Misrepresented Interests: Business, Medicare, and the Making of the American Health Care State

Abstract

A belief that there is a pervasive and enduring adversarial relationship between business and the welfare state is shared widely across scholarly disciplines engaged in historical and comparative analysis of social politics. According to that view, each stage in the expansion of the American welfare state was a defeat for capitalists. Detailed evidence on the politics of health care, with special focus on the passage of Medicare in 1965, casts serious doubt on this dominant view about class politics, the welfare state, and the power of business. It shows that much of the literature takes a hazardous inferential leap from national business organizations’ official positions against reform to overconfident conclusions about actual business opinions. The literature also mistakenly discounts evidence of business support for moderate reforms as strategic camouflage of actual opposition designed to head off more radical ones. Extensive evidence reveals enormous division within business rather than unity about the health care state, and a great deal of support from large and powerful corporations for its creation and expansion. Evidence about the economic implications of health insurance for businesses, including before and after Medicare, and all the way to the Affordable Care Act of 2010, indicates that the support was genuine, not strategic, and that sometimes it was critical for passage. That support calls for new thinking about how to answer the perennial question about class power in America: “Who actually governs?”