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

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.