Paying for Medicare: benefits, budgets, and Wilbur Mills's policy legacy.

Medicare features an unusually complex financing design. The Hospital Insurance Trust Fund pays for Part A of Medicare (hospital stays), while the Supplementary Medical Insurance Trust Fund finances Part B (doctor visits, outpatient care, and certain home health services). At a time when Medicare policy is generating debate, this article takes a new analytical look at the origins and consequences of the program's peculiar bifurcated structure. Addressing historians of the U.S. welfare state as well as contemporary health policy reformers, the article focuses on the crucial role of legendary Ways and Means Committee chair Wilbur Mills in Medicare's enactment in 1965. The central theme of the article is that fiscal conservatism and a commitment to budgetary restraint constitute important elements of Medicare's original political understanding. Contrary to analysts who argue that Medicare's financing design has produced "perverse" effects, we argue that it has served a valuable social function by encouraging policy makers to confront periodically the costs of one of the largest and fastest-growing federal programs. An argument can be made that Medicare's original division requires modification in order to integrate health care delivery changes of the past few decades. It is crucial, however, for reformers not to lose sight of the policy goals, including fiscal rectitude, that motivated the adoption of Medicare's bifurcated structure in the first place.

The Medicare assignment controversy: the construction of public-professional conflict.

The conflict between the elderly and organized medicine over "mandatory assignment" and "balance billing" is a significant public policy issue. Considerable ideological importance has been attached to this conflict by both sides, despite the relatively modest proportion of total revenue for physician services received through balance billing in payment for care of Medicare beneficiaries. The positions of these two coalitions are examined as well as the efforts of the Physician Payment Review Commission (PPRC) to craft a public policy response. Three alternative resolutions--those adopted by Congress in 1989 on the recommendation of the PPRC, the Canadian solution, and actions taken on a state level--are then contrasted. The concentrated impact on the elderly of balance billing practices is considered as a problem, especially for elderly of limited income and resources. Justification of the practice is typically provided by the profession on the ideological grounds of preservation of professional autonomy rather than economic gain, which also reflects the current relatively limited use of balance billing; a significant majority of all claims submitted in the United States are now assigned to physicians. A continuation of the gradualist strategy of the PPRC is endorsed as the most appropriate short-range solution to these problems, which diminish in significance with a more comprehensive national health financing scheme.