The little engine that could: Medicaid at the millenium.

Summary The Medicaid program is little understood and, often, even less liked. It has suffered from poor design, unintended consequences, massive cost increases, provider hostility, and the slings and arrows of political fortune. Nonetheless, it provides at least some coverage to 1 in 8 Americans and has been a hotbed of health policy experimentation-often for better, sometimes for worse. As it stands at yet another crossroads, its fate is uncertain; yet there does not seem to be anything that could replace it, save a level of social cruelty this nation is so far not ready to accept. The question, then, is how to make the best of Medicaid's tenuous situation-and what we might do to improve it. It had the most obscure legislative beginning possible, and suffered from some of the most short-sighted policy thinking imaginable. It is a nemesis of those who fear a government-run healthcare financing system, and a source of hope for those who want one. It is a constant frustration for healthcare providers, a touchstone of innovation for state governments, the most political of footballs, and the darling of policy wonks. It is Medicaid, arguably the most controversial, least understood, and most successful public healthcare program of the second half of the 20th century. It has been a work in progress for 33 years; and as the 21st century peeks over the horizon, Medicaid is once again in the throes of significant change. How that change plays out, and what impact it has on the populations traditionally dependent on the program, will tell us much about the future of public financing of healthcare, the state-federal interface in health policy, and the fate of the uninsured. A POLITICAL FOOTBALL Medicaid's roots extend far back, to repeated federal and state efforts over most of this century to subsidize access to healthcare for vulnerable populations (Friedman 1977; 1995). This activity, which was particularly strong among Congressional Democrats, intensified during and right after World War II. That led to limited programs focusing on maternal and child health and subsidization of services for the elderly and some low-income citizens, as well as a long string of bills seeking broader government-subsidized coverage, all of which failed in Congress. The failure was due not only to partisan politics; there was (and is) deep ideological opposition to the idea of a government-run national health program, and the most powerful lobby of the day, the American Medical Association, was dead set against federal involvement in health services for the elderly. However, Presidents John F. Kennedy and Lyndon Baines Johnson both liked this notion, and the campaign to pass legislation began in earnest in 1960. One bill nearly passed in 1964, but died when House and Senate conference committee members could not agree on a compromise. The barriers would finally be overcome in 1965. Throughout the five years it took to pass a law, the program for the elderly got all the attention and took all the heat. But the crafty head of the House Ways and Means committee, Wilbur Mills (D-AR), was also interested in care for the poor and disabled, having successfully passed a program in 1960, informally known as KerrMills, which provided federal subsidies to states seeking to expand access to care for low-income and elderly residents. Mills was working closely with Wilbur Cohen, Assistant Secretary of the then Department of Health, Education, and Welfare, who had already spent 15 years aiding in the writing of many of the bills that had passed-and failed. Cohen had been, in his own words, an advocate of "a comprehensive and universal nationwide health insurance plan since 1940" (Cohen 1985). When Mills asked him how he could fend off critics who would claim that Medicare was "an entering wedge" to national health insurance, Cohen suggested that if a different program were developed to cover "key groups of poor people," then the critics would be reassured that one single giant program would not be possible. …