The Politics of Policy Change Selected Titles in the American Governance and Public Policy Series Series Editors: Gerard W. Boychuk, Karen Mossberger, and Mark C. Rom Branching Out, Digging In: Environmental Advocacy and Agenda Setting Sarah Pralle Brussels Versus the Beltway: Advocacy in the United States and the European Union Christine Mahoney City-County Consolidation: Promises Made, Promises Kept? Suzanne M. Leland and Kurt Thurmaier, Editors Collaborative Public Management: New Strategies for Local Governments Robert Agranoff and Michael McGuire Competitive Interests: Competition and Compromise in American Interest Group Politics Thomas T. Holyoke The Congressional Budget Office: Honest Numbers, Power, and Policymaking Philip G. Joyce Custodians of Place: Governing the Growth and Development of Cities Paul G. Lewis and Max Neiman The Government Taketh Away: The Politics of Pain in the United States and Canada Leslie A. Pal and R. Kent Weaver, Editors Healthy Voices, Unhealthy Silence: Advocacy and Health Policy for the Poor Colleen M. Grogan and Michael K. Gusmano Investing in the Disadvantaged: Assessing the Benefits and Costs of Social Policies David L. Weimer and Aidan R. Vining, Editors Lessons of Disaster: Policy Change after Catastrophic Events Thomas A. Birkland Making Policy, Making Law: An Interbranch Perspective Mark C. Miller and Jeb Barnes, Editors Medical Governance: Values, Expertise, and Interests in Organ Transplantation David L. Weimer National Health Insurance in the United States and Canada: Race, Territory, and the Roots of Difference Gerard W. Boychuk Out and Running: Gay and Lesbian Candidates, Elections, and Policy Representation Donald P. Haider-Markel The Politics of Ideas and the Spread of Enterprise Zones Karen Mossberger The Politics of Unfunded Mandates: Whither Federalism? Paul L. Posner Scandalous Politics: Child Welfare Policy in the States Juliet F. Gainsborough School’s In: Federalism and the National Education Agenda Paul Manna Welfare Policymaking in the States: The Devil in Devolution Pamela Winston The Politics of Policy Change Welfare, Medicare, and Social Security Reform in the United States Daniel Béland and Alex Waddan georgetown university press / washington dc Georgetown University Press, Washington, D.C. www.press.georgetown.edu © 2012 by Georgetown University Press. All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage and retrieval system, without permission in writing from the publisher. Library of Congress Cataloging-in-Publication Data Béland, Daniel. The politics of policy change : welfare, medicare, and social security reform in the United States / by Daniel Béland and Alex Waddan. p. cm. — (American governance and public policy series) Includes bibliographical references and index. ISBN 978-1-58901-884-6 (pbk. : alk. paper) 1. United States—Social policy. 2. Public welfare—United States. 3. Medicare. 4. Social security—United States. 5. United States— Politics and government. I. Waddan, Alex, 1964- II. Title. HN65.B423 2012 361.6’10973—dc23 2011035688 This book is printed on acid-free paper meeting the requirements of the American National Standard for Permanence in Paper for Printed Library Materials. 18 17 16 15 14 13 12 9 8 7 6 5 4 3 2 First printing Printed in the United States of America This book is dedicated to Angela and Cheryl This page intentionally left blank Contents Preface ix Introduction 1 Chapter One: Welfare Reform, 1996 24 Chapter Two: Medicare Reform, 2003 74 Chapter Three: The Failed Attempt at Social Security Privatization, 2005 125 Conclusion 167 References 179 Index 213 This page intentionally left blank Preface I n March 2010 President Barack Obama signed the most comprehensive health care reform in the United States since the enactment of Medicare and Medicaid forty-five years earlier. In order to increase coverage to the uninsured and con- trol rising health care costs, among other things, this reform brings comprehensive change to some aspects of America’s complex public–private health insurance sys- tem and revises other parts in a more incremental manner. The heated nature of the debate surrounding this key legislation and the compromises necessary for the president and the Democratic majorities in Congress to enact a reform in the first place showed once again how the politics of policy change is both risky and com- plicated, especially when it involves dealing with powerful vested interests and a nervous public. This in turn illustrates the need for scholars and other commenta- tors on public affairs to have a proper understanding of the dynamics of the pro- cess of policy change. What motivates political actors and policymakers to pursue a reform agenda? And what are the opportunities and challenges they face? To help deepen understanding of these processes, this book explores the politics of policy change in the United States through a systematic comparison of three major policy areas and policy episodes: the 1996 welfare reform, the 2003 Medicare reform, and the 2005 failed attempt to privatize Social Security. These three cases had quite distinct immediate outcomes. First, there was a sharp, conservative reform of welfare as the Aid to Families with Dependent Children program, initially established in the 1930s, was ended and replaced by a new program called Temporary Assistance to Needy Families (with an empha- sis on “Temporary”). Second, during the George W. Bush years, legislation was enacted to reform Medicare but, as a social policy reform, this was less radical and more ideologically ambiguous. This is true because the introduction of a pre- scription drug benefit for seniors was accompanied by a series of less publicized but potentially significant conservative minded changes. Finally, the attempt to reform Social Security ended in dismal legislative failure. Despite these different outcomes, the three cases share common themes, particularly with regard to the importance of ideas and their interaction with other causal factors such as issue ownership and institutional legacies. Placing our discussion of the three episodes and their aftermath in the context of these factors allows us to develop an empiri- cally grounded and integrated analytical framework that should help others to bet- ter grasp the politics of policy change in the field of social policy and well beyond. In putting forward this framework, this book explicitly contributes to the debate about the nature and the sources of policy change in advanced industrial