Two days ago we watched Harry Truman lose. Yesterday we watched a record album beat a president in Madison Square Garden. Both times the idea of health coverage for the old ran into the same wall, and today we finally meet the man who was the wall.
His name was Wilbur Mills, and if you have ever wondered why your Medicare card has a Part A and a Part B, the answer is one sentence he said in a closed room on a Tuesday afternoon in March 1965.
Why does Medicare have a Part A and a Part B?
Medicare has separate parts because it was assembled from three competing bills that were never meant to coexist. Part A came from the administration's hospital insurance plan. Part B came from the Republican alternative that had been written to compete with it. And the American Medical Association's own rival proposal became Medicaid. One man put all three together in a single night, and the seams are still visible on your card sixty one years later.
To understand why that was so shocking, you have to understand who Mills was.
The most powerful man you have never heard of
Wilbur Mills chaired the House Ways and Means Committee, which is where tax and Social Security legislation lives or dies. Nothing reached the House floor without him. Yesterday we heard Kennedy's own aide explain the 1962 defeat by saying you do not persuade the chairman of Ways and Means with a rally in Madison Square Garden. This is that chairman.
And he had spent years keeping this idea in a drawer. His argument was not that the elderly were fine. It was that an existing program, Kerr-Mills, which sent federal matching money to states to help low income seniors, deserved more time to prove itself before Washington built something enormous and permanent on top of it. He had co-sponsored that program himself in 1960.
Historians describe him as stalling for time in the Medicare debate, and it worked for the better part of a decade.
Then the 1964 election happened. Johnson won enormously, brought in a large new majority, and Mills could count. The votes to pass something now existed with or without him. What he still controlled was what that something would look like.
Three bills, two of them written to kill the first
By early 1965 there were three serious proposals sitting in front of his committee, and everyone in Washington assumed they were mutually exclusive. You picked one and the other two died.
The administration's bill
The King-Anderson bill: compulsory hospital insurance for the elderly, run through Social Security and funded by payroll taxes. This was Medicare as its supporters had been arguing for it since Truman.
The Republican alternative
John Byrnes of Wisconsin, the ranking Republican on Ways and Means and a genuine Social Security expert, offered something different: coverage for physician bills and drugs, voluntary rather than mandatory, funded from general revenues and enrollee contributions rather than the Social Security system. It was built to be the reasonable-sounding option that made the administration's bill unnecessary.
The AMA's alternative
The American Medical Association, having spent fifteen years fighting all of it, put forward a plan of its own, popularly called Eldercare. It would have expanded the existing federal and state assistance program and subsidized private coverage for low income seniors. It was the doctors' answer to the question of what to do instead.
Two of those three bills existed for the express purpose of making sure Medicare did not happen.
The Tuesday afternoon
On March 2, 1965, the Ways and Means Committee was in closed executive session, working through those bills. Wilbur Cohen, one of the administration officials who had carried this fight for years, was in the room.
Mills turned to him and said something nobody was expecting.
"Maybe it would be a good idea if we put all three of these bills together. You go back and work this out overnight and see what there is to this."
Work it out overnight.
The Miller Center at the University of Virginia records the moment in its account of the legislative fight, and notes that the structure Mills proposed came to be known as the three-layer cake. Nobody seems to know for certain who first called it that. The name stuck because it is exactly right.
The administration's hospital plan became Part A. The Byrnes bill, the Republican alternative, became Part B, kept voluntary in deference to the doctors' objections. And the AMA's Eldercare approach became Medicaid. The National Institutes of Health archive of health policy research lays out that structure plainly: Mills proposed a bill that would incorporate the essential features of all three of the major pending proposals.
Sit with what that means. The people who wrote the bills designed to defeat Medicare woke up the next morning to find their work inside it.
Why this is the most interesting move in the whole story
I have spent a week reading about this fight, and this is the part I keep coming back to, because it is not the move you expect from a story like this one.
For fifty three years, both sides had treated it as a war with a winner. Truman lost. The record album won. The rally lost. Everybody involved understood the shape of it: somebody's plan was going to survive and everybody else's was going to be thrown away.
Mills looked at three plans built to destroy each other and decided that none of them had to lose.
It was not sentiment. It was arithmetic. A bill containing the Republican alternative is very hard for Republicans to vote against. A bill containing the doctors' own proposal is very hard for the doctors to call socialism. He did not defeat the opposition. He absorbed it, and in absorbing it he took away the thing it had been standing on.
He also, without anyone quite intending it, built the program you actually have. Part A and Part B are separate on your card, funded differently, one automatic and one you choose and pay a premium for, because they started life as opposing bills written by people who disagreed. Every retiree who has ever asked why this is split into pieces is holding the fingerprints of a compromise made in one room overnight in 1965.
From the conversations our advisors have, that structure is still the single most confusing thing about enrolling. It is not confusing because someone designed it badly. It is confusing because it was three arguments before it was one program.
Tomorrow the bill becomes law, and it does not happen in Washington. A president gets on a plane and flies to Missouri to find a man who lost this fight twenty years earlier and hand him the first card. Tomorrow is July 30, which means it publishes sixty one years to the day. That story runs at 10:30 AM ET.
And if the difference between Part A and Part B has never been fully explained to you, that is worth a conversation before you need it, not after. The team at American Retirement Advisors walks families through it as part of every plan, at no cost to you. Call (602) 281-3898.
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Next: Sixty-One Years Ago Today, a President Flew to Missouri to Finish Someone Else's Fight →Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.