The History of Medicare and
The Current Debate

The Birth of Medicare The Heritage Foundation Media Campaign Leading Market-Driven Legislative Proposal Instability in the Medicare HMO Marketplace The New Medicare Law: A Victory for the Proponents of Privatization Growing Power of Extremist Think Tanks MRC's Media Education Campaign

The Heritage Foundation Media Campaign

Between the 1970s and the 1990s, there was mounting concern among policy makers about the rising costs to Medicare, and cost-containment was a constant theme. The start of the Medicare prescription drug benefit debate in the mid 1990s, stemming from the exorbitant medication costs being borne by people with Medicare, coupled with worries about the impending retirement of the baby boom generation–has led to the birth of a full-fledged movement to "overhaul" Medicare. Proponents of this effort have propagated the idea that the Medicare program needs to be "saved," claiming Medicare is out-of-date and on the brink of bankruptcy.

The solvency of the Medicare Trust Fund is a red herring seen frequently in media coverage of Medicare issues. As Robert M. Ball, administrator of the Social Security program from 1952 to 1973 explains, "Year after year, the forecasts of the Social Security and Medicare trustees have been used as a rationale to postpone changes that are long overdue... Until recently, no one tried to make Medicare forecasts for more than 25 years, for the simple reason that no one can foresee how the fast-changing world of health care will look that far out. Knowing this, private health insurance plans generally limit their projections to two or three years at most... Do we really want to be thwarted in our efforts to strengthen a uniquely successful health insurance program covering 40 million Americans by a meaningless long-range forecast?" ¹ In fact, the Bush administration projected in early 2004 that the Medicare Trust Fund is secure until 2019.

Proponents of dismantling Medicare believe that changing Medicare to rely on the private marketplace would produce competition among plans that would drive down costs and increase choices for consumers. A fair reading of both history and current experience show otherwise.

The roots of the movement for a market-driven Medicare program lay in the Heritage Foundation's three-year, $30 million media campaign advancing their proposal to reform the Medicare program by applying the Federal Employees Health Benefits Program (FEHBP) model. The Heritage Foundation is a research and educational institute–a think tank–whose mission is to promote public policies based on free enterprise and limited government.

In a FEHBP-type Medicare program, the government would give an insurance company or a managed care firm a set amount of money to provide benefits. While the government's payments would be reduced, more of the costs would be shifted to people with Medicare, who over time would absorb the rising costs of medical services. This model is counter to the principle of collective-risk sharing that the Medicare program is built on. If too many people choose a private Medicare option that provides fewer benefits at less cost, only the sickest and hardest to insure would remain in Medicare's risk pool, which could eventually make original Medicare unaffordable.

In a chapter in her book Slanting the Story, health care reporter Trudy Lieberman details how Heritage's media campaign, begun in 1995, successfully launched in the mainstream press a new language for reporting on Medicare. This language took the focus off the fact that the long-term implication of a FEHBP-style Medicare program would be a drastic cut in government funding of Medicare, placing the burden of increasing medical costs on older adults and people with disabilities. Heritage refocused the debate on simple messages that strongly promoted a FEHBP-style Medicare program as a "consumer choice model" and the only way to "save" Original Medicare from bankruptcy. Heritage brushed aside another possible solution: increasing revenues earmarked for health care. It did so by bombarding editorial page writers, columnists, radio talk shows, and members of Congress with a well-timed stream of issue bulletins, reports, and press releases hammering these messages.

While there were no legislative results by the end of 1995, Heritage had laid the groundwork for its future success. By late fall of 1995, Heritage's Medicare reform proposal and messages had been integrated into the political debate and certain politicians became the new spokespeople for a FEHBP-style Medicare program. For example, Ohio congressman Martin Hoke wrote an op-ed for the Cleveland Plain Dealer using Heritage data to show how without Medicare reform payroll taxes would skyrocket; Representative Dan Miller of Florida promoted the idea of "Medicare choices" on MacNeil/Lehrer NewsHour.

Heritage crafted a new propaganda campaign "to prepare public opinion for Medicare reform" built on the lessons they had learned from their 1995 activities. As described in the 1997 Heritage document "Mandate for Leadership IV–Turning Ideas into Actions," the key goals of the new campaign were to:

• Convince Americans that Medicare provides inferior medicine and poor financial security;
• Convince Americans that Medicare cannot be sustained for long;
• Focus on "health care security";
• Attract provider constituencies to support reform; and
• Build bipartisan support first, then reinforce it with a commission.

With another flood of "Dear Journalist" letters, backgrounders and news releases between February and August 1997, Heritage moved toward achieving most of its goals. These efforts coincided with Congressional debate over the Balanced Budget legislation. Heritage used its message of increased consumer choice to recruit several major lobbying allies, such as the American Medical Association, the American Hospital Association, the National Right to Life organization, AARP and the United Seniors Association. Each organization began to promote certain choice options being advanced by Heritage, such as managed care or private fee-for-service, which they favored. And instead of educating the public about the long-term cost and quality implications for consumers of a market-driven Medicare program, much of the media followed Heritage's lead. Heritage had sold journalists on its idea that the only way to "save" the Medicare program was to give consumers a choice of health plans, because that would lead to greater competition and lower costs. Writers like Washington Post columnist David Broder pushed President Clinton to do the "right thing" by approving a new FEHBP-style voucher Medicare program.

Based on a combination of lobbying and media pressure, Heritage scored a major victory with the passage of the Balanced Budget Act of 1997. In addition to establishing Heritage's much desired commission, the Act expanded the range of Medicare private plan options, opening the door for the transformation of Medicare from a social insurance program to a private insurance scheme.

_________________________________

¹ Robert M. Ball, "The Sky Isn't Falling on Medicare," Los Angeles Times, July, 24, 2001.

Next →

 

_________________________________