part D is prescription drug coverage. So I think we may be running out of the letters. We certainly have enough to confuse everybody. 

Rovner: We certainly do. So we keep hearing about how Medicare is going broke. Is that true? And can it be fixed? And how hard would it be? 

Oberlander: People have been worried about Medicare going broke since about 1970. And my philosophy on this is if you’ve been worrying about something being unsustainable for a half a century and it’s still here, you’re probably worrying about the wrong thing. So the chances of Medicare literally ever going broke and going away are, if not zero, as close to zero as you can get. What this has to do with is the way that Medicare is funded. And so Medicare Part A, hospital insurance, is funded almost entirely by what we call an earmarked payroll tax, the payroll tax that workers and their employers pay just for that. 

Rovner: And it’s part of the Social Security tax, right? 

Oberlander: And it’s part of the Social Security tax that people pay. And each year, the actuaries from Medicare project: How much money are we taking in? How much do we have in balances for Part A? And what do the expenditures look like? And so when you hear people say the Medicare trust fund is going to go, quote, “bankrupt” in now it’s about a decade, I think, projected from now, what they really mean to say is: OK, when we get to 2036, Medicare right now is not projected to have 100% of the funds it needs to pay for Part A services. We’ve had multiple periods during Medicare’s political history when we’ve gotten down to seven years, five years, four years. And Congress has never let that trust fund go insolvent. Politically, think about it. If there’s one thing we know about members of Congress, they want to be reelected. There are 70 million people in Medicare. I’m pretty sure a good way not to get reelected would be to get to say, I don’t know, October in 2036 right before the 2036 midterm elections, and say: We’re sorry. Medicare is just going to stop paying. 

So the good news is things can change. Congress can adopt policies, which they have in the past, that extend Medicare’s finances and strengthen its finances. So I think there is good reason to be concerned about how do we stabilize Medicare financing. But in terms of what keeps me up at night, Medicare going bankrupt, I wouldn’t let that bother me, and I wouldn’t let it bother you. 

Rovner: So how have the politics of Medicare changed over the years? I mean, at the beginning it was very— it was supported by Democrats and opposed by Republicans, and now it’s President (Donald) Trump who says, Thou shalt not touch Medicare. 

Oberlander: There’ve been some twists and turns. If you look at the vote on Medicare enactment in 1965, it was not the vote on Obamacare in 2010. There were some Northern Republicans, moderate liberal Republicans, who voted for it, and conservative Democrats who voted against it. So it was mainly a partisan debate but not exclusively a partisan debate. And I would say in between 1965 and it passed in 1995, the politics of Medicare were consensual. There was a lot of bipartisanship. If you think about the payment reforms in Medicare that we have today and that shape Medicare today, the prospective payment system, the Medicare fee schedule, those were sponsored by Republican presidents and supported by bipartisan majorities in Congress. 

And as you will vividly remember, because I know that you covered this, the biggest benefit —attempted benefit — expansion in Medicare’s history at the time in 1988 was sponsored by (President) Ronald Reagan, a conservative Republican. In 2003, the expansion of prescription drug coverage was under a Republican president, George W. Bush. So the partisan tides have not flowed in predictable ways, but I do think it’s fair to say, since 1995, there has been an erosion of bipartisanship in Medicare and a real breakdown. And the reason I choose that year as a demarcation point is for the first three decades of Medicare’s life, it never lived under a Republican-majority Congress. And in 1995, after Republicans swept the ’94 elections that brought (Rep.) Newt Gingrich to the speakership in the House and a Republican majority in the Senate, was the first time you had Republicans in Congress as a majority governing Medicare, and they pursued ambitious Medicare reform plans. And in the decades since then, Democrats and Republicans have disagreed very sharply over Medicare and over the future of Medicare. 

Now, Donald Trump has thrown a wrench in the politics in Medicare, as he has in many things, because he is not a traditional Republican in many senses, including on Medicare. And he said explicitly when he ran for president the first time that the effort by (Rep.) Paul Ryan, who was chair of the Budget Committee, also speaker of the House, to really reform Medicare and accelerate privatization and make large cuts in Medicare, he said it was politically stupid. Why would Republicans want to do that? And so he has moved the Republican Party to a different place in Medicare, and you can see it in this budget bill that just passed that did all kinds of things to Medicaid and very little to Medicare. I think the question is whether that Trump effect is going to endure past Trump. And so when we get out to, oh, I don’t know, 2029, 2030, what is the Republican consensus in Congress going to be? Have they actually moved in that direction? Or, particularly with the soaring budget deficits, is it going to go back to really a debate between Democrats and Republicans about the future of Medicare? 

Rovner: So let’s talk about privatization. Medicare Advantage, the private health plan alternative to traditional Medicare, is now more than half the program, both in terms of people and in terms of budget. Is this the future of Medicare? Or will we look back in many years and see it as kind of a temporary diversion? 

Oberlander: I think it’s the present and probably the future. The future is always so hard to predict, Julie, because it’s unwritten. But, I mean, this is really a shocking outcome historically, because what Medicare’s architects expected was that the program was going to expand government health insurance to all Americans, first with the older population, then adding children, then adding everybody. Did not turn out that way. The original aspiration was Medicare for all through any incremental means. Instead, 60 years later, we don’t have Medicare for all, but Medicare is mostly privatized. It’s a hybrid program with a public and private component that increasingly is dominated by private insurance. And the fact that over half of Medicare beneficiaries are enrolled in these private plans is a stunning development historically, by the way with lots of implications politically, because that’s an important new political force in Medicare that you have these large private plans, and it’s changed Medicare politics. 

I don’t think Medicare Advantage is going anywhere. I think the question is: How big is it going to get? And I’m not sure any of us know. It’s been on a growth trajectory for a long time. And the question is: Given that all the studies show that Medicare Advantage plans are overpaid, and overpaid by a lot, by the federal government and it’s losing a lot of money on Medicare Advantage and it’s never saved money, is there going to come a point where they actually clamp down? There have been some incremental efforts to try and restrain payments. Really haven’t had much effect. Are we actually going to get to a place where the federal government says: We need savings, yeah. This 22% extra that you’re getting, no, we can’t do that anymore? 

So I think it’s an open question about: How big is it going to get? Is it going to be two-thirds of the Medicare program, three-quarters of the Medicare program? And if so, then what is the future, turning the question on its head, of traditional Medicare if it’s that small? And that’s one of the great questions about Medicare in the next decade or two. 

Rovner: So for all the needs that Medicare does pay for, one huge hole that remains is its lack of coverage for long-term care, which I think you mentioned at the outset. I wrote my first story on Medicare’s lack of a long-term care benefit in 1986 when I was in my 20s. Now I am in my 60s, and we still haven’t solved the long-term care dilemma. Why has this one thing been so very difficult to address? 

Oberlander: It is the issue that will not speak its name. It’s such a huge problem, and we don’t talk about it. And the way we organize and pay for long-term care in the United States is really terrible. The costs of long-term care in nursing homes has skyrocketed. It’s, as anybody who knows who’s had a family member deal with this, it is absolutely a staggering cost to pay for somebody to stay in a nursing home. And I think, paradoxically, one of the reasons we don’t talk about it is actually because of that cost, because the budgetary implications of this are so high that members of Congress and presidential administrations just don’t go there. And what we’ve done instead is we’ve created a kind of de facto nonsystem where people spend down, often in not very ideal ways, to qualify for Medicaid. So we’ve got Medicaid as a major payer for institutional long-term care. 

We have expanded home health, long-term care, both in Medicare and Medicaid, and that’s a growing part of the system. Private insurance has never really developed. It’s not very stable. The insurance is expensive and hard for people to afford and often not very good. And I think as the baby boomers age, of course the need for long-term care just keeps growing and growing, and yet we paid more attention to it when you were in your 20s. Not to date you, but you did it first. I mean, we paid much more attention, I think you would agree, to this issue on the national stage back when (Sen.) Claude Pepper was in Congress, what, 40 years ago, and it is not really talked about anymore. We’ve kind of swept it up under the rug. And the result of that is a lot of Americans are left with terrible situations when somebody needs a long-term care stay. 

Rovner: And 40 years later, people still don’t know that Medicare doesn’t cover most long-term care. 

Oberlander: And yes, people still don’t know. And yeah, they assume that: Medicare, of course, it’s a program for older persons. Of course it must cover long-term care. And unfortunately it does not. 

Rovner: So one other thing that Medicare does do that most people don’t realize is educate most of the health care workforce, certainly doctors. People don’t realize the way that Medicare subsidizes the training of doctors. Is that something that we’re going to have to look at going forward? 

Oberlander: Medicare does play a huge role in subsidizing medical education, and I think — you ask: Is it something we have to look at? It’s something that of course provides a lot of social value. I think that the issue for Medicare, and not just for graduate medical education but for all of Medicare, is this: We have a federal budget deficit that was already enormous. We just added to it and added to it a lot in the so-called One Big Beautiful Bill. So we have red ink as far as the eye can see. And my prediction, which I don’t think takes a lot of courage, is that sooner or later, probably sooner, members of Congress are going to look up and see: Wait a minute. We have this gargantuan deficit. And they’re going to say — it’s a deficit that is going to have exploded because of the tax cuts — but they’re going to say: Oh, look at this deficit. We’ve got to tame government spending. 

Well, OK. Where does the government spend money? And of course, why did Willie Sutton rob banks? That’s where the money was. That’s what he famously quipped. Well, where does Congress go for budgetary savings? And this has been true for 40 years now. They go to Medicare. So I think there is a reckoning coming where Congress will look for major savings in Medicare as a result of the broader fiscal picture in the United States, and that is going to have implications for all parts of Medicare. 

Rovner: So last question. I know you don’t want to predict the future. Is Medicare going to be around in another 60 years when you’re ready for it? 

Oberlander: I’m going to be ready for Medicare closer to six years than 60 years. I won’t be around in 60 years. Yes, yes. The most important thing to say about Medicare is that retirement in the United States today is unimaginable without Medicare. Medicare is a cornerstone of health security, of retirement security, in the United States. It is absolutely unthinkable that we wouldn’t have the Medicare program. And for all the problems and challenges that it has, it’s also important at the end of the day to remember the successes it’s had and the vital access to medical care that it’s provided. And to think about what the world would look like for older Americans and persons who have permanent disabilities who did not have Medicare, what would happen if Medicare was not there? So I think there’s no question that Medicare is going to be here in 60 years. The question is: What form is Medicare going to take? 

Rovner: Excellent. Jonathan Oberlander, thank you so much. 

Oberlander: It was great to be with you, Julie. 

Rovner: I am so pleased to welcome Sara Rosenbaum to the podcast. Sara is professor emerita of health, law, and policy at George Washington University, one of the, if not the, leading experts on Medicaid. She’s also the person who has taught me at least 80% of what I know about the program. So I am extra thrilled that she’s agreed to come be our guide. Sara, welcome. 

Sara Rosenbaum: Thank you for having me. It’s such a pleasure to be on the show. 

Rovner: Let’s start at the beginning. Medicaid was kind of an afterthought to Medicare when they were both created 60 years ago. How did Medicaid come to be? 

Rosenbaum: Yeah, it’s a really interesting question. This is, of course, the lore, that Medicaid was an afterthought. If you look at the original act — which of course was an outgrowth of an earlier law, the Kerr-Mills Act, which had been enacted about five years before — and you read the original statutory language, which we lawyers revel in doing, you are amazed. This was not such a big afterthought. I would say that Wilbur Cohen and Wilbur Mills and Lyndon Johnson and everybody else had a good idea of what they were doing. They knew that they were planting the seeds for a program that ultimately would come to be the foundation of health insurance for low-income people across the United States, as well as, of course, specific categories such as people with very severe disabilities. 

Rovner: Why don’t you remind us what Kerr-Mills was? 

Rosenbaum: Yeah. So Kerr-Mills was an earlier, a limited, federal grant program, very much structured the way Medicaid is structured today, open-ended grants, but it really focused on the elderly. And of course it predated Medicare. And Kerr-Mills kind of helped make the case for Medicare, because it was obvious that it was such a limited program in its reach. It could not do what a universal insurance program for people who had attained a certain age, and ultimately also who become disabled, would do. 

Rovner: So what was the difference between Medicare and Medicaid supposed to be when they were signed into law 60 years ago? 

Rosenbaum: Yeah. So Medicaid was very much structured in the classic style of a state grants program. It has come, of course, to be so much more than that. But it was a grant to states, and states would set up state plans. This is all language that has become very familiar to us. And they would provide medical assistance, as it was called, to certain categories of poor people. And the theory was that the program would start with these people, but tucked into the — the categories were cash welfare recipients — but tucked in there were a group of people known as the medically needy, in the early days. 

And the medically needy, I always felt, was sort of the first seeds of something much bigger, because the point was that it was a program for people who were low-income, who couldn’t afford their medical care, but didn’t get cash welfare. So the theory was exactly the theory that has carried the program for 60 years now. And originally the thought was that it would really — and of course this has turned out to be the case — that that would enable people who had very serious health care costs for things that Medicare did not cover — nursing home care, home health benefits ultimately, those kinds of really big-ticket long-term care items outside of Medicare, because Medicare was really sort of like Blue Cross Blue Shield for old people like me. 

Rovner: You weren’t old at the time, though. 

Rosenbaum: I was not. I was just a kid. But the program was meant to replicate what folks had had through, during their working years. And so it was very important and very profound, but limited. 

Rovner: So Medicare’s long been the more politically popular of the two programs— 

Rosenbaum: Yes. 

Rovner: —primarily because of the political clout of older voters, which is how it was created. How was it that Medicaid became the program that grew so much? 

Rosenbaum: Well, I believe that Medicaid, and this is I think what Wilbur Cohen understood— 

Rovner: And you might remind us who Wilbur Cohen was. 

Rosenbaum: Wilbur Cohen was the genius behind so much of the early social welfare thinking who sort of was a bridge between the academic thinking about assistance, the legal thinking about assistance. By then, by the time Wilbur Cohen was working his magic in the Johnson administration, maybe the single most important article on social welfare policy ever written had been written by Charles Reich, “The New Property.” That sort of spelled out how Americans had come to expect help from the government as a right. So he was the brain trust, the one-man band behind thinking through, with members of Congress, what Medicare and Medicaid would look like. He was really the architect. 

Rovner: He was the secretary of health, education, and welfare at that point, right? 

Rosenbaum: Yeah. Well, I think he was actually the deputy, but you could be correct. I don’t remember whether he ever assumed the top position or whether he in fact was second in command. It’s worth checking. But he was the guy. He knew that what would propel Medicaid forward is that, unlike Medicare, which is tied to a premium structure, Medicare is funded through premium payments, which is great, but premium payments are quite unique because they are actuarially based. They are sort of a very tightly controlled form of financing, because you’re asking — whether it’s the government or now, of course, private insurers that contract with the government — you’re asking them to take on a lot of financial risk. And so everybody wanted the — like it was really going to work that way — wanted the assurance of premium structure. 

Well, Medicaid was not. Medicaid is a classic public health statute. It’s general revenue. And so every time something happened that required an intervention by the federal government where health care was concerned, you could just add a few pages to the Medicaid statute and end up with, voilà, a fix. So I was very privileged. I began my career in the first decade of Medicaid’s existence, shortly after the first great leap had happened when we created, in 1972, the Supplemental Security Income program, for people with profound disabilities or the elderly who were very, very poor. And that, of course, was accompanied pretty much by Medicaid. People were entitled to Medicaid. 

And by the time I came along, everybody was looking at another great leap. And that great leap, under the Carter administration, because of a lot of people’s work along the way, was children. Interestingly, the original statute — and this is what I mean when I say, “You go through the statute” — there’s all kinds of stuff that tells you where everybody knew this thing was going. There was the used-to-be-famous Ribicoff Amendment. Sen. (Abraham) Ribicoff of Connecticut offered an amendment to give states the flexibility to cover low-income children without regard to whether they lived in families that received cash welfare. And not too many years later, along comes the Department of Health and Human Services, based at HEW, that says, You know what? And of course this is way before the reproductive health politics of today. Somebody said, You know, if we added an unborn component to the Ribicoff child option, then you could cover poor pregnant women. 

And the original Ribicoff child program, therefore, including its the-unborn component, which was regulatory, were incredibly important. But they were tied to cash welfare assistance, and of course cash welfare assistance began to sink and sink and sink and sink. And by the mid-’70s, people said, Well, what if we decoupled this category from cash welfare funding levels and just let poor children have Medicaid? And there then ensued essentially a decade-long effort to add poor children and pregnant women as groups in their own right to the Medicaid program. And— 

Rovner: That was when I started covering it. 

Rosenbaum: Yes. 

Rovner: I was going to say it was almost sort of a stealth expansion, because it happened bit by bit by bit. But that was the strategy. 

Rosenbaum: That was the strategy. And of course the architect of that strategy — there were many, many parents of that strategy — but the true hero of that strategy was Congressman Henry Waxman and his extraordinary staff, who were so brilliant, not only in thinking through what they would be able to get done in the House — he was of course a chair of the (Energy and Commerce) health subcommittee at that point in the House — but also what those of us working outside of government would have to do by way of delivering support in the Senate. And so every year became sort of, at the beginning of the year, a strategy session with the singular Karen Nelson, who was the staff director for the health subcommittee. And we would all sit and say: OK, this year we’re going to do X. And so we’ve got to round up — this is what you could move in the House, and this is what we have to go round up in the Senate, and these are the outside groups. 

It was, they were amazing that way — I mean, political athletes. And their political athleticism was used to achieve this extraordinary breakthrough, not just for children but later on for long-term services and supports for the elderly, for people with disabilities. We all have that kind of amazing legislative prowess to thank, and they sent the program on its way. So by the turn of the 21st century, we had a Medicaid program in which it was a given that low-income children and pregnant women would have coverage. It was a given that the program was propelled — of course, there were many other things along the way — but would be a much more robust responder to long-term care needs, and to adults, to working-age adults, because we recognized parents as a group of people who could be helped. 

So all these seeds were here. And Medicaid had done amazing other work in the early 21st century, like enabling a response to the catastrophe of New Orleans, because it’s a general revenue program, or the World Trade Center attacks, where suddenly thousands of people needed health insurance. And so Medicaid was constantly the first responder, whether it was a structural first responder like coverage for poor people or whether it was a first responder to naturally occurring or man-made disasters. And that was the brilliance of the early years. 

Rovner: I was going to say also, Medicaid was used, I know in the last 30 or so years, to basically give states more money during economic downturns. 

Rosenbaum: Absolutely. This is one of the things that everybody was so sensitive to, that as the program was building, building, building, what the federal government could — now see, just how much debt the federal government can manage to work under — what the federal government could absorb in the way of spending in order to advance social welfare policy. States, because their economies are very differently structured, as are their political and legal systems, could not. And so, many times — many times — preferred financing has been used to make it possible for states to do all kinds of things. And look, we could go back to Sen. Russell Long, not exactly a civil rights icon, who was the father of Medicaid’s extraordinary family planning benefit, who made sure, along with Sen. (Herman) Talmadge, who similarly was not exactly a civil rights pioneer— 

Rovner: Couple of Southerners. 

Rosenbaum: Yes. That the family planning benefit not only would be expansive but would be paid to the states at 90% federal financing. So this idea goes all the way back to the early years, and you’re absolutely right that the financing has been used to make it possible for states to do things, to make it possible for states to maintain their programs during downturns, right up through the covid pandemic, of course. And that’s been a tremendously important part of the story, just like Medicaid has been used to support the health care safety net, both hospitals through its disproportionate-share hospital payment program, its other elements that give states the ability to fund their public health systems, county-operated public health systems, through Medicaid, and of course one of the most interesting stories of all, which is the extent to which Medicaid literally took a few dozen experimental clinics from the Great Society years that were struggling to survive — there were a few hundred by the time it happened — and created the financing system that today has created community health centers which serve 32 million people. So, I mean, Medicaid is the powerhouse. It is the powerhouse. 

Rovner: Today we think of Medicaid, as you were saying, in terms of this major population — seniors in nursing homes, low-income moms and kids, people with disabilities. But Medicaid’s also become the nation’s leading provider of things like drug treatment and rehabilitation and mental health care. How much has that been overlooked in the modern Medicaid discussions? 

Rosenbaum: Well, I think all of these things tend to get overlooked until they’re threatened, right? So all of a sudden, for the past six months, everybody’s had a 101 into what Medicaid does, because every few years we find we go through the same thing. This year was tougher than any we’ve faced before. But I put all of Medicaid’s contributions to mental health and addiction treatment in the category of long-term services and supports that Medicaid, because of its financing structure, has been able to essentially wrap around of a terribly deficient private insurance system and Medicare system that just do not, they’re not structured to fund these things. Somebody’s got to fund these things. And Medicaid has stepped up each time. And that’s why I think the battle over Medicaid that we have all been living through since January of this year is so profound, because the achievements of the program sort of reach into everything — chronic health, public health, insurance coverage. I always tried to explain to my students that there was no one thing that Medicaid does. You can’t just describe Medicaid as insurance. It’s way more than that. So you are absolutely right to point this out. 

Rovner: I feel like in 2017 in the fight over the repeal of the Affordable Care Act, that was sort of a big change for Medicaid. I think people had finally realized that Medicaid had grown larger than Medicare, that it was not just a program for the poorest of the poor, that it did all of these other things that you’re talking about, and that really a lot of, I guess, the stigma had been taken away. And yet this Congress felt comfortable — I don’t know if I’d say “comfortable” — but a majority of them voted to make these really deep, profound changes. I mean, what is that going to mean going forward both to the health care system and to the political system? 

Rosenbaum: Well, I’ve spent a lot of time thinking in the post-enactment period about: When was the die cast? When was the die cast that set everybody spinning? And I think they, congressional leaders and the White House leadership, understood the fatal error they’d made in 2017, which was separating the tax reforms from the spending reforms, because of course we were then able to battle the spending reforms on our own turf, right? Here, because of the decision that was made back, I’m sure, almost a year ago— 

Rovner: Literally the idea to do one “big, beautiful” bill. 

Rosenbaum: Yes. And that meant that Medicaid, along with food stamps, or SNAP (the Supplemental Nutrition Assistance Program), along with everything else, just became pay-fors. They just became offsets. And the name of the game then became beating back every attempt to deprive Congress of pay-fors to do the thing that it really wanted to do, which was tax reform. And so we were all reduced to — “we” in the sense of people who worked on social welfare policy, including a lot of my friends who work on tax policy but as a social welfare concern — we were all reduced to bystanders in this effort to get to a trillion dollars. 

Rovner: A trillion dollars in cuts. 

Rosenbaum: A trillion dollars in cuts. And therefore it opened the door to extraordinary things. I mean, for example, if I could take just a second on it, on the work requirements. The experiments from Arkansas and New Hampshire and other states, that formed the basis for so much of the opposition to work requirements, were very destructive. But the way they worked was people who were on Medicaid would then have to report in if they were working, which was not good, because they couldn’t navigate the red tape and fell off. But the model that has been passed, that’s been enacted, is like dropping a hydrogen bomb, because you will no longer be able to enroll in Medicaid if you cannot navigate the red tape. And so many of us kept pointing out that this was a terrible idea in any event, but to impose this at the point of enrollment meant that you were not just simply destabilizing coverage for people who had it, you were preventing people from getting it. 

And the way the statute is written, literally every person on Medicaid today who’s an affected person, the working-age adults in expansion states, is going to have to reapply for the benefits. It is huge. Huge. And because you can’t have Medicaid at the point of enrollment unless you could meet these requirements. And so I had many, many disputes along the way with people who thought it would be 3 million or 4 million or 5 million people losing their coverage. It’s potentially 20 million people, 20-plus million, the expansion population, because while there are exemptions, you’re going to have to prove an exemption. And some of the exemptions will be easier than others. But interestingly, the way Medicaid works in expansion states, people just enroll as low-income people. 

So whether you’re a parent, whether you have a disability and you’re waiting for Social Security to make the determination and you’re sort of on as a poor person while that’s happening, it doesn’t show up. What shows up is you’re a low-income person. And you’re going to be confronted with having to prove your worth to get health care. And when we tried to confront this, we were told quite bluntly that people were told: No, no, it’s the enrollment that’s going to remove everybody. That’s where the savings come from. And so it lost all of its humanity, and I think it drove home to me the point that this was all about the money and that’s why they were able to succeed. 

Rovner: So obviously, I mean, I know a big source of enrollment for Medicaid is health care providers themselves. People show up, they’re uninsured, and there’s somebody smart there who says, Hey, you’re eligible for Medicaid, so we can get paid. This is going to have a huge impact on the provider community, isn’t it?” 

Rosenbaum: Yes. And those providers that have, say, experience in trying to help their patients enroll in or keep their coverage will struggle mightily, because they’re losing huge amounts of revenue. We did a couple of quick analyses of just how much money, for example, community health centers stood to lose, and it’s over a five-to-seven-year period. It’s in the tens of billions of dollars. A friend of mine in Georgia told me that they’re about to lay off their entire — this is, We’re not affecting children, we were told. They’re about to lay off their entire child outreach staff, who help families with children all over Georgia enroll in and keep their coverage — for the children. And so they can’t afford them anymore. 

Rovner: So what happens next? Does this happen? And if it happens, does it take out the underpinnings of the entire health care system? Or does Congress eventually realize what it’s done and change its mind? 

Rosenbaum: Well, yeah, I mean, I think people are saying, Well, the two-year runway. It’s like two years until it becomes effective. The two-year runway is going to sort of make people forget about this, and then, boom, it’ll be upon us. I don’t think so. I think the two-year runway will end up shining a huge light on the fact that states cannot implement the whole system. I mean, while we are very focused on the number of people who will lose their coverage, the states are confronting an insurmountable problem here. They’ve never had to link Medicaid to work records. And Congress did everything it could to make matters so much worse. For example, they could have just said that: We’re going to import the same requirements that apply to SNAP to Medicaid. And so if you’re getting SNAP in your working age, then you automatically enroll in Medicaid. They didn’t do that. They didn’t do that. It’s a different-enough set of eligibility criteria and exemption categories. For example, SNAP ends, I think, at about 60, and the Medicaid work requirements go all the way to 65. 

Rovner: Age 60 and 65. Yeah. 

Rosenbaum: Yes, exactly. But I mean, the exemptions are different. The requirements are different. And so people are talking about, Oh, we’ll just align reporting systems. No, no, no, no. You are liable for all kinds of error rate penalties. If you just rely on SNAP, you can’t. So states have no way to deal with this, health care providers that will be called upon to literally provide the documentation. My guess is that Russell Vought, the head of OMB (the Office of Management and Budget), who is really the person in charge of implementing all of this, is not going to take attestations as evidence. They’re going to require documentary evidence and files about health exemptions and continuing health exemptions. This is all just to get some health care. It’s not like you can eat with your Medicaid card or pay your rent with your Medicaid card. 

So the astonishingness, I don’t think that’s a word, but the astonishingness of this all, I think, is only going to build and build. And of course so much attention was paid to rural hospitals, and so they tucked in this little teeny-tiny rural hospital program. And quite frankly — I just did a post with my colleague Anne Reid about this at HealthAffairs — if you read the fine print — and Carole Johnson has an excellent one — if you read the fine print — we’re not so fine print — if you read the print of the statute, we noted that offsetting lost revenue is only one of 15 different activities. In fact, you can’t just go to the government and say, you can’t go to Russell Vought and say, Please give us our allotment so that we can offset, the way the fund worked back during covid. You have to spend your money. My favorite is that you have to spend your money on things like consultants to help you design payment reform strategies, payment reform strategies for people who are no longer injured. So there’s no mitigation strategy for this, and I think the hope is that Congress will call it back 

Rovner: If it doesn’t, is this, I mean, the one sort of silver lining that I’d been sort of thinking about is, well, maybe if we tear down the health care system we’ll have to start again and build a better one. Is it possible that we could get there? Or are we just going to limp along? 

Rosenbaum: I have those thoughts often, and then I stop and think, well, those of us with health insurance could sit there and say, Yeah, maybe we just tear down the health system to start again. Meanwhile, of course, we will have millions of people without health care. So interestingly, the Affordable Care Act, of course, was designed not to tear down the health care system but to strengthen the health care system. But it was the brilliance of the Affordable Care Act was that it saw the holes and it sort of tried to fix them. And if we’d left it alone, with everybody in this, what I consider to be, sort of an intermediate arrangement, we could have done exactly what you are talking about, with just about everybody in the United States covered. We could have begun to really do the serious work of moving to something more unified, better, and of course cheaper and more efficient. That’s right — far easier to use. But we have decided instead to tear the Affordable Care Act apart, both the access to the marketplace by rolling back the assistance and of course the Medicaid reforms. 

Rovner: Well, happy birthday, Medicaid. 

Rosenbaum: Happy birthday, Medicaid. Today’s the day. 

Rovner: I know. 

Rosenbaum: Yeah. 

Rovner: Thank you so much, Sara Rosenbaum. 

Rosenbaum: Thank you for having me. It was a — it was both uplifting and sad. 

Rovner: OK. That’s this week’s show. I hope you enjoyed it. Thanks as always to our editor, Emmarie Huetteman, and our producer-engineer, Francis Ying. If you enjoy the podcast, you can subscribe wherever you get your podcasts. We’d appreciate it if you left us a review. That helps other people find us, too. Also, as always, you can email us your comments or questions. We’re at [email protected]. Or you can find me on X, @jrovner, or on Bluesky, @julierovner. We’re going to take a short break to let our hardworking staff have some rest. We’ll be back in your feed the Thursday after Labor Day. Until then, be healthy. 

Credits

Francis Ying
Audio producer

Emmarie Huetteman
Editor

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