It is no accident of history that LDI, the first institute of health economics in the United States, was founded at Penn in 1967, in the wake of the passage of Medicare and Medicaid. Fifty-two years ago, on July 30, 1965, President Lyndon Johnson signed Medicare and Medicaid into law. Over the next two years, more than 29 million people gained health coverage through these programs. By 1967, as Alice Rivlin recalls, economists were sounding an alarm about rising Medicare costs and reporting to the President that projected growth would be unsustainable.

Fast forward to now. Medicare covers 55.5 miilion people; Medicaid covers 68.8 million and is the largest single insurance program in the country. The alarms are still sounding about unsustainable growth rates in health care costs, and the expertise LDI brings to the table is as needed now as it was 50 years ago. Our early work on HMOs still echoes in newer managed care forms such as ACOs; our early work on quality still echoes through new pay-for-value mechanisms.

So to Medicare and Medicaid, happy birthday. Our founders and our fates are deeply intertwined. We look forward to the next 50 years together, as the American health care system continues its journey through what William Kissick called the “Iron Triangle”: the delicate and optimal balance among cost, quality, and access to health care.