Bob Rosenblatt, Special Correspondent

Throughout 2015, the Academy is working with partners to create a platform for dialogue around the history and future of these two vital programs, including this weekly Covered blog series. Covered is written by Bob Rosenblatt, a Senior Fellow at the National Academy of Social Insurance and editor of the website HelpWithAgingLearn more about the Academy’s celebration of the 50th anniversary of Medicare and Medicaid.

Finance Committee Restores Medicare bill, AMA Chief Calls Off Docs

By Bob Rosenblatt, Special Correspondent

June 26, 1965

Washington, DC – The Johnson Administration this week won two potentially critical victories for its Medicare proposal – one in the Senate Finance Committee and the other in the court of public opinion.

In Washington, the Senate Finance Committee reversed course and stripped from the bill language that would have converted a plan for universal hospital care for people over 65 into a welfare-type benefit linked to income. In doing so, the Committee rejected two amendments from Sen. Russell Long (D-LA), the Senate Democrats assistant floor leader,   that had been approved just a week earlier.

The Johnson Administration and Congressional backers of Medicare want more of a social insurance approach, funded through the Social Security system, with everyone over 65 entitled to hospital, nursing home, and home care benefits. Long’s amendments would have offered unlimited hospital and nursing home care but cost-sharing would be higher for individuals with greater income. The Administration’s proposal, adopted in the House, has equal cost-sharing for all persons over the age of 65.

Meanwhile, in New York, the president of the American Medical Association (AMA) called on doctors not to protest the creation of Medicare. There had been threats by individual doctors and informal talk among physicians about not accepting Medicare by refusing to see patients covered by the program if it becomes law.

The Administration was afraid that a strike would thwart the ability of newly covered seniors to access care. To avoid angering physicians, the Administration proposal for hospital care would not apply to physicians’ fees. Instead, doctors’ charges would be paid under Part B, a voluntary insurance program that would be operated like the current Blue Shield insurance plans. More importantly, the Administration agreed doctors would be reimbursed under Part B for its “usual and customary” charges.

The Finance Committee voted first to remove a Long amendment approved on June 22nd that would have provided unlimited days of hospital care, nursing home care, and home visits. Such an amendment would drive up costs and thus undermine support for the proposed program. The Finance Committee also removed a second Long amendment that would have required Medicare beneficiaries to pay a percent of their hospital bill, with higher income individuals paying a higher percentage of the bill for inpatient services, up to a maximum of seven percent of their annual income.

The Finance Committee voted 10 to 7 to remove the amendments that were seen by political observers as a surprising rebuke to the Johnson Administration by a member of the Democratic leadership.

This action by the Committee on June 23rd restored the Medicare plan to one that closely resembled the original version backed by the Administration and approved by the House. It would use Social Security taxes paid by workers and employers to finance hospital care for all Americans over the age of 65. Hospital coverage for an illness would last 60 days and nursing home coverage would last 100 days if it followed a stay in the hospital. And 100 days of home care visits would be available after a hospital stay. Medicare would be a program for all Americans over 65, without any variations or costs linked to their income.

The Finance Committee also decided to expand the benefits, adopting an amendment by Sen. Vance Hartke (D-IN) that would increase hospital care coverage to 90 days, but with the patient paying $10/day for each of the extra 30 days. Nursing home care would be boosted to 180 days, with the additional 80 days requiring the patient to pay an additional $5 per day. Home care visits would get another 75 days, with no added charge for the patients.

The AMA spent an unprecedented amount of money, more than a million dollars, in lobbying and organizational efforts to mobilize opposition to the legislation.

But this week, Dr. James Z. Appel, the AMA president, surprised many with a conciliatory message on June 20th, when he said doctors should “actively participate” if Medicare becomes federal law.

A campaign by doctors should not “include unethical tactics such as boycott, strike or sabotage,” Dr. Appel said. Instead, opposition activities by doctors “must be based on reason, logic, and education and must utilize existing parliamentary procedures that are a part of a representative democracy,” he told the delegates meeting in New York.

Some state delegations to the AMA convention threatened a floor fight against Appel’s remarks and press for a formal decision to boycott. Dr. Appel warned the doctors against any actions to refuse to obey the law. “Such lack of cooperation would … discourage respect for law and would stimulate retaliatory regulatory legislation.”

Trying to change a law doctors don’t like would be going down a hard road, but this is “the only way we can or should travel,” he said. “Responsible elements in our society must place respect for law and order above emotionalism, personal beliefs or personal desires. If the law works badly, the doctor must call this to the attention of his patients. On the other hand, the physician must not let his political philosophy be the criterion of his judgment as to what constitutes good or inferior care. Such judgment must be objective and based on purely scientific grounds.”

Dr. Appel said he is a strong opponent of the Medicare proposal and urged physicians to work hard to “contain” Medicare. If the proposal passes Congress, as expected, and everyone over the age of 65 is covered for hospital care, the backers of Medicare’s likely next step would be to try for legislation to cover Americans under age 65. This is where the doctors should work to limit any expansion, Dr. Appel advised.

This week’s events give renewed confidence to the backers of Medicare. They may now safely view last week’s events in the Senate Finance Committee as a political detour. Dr. Appel’s remarks suggest the biggest political opponent, the AMA, appears to have been neutralized.

► Directory of COVERED posts
► Read the next post in the COVERED series, “Senate Wrestles with Medicare and Desegregation of Southern Hospitals​”
► Learn more about the Academy’s celebration of the 50th anniversary of the enactment of Medicare and Medicaid

Posted on: June 26, 2015

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