In a fit of bipartisanship, and no small amount of political expediency, President Ronald Reagan reached out to congressional Democrats to create new benefits in Medicare: "a ceiling on hospital and doctor bills, expanded payments for nursing home care and prescription drugs, and much more." Here's how it all started.



The present act originated in a 1983 recommendation by Dr. Otis R. Bowen, then chairman of a statutory Advisory Council on Social Security. Dr. Bowen, a former Governor of Indiana, became Secretary of Health and Human Services in 1985, and that year he drafted a legislative proposal with Thomas R. Burke, his chief of staff. The Bowen proposal was a basic version of the bill that finally became law. It placed a $2,000 ceiling on out-of-pocket payments by Medicare beneficiaries for hospitals and doctors. The program would pay for two hospitalizations, requiring the beneficiary to pay $500 each time, and for 20 percent of approved doctor bills until the $2,000 was used up. Thereafter all hospital and doctor costs would be covered. Then came the run-up to the 1986 Congressional elections, in which Democrats were preparing to assail the Reagan Administration's efforts to delay the scheduled cost-of-living increases in Social Security benefits. The President was eager to contain the political damage, and in his State of the Union Message that year he asked Secretary Bowen to revive the proposal on care costs. The President sent the proposal to Congress in February 1987. ''I am asking Congress to help give Americans that last full measure of security to provide a health insurance plan that fights the fear of catastrophic illness,'' he said in his legislative message. ''For too long, many of our senior citizens have been faced with making an intolerable choice, a choice between bankruptcy and death.'' Representative Thomas S. Foley, the Washington Democrat who was then majority leader, observed the following year: ''The White House found a way to appear responsive to the needs of the elderly. It was good politics, as well as good, substantive legislation.''

But it wasn't such good politics. See, the new benefits came at the expense of the beneficiary: the entire cost of the program was covered by increased Medicare premiums and a surtax, albeit a progressive one, on retirees. The other problem was a bit of bait and switch. While it was actually called the Catastrophic Coverage Act, it didn't actually provide much in the way of assistance for long term nursing home care, which was deemed way too expensive to include. For many seniors, the extra benefits provided were duplicative; they already had them through the retirement or pension benefits from their former employers. Having to pay extra in premiums, and potentially extra taxes if they reached the income threshold, was not acceptable to many.

Nonetheless, the law passed with House Ways and Means Chairman Dan Rostenkowski doing the heaviest lifting. Reagan signed it on July 1, 1988, "at the behest of Vice President George Bush, then in the middle of his Presidential campaign."

And then the seniors revolted, both against the proposal and against AARP, which was then supporting it.



From his retirement home in Las Vegas, Daniel Hawley, a 64-year-old former airline pilot, has helped organize the stunning grass-roots protest that has shaken AARP and pushed this largest expansion of Medicare benefits to the brink of congressional repeal. "They thought retired people were sitting around doing their ceramics and their little aerobics classes in senior centers and wouldn't give any fight," said Hawley. "Well, they found out differently."

The program came to be recognized as one without a constituency. ''There's no public support for this program,'' said Representative Brian J. Donnelly, Democrat of Massachussetts. Mr. Donnelly co-sponsored the measure to repeal the program. ''You wouldn't get those votes in the House if there was public support,'' he said. [...] In debate yesterday, Representative Porter J. Goss, Republican of Florida, told the House, ''The seniors of this nation have made themselves heard in every Congressional district in this country.'' Representative Barbara B. Kennelly, Democrat of Connecticut, said, ''The message has come in hard and clear from the people of the U.S.: repeal.''

On Nov. 22, 1989 , the last day of the session, Congress repealed the law.Behold the power of pissed off and activated senior citizens. Again, the Catastrophic Coverage Act was actually providing some expanded benefits to seniors, it was something intended to help them. But it came wrapped up in premium and tax increases. No one knows their monthly intake and outflow like America's senior citizens, and those extra payments loomed large. Now imagine the reaction to actual, compounding benefit, every year of a senior's lifetime, and what that will mean for any politician who agrees to it.

If 2010 wasn't enough of a cautionary tale for current Democratic lawmakers, then they just need to remember 1989, and Dan Rostenkowski being chased down the street by an angry mob of gray-hairs.

