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The Reagan-Era Health Reform That Scares Both Parties

Twenty-seven years ago, President Ronald Reagan and a Congress split between Republican and Democratic control agreed to a radical new payment scheme for Medicare. The resulting legislation trimmed billions of dollars from the federal budget and caused medical inflation to plummet, yet still maintained quality of care.

Although this stunning achievement led to a permanent change in how both the public and private sector pay for health care, it has gone curiously unmentioned during more than a year of rancorous health reform debate. Nor is it likely to arise at the much-ballyhooed bipartisan summit. The topic simply raises too many squirm-inducing questions. In this instance, conservatives and liberals alike can agree that political discretion is the better part of valor.

For Democrats, the changes in Medicare hospital payments enshrined by the Social Security Amendments of 1983 constitute an unpleasant reminder that reforms targeting cost can be, and have been, successfully  decoupled from those aimed at improving access. Given the public enthusiasm for cost control over access expansion, acknowledging that reality might well deal a fatal blow to decades of liberal efforts to achieve the dream of universal coverage.

For Republicans, however, the reverberations of the Reagan-era Medicare revamp are even more unsettling. The most-revered figure in modern American conservatism agreed to an administered price system that the current guardians of conservative orthodoxy would undoubtedly denounce as socialist, Bolshevik or worse. Even more painfully, the scheme worked. Perhaps most painful of all, Reagan’s reasoning showed a pragmatic view of government much closer to today’s political center than it is to hard-right GOP ideologues.

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