The awful Social Security and Medicare rollouts

FDR signs the Social Security Act in 1935.

FDR signs the Social Security Act in 1935.

This morning, Celeste Headlee Tweeted:


She was referring to this Reuters story about what a mess Social Security and Medicare were at first:

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….

Social Security’s first baby steps proved especially uncertain. Of course, opponents denounced the pension plan as the leading wedge of a socialist revolution….

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….

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….

And so forth. Yet somehow, the nation survived it all…

29 thoughts on “The awful Social Security and Medicare rollouts

    1. Juan Caruso

      Comparisons of the Obamacare launch with Social security and Medicare rollouts would be legitimate on an “apples to apples” basis, but as you imply, website performance is apples to oranges. What the public got for Medicare and Social Security, however, from leading politicians at the time were not the obvious, recurring misrepresentations about keeping the plans you like and have now as well as promised affordability.

      Not only does AT&T advertise at Brad, another AT&T site featured this “news”, today:
      “Top 5 Product Launch Failures – From the launch of the Obamacare website to New Coke, Yahoo Quick Hits gives you #THELIST of the top five product launch failures.”

      Call be skeptical or perceptive, but I see a concerted PR attemp to salvage the legacy, not only of Obamacare, but of a president who has mislead millions of citizens on a key overreach of federal government.

  1. Doug Ross

    The ONLY reason Social Security and Medicare have been able to survive is because they are mandatory government programs. You cannot opt out. You have no other choice. They are rife with inefficiency, fraud, and mismanagement. They don’t reflect the changing (aging) demographics of the population. The sheer lunacy of the Social Security system and its bureaucracy is stunning. It can’t work unless there are a significant number of contributors for each recipient. The ratio of payers to payees has dropped considerably and will reach a tipping point in our lifetimes.

    1. bud

      Come on Doug, that’s nonsense. Social Security works so much better than any government program in history. Given the increasing tendency of private sector investment companies to add endless fees onto 401k, just like the big banks have done with checking and savings accounts, it’s looking more and more like a very good investment for retirees. I know dozens of people who have enjoyed their monthly benefit check for decades. It’s the salvation of millions upon millions of Americans. My only complain is that the rich don’t pay more into it.

      As for Medicare it’s far more efficient than private health insurance plans that hopefully will be long gone in a few years and replaced by a much more sensible approach. So much of the squacking over the ACA is because big insurance companies can no longer pay out as little as 50% of their premiums in actual medical care. Worse is the grotesque salaries the CEOs of big medical companies make for basically sitting on their fat behinds and trying to deny treatment. If you’re on Medicare you aren’t denied treatment coverage because of some obscure clause in an impossible to decipher insurance policy. And you won’t reach a $million lifetime limit on payment. Plus Medicare can negotiate with the monopolistic healthcare providers that offers patients some measure of countervailing power that is missing from the failed free-market approach.

      Given the staggering profits made by big pharma and big insurance it’s no wonder they’re fighting so hard to kill the ACA. All this hubbub over patients losing their plans is because of a mere 2 million insured who are “losing” really bad insurance. I’ve heard for years that bad healthcare insurance is worse than none and that’s why there are so many of these stories about folks losing their plans.

      If we can see this thing through the ACA will be as cherished as SS or Medicare within a few years. And the Libertarians will rant and rave, without any facts, about what a failed program it is.

      1. Barry

        As someone who use to work within the Medicare contract itself, I can tell you there is more fraud in Medicare that most Americans would ever want to believe. I personally saw (and I mean I actually saw the names, the amounts, and what was ordered that was fake) so many times I lost count.

        The truth is – Medicare is largely administered by private health care insurance companies. However, they do have to abide by many government requirements – since it’s based in federal law.

        When I worked there, there was so much fraud in medicare just in Florid that is was disturbing.

        and of course like a lot of things regarding the government, they weren’t really interested in pursuing a lot of the fraud issues- until certain people complained. Enough said on that.

      2. Doug Ross


        Do the math. Using your own projected Social Security income, how many people paying 13.% of their income are needed to cover your monthly Social Security check? There’s no pool of money with your name on it with your contributions over the years. There is only the expectation that someone else will pay for it.

        Let’s say you end up with a $2000 a month check. You need about 4 workers making $50K each to cover your payment. What’s going to happen when we hit the peak baby boomer years in retirement? Considering birth rates are shrinking, the ratio isn’t going to be there.

        I know, I know. You can always raise taxes on the rich. That’s what they are there for – to make sure your retirement is covered. Good thing they were “lucky” enough to make those high incomes in a capitalistic society.

        1. Doug Ross

          Here’s the data from the Social Security Administration on workers to beneficiaries ratios:

          The number of beneficiaries has grown by 8 million since 2000 while the number of workers has only grown by 1 million. 3.4 workers per beneficiary in 2000 versus 2.9 ratio now. And we’re just heading into the Baby Boomer retirement phase. It’s going to get worse over the next two decades.

          Also, here’s a chart from SSA showing the increases in the Social Security tax since its inception:

          In 1980, the combined FICA tax rate for employer/employee or self employed was 8.1% of 25,900 maximum. It is now 15.3% of 106,800 maximum.

          That’s how you “sustain” a program like Social Security. By raising the taxes paid into by mandatory legislation. It would collapse without that power.

      3. Juan Caruso

        “Social Security works so much better than any government program in history.” – Bud

        No doubt, but HOW that is not say very much… Three large failures have been reported this month alone, and one inlvoves a fraud network involving lawyers and a judge:
        NEW YORK (CNNMoney) October 29, 2013
        [T]he Social Security Administration has made $1.3 billion in overpayments in just two years, according to a recent GAO audit.

        Some of that has gone to fraudsters, while other payments have been improperly doled out to innocent people who don’t realize they are being overpaid or have tried to stop the erroneous payments.”

        The Washington Times October 22, 2013 – “Social Security paid prisoners $1M in disability”

        Daily Finance October 7, 2013 – WASHINGTON — “A retired Social Security judge in West Virginia collaborated with a lawyer to improperly award disability benefits to hundreds of applicants, according to a report released Monday by congressional investigators.

        A new government report documents what appears to be a breathtaking scam involving lawyers, medical professionals and an administrative judge in Eastern Kentucky who may have snookered SSDI programs out of billions of dollars.”

  2. Bryan Caskey

    Stats on the passage of the Social Security Act of 1935:

    Yes: 284 (Democrats) 81 (Republicans)
    No: 15 (Democrats) 15 (Republicans)

    Yes: 60 (Democrats) 16 (Republicans)
    No: 1 (Democrats) 5 (Republicans)

    Now, think about how the ACA was passed. I don’t need to give you the breakdown. You know it already. The president and the Democratic Party pushed us into (in my opinion) a bad law. The GOP opposed the law on principle. A single party — the Democratic Party — owns this law in a way that no party has had complete ownership of any major social legislation in a century.

    1. bud

      So? A large majority in both houses passed it and POTUS signed it. It’s irrelevant how it broke down along party lines. The vote to go to war in Iraq was bipartisan too. And look how that turned out.

    2. Mark Stewart

      Bud’s right on this. The composition of the parties have significantly changed over time; you can’t compare one decade to another as far as the meaning of party voting within the legislature goes.

  3. Bryan Caskey

    And the website is just the tip of the iceberg that you can see. According to CBS, more than 2 million people have been told they cannot keep their current insurance policy…so far.

    Remember “If you like your plan, you can keep your plan.”? Remember that? Yeah, not so much. NBC is reporting that HHS is writing regulations intentionally narrowly so as to cause any change whatsoever to a plan to make that plan lose it’s “grandfathered in” status.

    These regulations come from HHS. They aren’t a statute; they are regulations that interpret the ACA. And regulations from an Agency, like HHS, being a creature of the Executive branch, can be rewritten by the executive branch at any time. We don’t need a law for this. We just need Obama to pick up the phone and call HHS. He can tell them to rewrite their regulations.

    Obama has it within his power to call up the HHS reg-writers and instruct them to honor the promise he made time and again for two years. And he won’t, because he is determined to break that promise.


    The exchanges are basically high-risk pools. If you don’t force people (like me, who are young and have private coverage) to lose their current coverage into what is effectively a high-risk pool, so that they could subsidize high-risk clients, the public would have rejected the law even more strongly than he did.

    Remember that scene from “Animal House” where Otter explains Flounder’s mistake?

    1. Barry

      Most 20 somethings don’t want health insurance- and certainly aren’t going to pay for it.

      I work in the insurance field (my company doesn’t sell health insurance btw) but for years now part of my job was to ask employers about what type of health insurance they offered- if any- and then how many of their employees actually choose to purchase the insurance.

      It’s rare- but even when I run across a company that pays 100% of the costs (single) of health insurance – the employer always has the same complaint to me- and it’s like clockwork- I can always predict what they are going to tell me: “I pay 100% but I can’t get my younger employees to participate. I try to tell them what a big benefit this is to them but they aren’t interested.”

  4. bud

    Bryan I completely agree there are a number of things that need addressing with the ACA. So rather than whining about irrelevant stuff let’s make some improvements that make it work better. I would suggest some type of 20 year grandfathering in of existing plans even if they are really, really bad. But the benefits MUST remain the same but insurance companies would be allowed to raise rates. We could also take a look at provisions to provide maternity benefits for 60 year old women (if that really is true, which I suspect is not).

    My only fear is that we go back to a completely failed system that allowed 10s of millions to go uninsured while providing very expensive but lousy policies.

    1. Bryan Caskey

      So, “If you like your plan, you can keep your plan” has turned into, “You morons had crappy plans that you’re not allowed to keep, and we’re doing you a favor by forcing the cancellation of your plan that you stupidly selected; good thing government is here to take care of you.”

      Doesn’t really have the same ring to it, does it?

      Don’t get me wrong, I’m not happy that this is a flaming train wreck. I’m going to lose my insurance policy soon, once it’s no longer “grandfathered in”. No way I’m paying 300% more. I’ll pay the tax.

      The ACA isn’t going to work. It had such a small chance of working if it was implemented perfectly, and it has been implemented in the absolute worst way possible. Just wait until the employer mandate comes back. Scores of millions of people will start getting cancellation letters.

      That reminds me. I gotta go buy some more ammo.

    2. Doug Ross

      “completely failed system ”

      Its the hyperbole, bud, that brings you down every time. There was no completely failed system. There was a system that the majority of Americans were happy with. There were a minority of people who were not able to obtain insurance coverage. Obamacare SHOULD have addressed only that problem. Were there other issues in the insurance system that was in place prior to Obamacare? Sure. But many of them were inflicted by government activities: Medicare reimbursement rates that were below market causing costs to be shifted, drug patent laws that allow pharmaceutical companies to price gouge for longer periods of time, laws that allow insurance companies to hold monopolies within states rather than allowing free market competition… the list goes on and on.

      1. Bryan Caskey

        I’m looking forward to the total amount of Orwellian euphemisms that come out of this.

        1. You haven’t had your insurance cancelled. You’ve been “transitioned” to other insurance.
        2. The website has never crashed. It’s just “resting”.
        3. You’re premiums aren’t going up, they’re being “recalibrated”.

      2. bud

        Just got the Halloween decorations out. Time to take a break before raking the lawn.

        No Doug it is not hyperbole to suggest the healthcare system pre-2009 was a failure. It was a total failure. Obamacare won’t fix everything, it’s too complicated for one thing but mainly folks on the right are doing their best to make it fail. Given the shockingly high increase in rates of medical spending we had in this country in the early 2000s combined with the poor outcomes compared to other industrial countries yes it was clearly a failed system and getting worse.

        And frankly the suggestion that the majority of people were happy with their plans is laughable. Folks with insurance were going bankrupt because there plans either denied coverage or the upper limit was met. Other folks put off treatment because they were uninsured. And even folks like me who were somewhat content with their plan never really understood what the billing was all about. Generally I just sighed and went along with whatever was billed simply because I couldn’t make any sense of it. And I was one of the lucky ones. No Doug everyone I know who had to deal with the private healthcare mess were generally not happy with their plan. Folks on Medicare on the other hand are almost always happy. And even with the alleged fraud that everyone claims exists it still provides cheaper than the private sector healthcare.

        So let’s work together to make our healthcare system better rather than going back to the failed greed-driven approach of the past. Otherwise America stands to become the laughing stock of the world by denying millions sensible healthcare. Wouldn’t that be better than suggesting we go backward to a time when clearly the system was hopelessly flawed and getting worse?

        1. Doug Ross

          bud – there’s no sense debating when one person makes statements that are full of gross exaggerations. Tens of millions of Americans who were not on Medicaid or Medicare were perfectly happy with their employer provided insurance pre-Obamacare. SOME people (the White House claims it’s 5% of Americans) who had individual plans had problems with insurance companies. That’s not a failure of the system as a whole.

  5. tired old man

    Maybe a more apt comparison might be to look at the Patient Protection and Affordable Care Act vs. the Medicare Part D drug program under W Bush. Both are going to start up with major hiccups, yet one is under continued partisan fire while the other was a bipartisan supported effort. Medicare Part D is now acknowledged to be providing significant health and economic savings to the older generation. Obamacare will, too.

    There is a story in today”s NY Times that says in part: “Whites tend to hold negative views of Obamacare, while blacks tend to like it. … The statistics mirror the core philosophical division in Washington’s fierce battles over taxes, spending and debt. Whites say government does too much, while blacks and Hispanics say it should do more to meet people’s needs.

    “Those attitudes, and the continued growth of the nonwhite population, have produced this sometimes-overlooked result: American politics has grown increasingly polarized by race, as well as by party and ideology.”

    It goes on to say — and this is the important part — “That reality promises to command increasing attention as the day draws closer when whites will no longer make up a majority of the nation’s population, which the Census Bureau projects will be in 2043.”

    So here is the largest question on the table: If politics is increasingly becoming polarized by race — and racial lines continue fossilizing into rigid political positions — who do you think will win this battle of the womb that in less than a generation will culminate in a seismic event in our national demographics?

    I am thinking back to the last time that happened — around 1890 in South Carolina, where an entrenched white minority enacted Jim Crow laws that were both carrot and stick for the migration of the black majority out of this state (and the South) and up to the north.

    Perhaps Tillman and his pals died thinking they were the winners — not comprehending how a Civil Rights Act and the Brown Vs. Board of Education decision would both shatter and shame their legacy.

    So, with my tiptoes in 2013 and pretending to be standing in 2043 and looking back at the intervening years, what would I have learned in those 30 years (to be)? I probably would think that if white Republican politicians were truly looking out for the interests of their white world, they would begin working to shape what is to come in a far more preferable fashion than what their current “over my dead body” policy portends. They might begin now to compromise, they might want to join hands with their political adversaries to temper the rigidity of American political thought that is moving inexorably to 2043. It will be a new world — and numbers will count. A white minority that is a vibrant and constructive part of a political majority sure beats a white minority inheriting decades of increasing ugly acrimony.

    1. barry

      Medicare Part D wasn’t bi-partisan. Democrats were vocal opponents of President Bush trying to incorporate it when he first rolled it out.

      As even liberal Sam Stein said earlier this week “Democrats were against Part D for partisan reasons”

      Now they did come around – which the Republicans didn’t do (and are screwing up by not doing) – but it’s wishful thinking that Democrats supported Part D in large numbers when President Bush rolled it out.

    2. Doug Ross

      Sure, it’s a race thing. That’s what it always is. Is it really surprising that the black community of which 90% or more voted for Obama would support his programs? What percent of that 90% voted for Obama simply BECAUSE he is half black?

      I would bet a large sum of money that those people most impacted by Obamacare are mostly white. That alone invalidates the argument.

  6. Doug Ross

    Two videos of Nancy Pelosi and Hillary Clinton in 2006 talking about Medicare Part D implementation – one month after the go live – using the same rhetoric Republicans are using today. Anyone who votes for “traditional” Democrat or Republican politicians has been duped. They are all driven by greed, power, and ego.


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