Historians of the United States have long contended that the study of governmental institutions, including the history of public policy, is no longer central to the teaching and writing of American history. Some lament this development; others hail it as a sign that other worthy topics are finally getting the attention they deserve. Yet is it true? The recent outpouring of scholarship on the relationship between the state and the market, or what an earlier generation would have called political economy, raises questions about this venerable conceit. Indeed, if one were to pick a single word to characterize the state of the field in the history of American political economy, it might well be “robust.”

There was a period in America when the political science and history disciplines were not that far apart. Both approaches to analyzing civil society had evolved out of an old Anglo-American tradition where these two subjects, along with philosophy and literature, were all considered in relationship to one another. During the formative years of the American research university, which took place at the turn of the twentieth century, both disciplines shared common founding fathers. A classic example was Charles Beard, whose influence spanned both areas of scholarship. Indeed, it was a breakaway faction of the American Historical Association that formed the American Political Science Association.

In a way, there is an unspoken subtext to this “state-of-the-field” panel on political history. For at least some of us, there is a whisper of uneasiness associated with this topic, a small internal voice concerned about the health and survival of political history. In the relatively recent past, the flowering of social history challenged and eventually toppled the dominance of political history—a fine development, given that in the long reach of history politics is only part of the story. Unfortunately, this shift of balance left some scholars with a bad taste in their mouths. Some social historians have retained a lingering antipathy toward political history as a looming presence—an elite-driven, chronologically organized, “imperalist” narrative that threatens to subsume scholarship once again. Some political historians, in turn, feel besieged by social history and its seeming focus on minority and underprivileged populations to the exclusion of much else. Both of these emotionalized outlooks rest on distorted and exaggerated assumptions. But for many political historians, the end result is a current of nervous tension about the place of their field in the larger scheme of historical scholarship.

The conventional wisdom on how managed care came to replace traditional fee-for-service reimbursement as the nation's dominant mode of health insurance is that enlightened businesses and their employers led the way in responding to the emergence of market forces in health care in the 1990s. A common textbook treatment of managed care's ascendancy puts it this way: “Transformation of the health care delivery system through managed care has been driven principally by market forces, and reinforced by government.” The irony is that the opposite sequence of events is a more accurate portrayal of what actually happened. As this article shows, the transformation of America's health-care system through managed care was initially triggered—albeit indirectly—by government actions and then driven by market forces. In other words, before business behavior was a cause of managed care's extraordinary growth, it was largely a response to and an unintended consequence of government policymaking: in this instance, Congress's reform of Medicare in 1983.

As late as the 1970s, only a handful of scholars called themselves children's historians. Thirty years later, much had changed. Though nobody possessed an accurate headcount, a new historical field had emerged, with a burgeoning literature, Web sites, and specialized societies.