Health policy debates rarely include broad review of cross-national experiences with related social policies. This article addresses the connection between medical policy concerns and the development of welfare states in the advanced industrial democracies following the oil crisis of 1973–74. After examining the evidence about what actually occurred during the “crisis” years of the welfare state, the article relates the debates about the welfare state's crisis to American concerns about medical care in the 1980s. The distinctive American response to the fiscal strains of stagflation—more severe cuts in social spending than necessary based on the country's economic strength, threats of bankruptcy to produce small adjustments to large programs, and inability to address the problems of medical care as anything other than budgetary strain—is linked to American dissensus about the purposes of the welfare state.

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