The States as Generators of Incremental Change in American Health Care Policy: 1935 to 1965

The States as Generators of Incremental Change in American Health Care Policy: 1935 to 1965

Robert A. Peters (Western Michigan University, USA) and Minerva Cruz (Western Michigan University, USA)
DOI: 10.4018/978-1-4666-9944-1.ch005
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The literature defines the role of interest groups and administration officials in the evolution of health care policy but does not acknowledge the impact of Congressional casework or the initial Social Security (OASI) eligibility criteria. There is, as a result, an inadequate appreciation for (1) the extent to which the initial development of federal policy was a function of Congressional delegations pursuing initiatives that would increase the flow of federal dollars their states could use to expand health services or (2) the way in which the regional cleavages created OASI eligibility criteria combined with the South's control of Congressional leadership positions to yield an expansion of health care for indigent people while intentionally delaying the creation of Medicare. This chapter addresses these gaps and provides a more complete picture of the way in which the incremental, unplanned evolution of federal health care policy was the product of using federal resources to diminish the states' fiscal needs and the south's capacity to temporarily control the health care agenda.
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Model For The Expansion Of Federal Health Care Financing

During the thirty years between the establishment of the public assistance matching formulas in 1935 and the enactment of the Medicare and Medicaid programs in 1965, the states’ pursuit of their self-interest affected the evolution of federal health care funding for elderly and indigent citizens. Kingdon’s (1995) policymaking model suggests that the state’s success in placing their health care financing proposals on Congress’ agenda was a function of their congressional delegations’ ability to merge the problem, policy, and politics streams to take advantage of windows of opportunity (Gilman, 1998). The problem component, as defined by the states, focused on minimizing welfare dependency, i.e., providing health care services that would enable public assistance recipients to become self-sufficient. Given definition of the problem and the states’ desire to limit the demands on their resources and the need for state tax increases, the states’ policy was to expand the flow of federal grants-in-aid via federal matching formula revisions. As an increasing share of states availed themselves of the expansion of federal funding, there was a concomitant increase in the probability of securing Congressional support for additional matching formula revisions. The process, in other words, was self-perpetuating: an expansion in the number of states benefiting from the revised federal matching formulas enhanced the feasibility of enacting additional changes that would generate further increases in federal outlays.

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