From National Health Insurance to Medical Indigency: The Expansive Possibilities and the Contractive Realities of Medicaid Reform at the End of the 1960s

Alongside former president Harry Truman, on July 30, 1965, President Lyndon B. Johnson signed legislation that included Medicare and Medicaid as part of the Social Security Act. Stylized as the triumph of a Progressive-era and postwar effort to achieve national health insurance, Medicare and Medicaid fell short of the ideal of universal coverage. Some states, however, seized a vague statute for medical indigency that enabled adults who did not qualify for Medicare or who lacked private health insurance to use Medicaid. States such as California, New York, and Massachusetts used expansive definitions of medical indigency to expand coverage to this population. Other states, particularly in the South, resented this use of federal matching dollars and pushed to constrain medical indigency to the federal poverty level. This paper explores the expansive possibilities of the category of medical indigency between Medicaid’s initial passage in 1965 and its first amendment in 1967. Rooted in transcripts from 1968 regional Medicaid hearings in eleven major American cities, this paper reconstructs the debate between liberal and conservative states over the definition of medical indigency. While Medicaid was designed as a cost-sharing program between the federal government and the states, this fiscal arrangement did not preclude scrutiny between states. The interplay between regional debate and national reform both responded to and constrained state and local democratic demands to expand Medicaid. At the same time, rising income, improvements in medical technology, and government policies that promoted a link between health insurance and employment increasingly left those who agitated for an expanded definition of medical indigency in the political minority. This paper thus illustrates the contingency of local debates within a national political economic framework to show how reform and expansion efforts limited the parameters of policymaking in ways that have come to perennially define the politics of Medicaid.