Column: What about Social Security's rollout?

Reuters News
Posted: Oct 28, 2013 11:39 PM

By Bruce J. Schulman

After the nation's major social program finally became law, critics regularly blamed it for a slowing economy and a swelling federal bureaucracy. Fierce congressional opposition led to the formation of a blue-ribbon panel to overhaul the measure. Obamacare in 2013? Not quite. It was Social Security in 1937.

Meanwhile, after enrollment began for the far-reaching health insurance initiative, administrators wrestled with myriad, unexpected problems. Implementation, according to the man who oversaw the introduction of Medicare in 1965, "took the form of a whole year of consultation with literally hundreds of people in identified areas of concern."

The tortuous, often controversial implementation of both Medicare and Social Security serves as an early template for the current controversies over the Obamacare rollout. The ultimate success of those social programs ought to calm the overheated atmosphere surrounding the first days of enrollment for the Affordable Care Act.

Obamacare is but a few weeks old, and partisan opponents like Senator Ted Cruz (R-Texas) have already denounced supporters of the fledgling program — comparing them to Neville Chamberlain and other appeasers of Adolf Hitler and Nazi Germany. Even thoughtful critics like former George W. Bush speechwriter Michael Gerson are depicting the healthcare insurance program it as an "intellectual crisis for modern liberalism."

Meanwhile, voices on the political left have called the launch a "failure." Or they have leapt on the website glitches as evidence of the need for a simpler, universal single payer system.

To be sure, Americans might one day regard the Affordable Care Act as the foundation of a successful national health insurance system — an untouchable entitlement like Social Security. Or Obamacare might enter the annals as an ignominious failure. But if history is any guide, nobody will be able to decide authoritatively for years, maybe even decades — certainly not until after the program evolves significantly from its original conception.

Implementation of massive public programs on a national scale takes time — especially in the United States, when responsibility for administering them is divided not only among local, state and national governments, but between public agencies and private actors like insurance companies, hospitals and doctors.

Social Security, that now beloved centerpiece of the nation's social safety net, offers a case in point. Created in 1935, the program took 40 years just to include all working Americans in its basic coverage. When the old-age insurance program launched in 1937, barely more than half the labor force participated.

A series of amendments to the Social Security Act gradually expanded coverage. By 1979 it finally reached 90 percent of American workers. Over the decades, Congress repeatedly retrofitted Social Security: adding dependent and survivor benefits; balancing payments between early participants and later retirees; including farm workers, domestic laborers and the self-employed, and introducing annual cost-of-living adjustments.

Social Security's first baby steps proved especially uncertain. Of course, opponents denounced the pension plan as the leading wedge of a socialist revolution. One senator warned that the nationalization of wheat fields would soon follow. Former President Herbert Hoover suggested the law would reduce once-hearty Americans to servile passivity. "Our people are not ready to be turned into a national zoo," Hoover warned, "our citizens classified, labeled and directed by self-approved keepers."

But it was not just dissident conservatives who issued ideological censure. Even friendly critics disparaged the program for its incompetent personnel, confusing procedures and widespread abuses. One watchdog group particularly disapproved the rapid hiring of thousands of untrained, ill-qualified workers to staff the program.

In response, the fledgling Social Security administration launched a massive PR campaign to educate Americans about the intricacies of the program and broaden support for it. This effort included a widely distributed booklet, "Why Social Security?" with whimsical illustrations by a popular author of children's books.

Worse yet, it quickly became clear that the new payroll taxes that financed the program and reserve accounts that squirreled away millions of dollars made poor economic sense in the middle of the Great Depression. Leading congressional Republicans like Senator Arthur Vandenberg (R-Mich.) and mainstream opinion makers like the syndicated columnist Walter Lippmann blamed Social Security for the "Roosevelt Recession" of 1937-38. Not surprisingly then, the Roosevelt administration revised the act in 1939 to reform its financing scheme and pay out larger sums in benefits.

Similar uncertainty marred the introduction of Medicare. When the health insurance program went on the books in 1965, the federal government already possessed a Social Security administration to run it with three decades of experience in the business of social insurance.

Still, the complexity of the new program made its rollout a lengthy, contentious process. Federal officials had to negotiate with a wide variety of providers (nursing homes, hospitals, insurance companies), deal with a largely uncooperative American Medical Association, and coordinate with 50 state governments.

Unforeseen problems stymied implementation: How would Medicare respond to segregated facilities in the South? How would the program accommodate group health plans like Kaiser, which did not use traditional fee-for-service systems?

As sign-up day approached, President Lyndon B. Johnson put the Veterans Administration and army hospitals on alert to insure that nobody was denied care, particularly African-Americans in the South. LBJ also readied a fleet of helicopters to transport patients in case newly insured seniors overwhelmed their local hospitals on "M Day."

Some of the most difficult challenges revolved around recruiting elderly Americans to enroll in the program by the March 31, 1966 sign-up date. Deploying resources across the federal government, including enlisting the Forest Service to track down senior citizens in isolated rural locations, "Project Medicare Alert" hired 5,000 new, part-time workers to sign up often reluctant elderly Americans. Newspapers reported concerns about the costs of the new program, widespread confusion over the available coverage and people slamming their doors shut on government employees.

Much like the history of Social Security, Medicare has also experienced repeated tweaks, expansions and improvements, ranging from new coverage for catastrophic care and prescription drugs to changing eligibility rules and financing formulas.

Implementing large-scale social programs, as the history of Medicare and Social Security demonstrate, rarely run smoothly. A large swath of the American public seems to understand this.

Despite the recent orgy of criticism, polls show that majority of Americans still support the law or believe it doesn't go far enough.

For better or worse, today's retirement plan infrastructure, with its complex mixture of Social Security benefits, privately-run but publicly-regulated pension plans, and tax supported 401k and 403b savings schemes, took decades to build. So did Medicare.

A comparable effective national healthcare system could never emerge overnight.

(Bruce J. Schulman, William E. Huntington Professor of History at Boston University, is the author of "The Seventies: The Great Shift in American Culture, Society and Politics" and "From Cotton Belt to Sunbelt: Federal Policy, Economic Development and the Transformation of the South 1938-1980". Opinions are his own.)