ABSTRACT
Medicare's complicated historical origins are difficult to explain in the quite different political environment of the 1990s. The truth is that in the early years of Medicare's implementation, the program's administrators were not organizationally disposed to confront most providers of medical services in ways necessary to restrain costs. Medicare, after nearly fifteen years of relatively quiet controversy in the specialized politics of medical care finance, acquired much greater political salience in the Reagan era. The possession of Medigap insurance in turn motivated the affluent elderly to oppose an act providing just such expanded coverage to all Medicare beneficiaries. Politically criticized for a well-intended effort to expand Medicare benefits, Congress returned with enthusiasm to the technical tasks of making regulatory adjustments in Medicare that would reduce program expenditures. Despite the rapid growth of Medicare expenditures, however, the elderly actually experienced significant erosion in their program benefits.
