| Upon its enactment in July, 1988, the Medicare Catastrophic Coverage Act (MCCA) was hailed as the first major expansion of government health care for the nation's elderly since the creation of Medicare in 1965. Less than 18 months later, the House and Senate, responding to a torrent of elderly criticism, voted by large margins to repeal virtually the entire program.; This study examines how and why this unprecedented series of events transpired and the episode's implications for social insurance policy-making in an era of scarce resources. It argues that the key to understanding MCCA's passage and eventual repeal concerns the legislation's financing. Specifically, in an attempt to expand Medicare in a deficit-neutral manner without imposing costs on future generations the new program imposed all costs on elderly beneficiaries themselves. Additionally costs were distributed in a progressive manner in order to avoid burdening low income senior citizens and to establish fully a precedent for future policy-making in social insurance programs.; The study finds that the program proved unpopular not only with relatively affluent senior citizens liable for substantial costs but among the lower-income majority who stood to receive significant benefits from the program at minimal personal cost. It attributes this phenomenon to three causes: the legislation's failure to include a comprehensive benefit for long-term custodial care; the success of the National Committee to Preserve Social Security and Medicare in misleading many low-income elderly as to the program's costs and encouraging grass roots opposition to the program; and, perhaps most importantly, the inability and failure of MCCA's architects to address clearly or with complete honesty the redistributive implications of the program's financing.; The study concludes that although MCCA proved a short-run political catastrophe, the episode provided policy-makers with an improved understanding of the constraints inherent in social insurance policy-making in the current political environment. As a result, it argues that the episode may ultimately prove to be merely a failed first effort to confront this complex set of political issues. |
