In 1989, in response to growing public concern about spiraling health care costs, and particularly "catastrophic" costs bills for major procedures that could run into the tens or even hundreds of thousands of dollars, potentially bankrupting even well to do families Congress passed the first substantial social "safety net" program to be enacted since the Great Society years of the 1960s. The Catastrophic Coverate Act of 1988 called for an expansion of the Medicare publicly funded health care system to provided senior citizens with protection against catastrophic costs. It was an expansion of benefits for which senior citizens' organizations had vigorously lobbied (Longman, 1989).
The public response among the elderly (who alone were covered) was, however, far from enthusiastic. The coverage was funded by an increase in Medicare premiums, particularly for the relatively affluent, and the tax was levied at the "front end" before the benefits actually began to be paid out. The result, in the conservative and anti tax atmosphere of the late 1980s, was a political firestorm. The well to do elderly, who were hit hardest (though not particularly hard) by the tax, rose in rebellion. The elderly of more modest means, who would most benefit from the expanded coverage, were largely silent. They were less well organized than their better off contemporaries. Moreover, since the benefits had not yet come "on line," the potential beneficiaries had stake in a program from which they had not yet benefited. Congress, bending under the pressure, did an awkward about face and repealed the measure (Weisberg, 1989).
No one had much reason to be happy about the outcome. Congress was embarrassed. The more affluent elderly saw their taxes slightly reduced, but any savings were likely to be eaten up by "medigap" coverage premiums (which will be discussed below). The elderly of more modest means, and all those under ag...