Recurring Quest for Health Reform: First Enthusiasm, Then Failure
The usual beneficiaries? Only some of us.
The quest for guaranteed health care is an old one. Reformers have sought major changes five times during the last century, and at astonishingly regular intervals. From the sweeping pronouncements of Theodore Roosevelt at the dawn of the Progressive Era to President Clinton’s foundering attempts led by first lady Hillary in the mid-1990s, the story mostly repeats: Proposals to expand coverage are often considered but rarely enacted, and then only on a piecemeal basis.
Every 15 years or so, movements arouse great enthusiasm, only to fail spectacularly. [47]In the end, peripheral improvements have benefited specific populations — the elderly, the disabled, low-income children and certain low-income adults. But universal coverage, though enticing to both politicians and the body politic, is as elusive as the Holy Grail.
Theodore Roosevelt’s “Bull Moose” Progressive Party made national health insurance, modeled on workmen’s compensation, a main plank in its party platform in 1912. One of the most sweeping health-reform attempts ever advanced by a presidential candidate, it called for employers, employees and society at large to pay for safeguarding Americans “through insurance” from “the hazards of sickness, accident, invalidism, involuntary unemployment and old age.” [48]
Like every major plan to follow, it went nowhere. And yet certain ideas were set in motion. By 1917, model health-insurance bills began popping up in state legislatures, and in 1929 the forerunner of Blue Cross emerged, establishing the pattern: Major proposal, major defeat, small steps forward.
After Social Security was created in 1935, supporters began urging a second step — a national health-insurance system.
In 1945, President Harry S. Truman sought to include universal health insurance with Social Security, noting that “in a nation as rich as ours, it is a shocking fact that tens of millions lack adequate medical care.” [49]
In a stirring speech four years later, he again declared his commitment: “We need — and we must have without further delay — a system of prepaid medical insurance which will enable every American to afford good medical care.” [50]
Yet Truman faced formidable foes. The AMA branded his plan “socialized medicine.” Enemies kept asking his physician, Wallace H. Graham, “are you a socialist, doctor?” [51]By the end of his time in the White House, Truman had given up his vision of universal coverage.
During World War II, health insurance had become a common employee benefit, primarily as a way to attract workers in a tight labor market. During the four decades after the war, the number of Americans with some form of health insurance increased dramatically. In the 1960s, unions made health benefits a key demand in collective-bargaining negotiations. Many experts believed that because so many workers now could visit the doctor without ever seeing a bill, health insurance actually drove up demand for medical services.
Perhaps because of the growing popularity of health insurance, Truman’s idea of insuring Social Security beneficiaries persisted. In 1965, President Lyndon B. Johnson signed legislation launching Medicare in a ceremony held, as a tribute, in Truman’s hometown of Independence, Mo. It was the cornerstone of Johnson’s so-called Great Society program to end poverty.
Johnson also signed Medicaid into law, providing health benefits for low-income pregnant women and children, disabled Americans and low-income elderly needing long-term care. “No longer will older Americans be denied the healing miracle of modern medicine,” Johnson said. “No longer will illness crush and destroy the savings they have so carefully put away over a lifetime.” [52]
President Richard M. Nixon briefly revived the idea of universal health insurance when he proposed making comprehensive, high-quality health care “within the reach of every American.” In his 1974 State of the Union address, he suggested expanding Medicaid and Medicare to provide health insurance “to millions of Americans who cannot now obtain it or afford it.” [53]His proposal got serious attention in Congress — only to be doomed by the Watergate scandal that engulfed his presidency.
Meanwhile, skyrocketing hospital costs had caught the government’s attention. Nixon and another Republican president embraced HMOs as a way to control costs. In 1973, Nixon signed the Health Maintenance Organization Act, requiring businesses with more than 25 employees to offer at least one HMO as an alternative to conventional insurance. Then, in 1982, President Ronald Reagan gave Medicare patients the option of signing up for an HMO. Managed-care organizations composed of loose networks of doctors began to proliferate, and by 1995, nearly three-quarters of covered workers were insured by an HMO. [54]
Clinton Debacle
Suddenly, in 1991, health care resurfaced as a potent political force. Harris Wofford, an upstart Democratic Senate candidate from Pennsylvania, declared: “If a criminal has a right to a lawyer, working Americans have a right to a doctor.” His message had such appeal that he resoundingly defeated a popular two-time governor.
On the advice of Wofford’s adviser, James Carville, then-Gov. Clinton appropriated Wofford’s thunder, riding the health-care theme to the Democratic nomination in 1992. In his acceptance speech, Clinton vowed to “take on the health-care profiteers and make health care affordable for every family.”
In 1993, Clinton unveiled his “Health Security Act,” a plan largely crafted under the direction of Mrs. Clinton. Employers would pay 80 percent of the premiums to insure all workers, while the government subsidized coverage for everyone else. Clinton said he wanted “to reform the costliest and most wasteful system on the face of the Earth.” [55]
Yet the president’s own party fractured badly. Some Democrats proposed a “single-payer” government system, similar to Canada’s, which would pay private health-care providers. Others sought a scaled-down version of managed competition, which would have failed to guarantee coverage to many Americans. Republicans, meanwhile, preferred compelling every American to buy insurance, using government dollars only to help the poor.
Congressional Republicans accused Clinton of trying to establish yet another inefficient, expensive and uncaring big-government bureaucracy. Hillary Clinton, too, attracted criticism, in part for her secretive management style. A single, compelling television ad, part of a $17 million campaign by the Health Insurance Association of America, also helped torpedo the plan. Its simple message — in which a fictitious couple, Harry and Louise, tried to make sense of the 1,342 pages of details — preyed on public anxieties. Would people still be able to choose their own doctors? Could employers afford to cover workers? Would health-care decisions be left up to government bureaucrats?
Yet some of Clinton’s ideas have been adopted by managed-care plans, helping them achieve some efficiencies and savings. [56]Enrollment exploded between 1986 and 1995, from nearly 26 million to 58 million, according to the American Association of Health Plans — yet people grew disenchanted with having to change doctors, being refused services and losing access to specialists.
Managed care’s unpopularity led to the “patients’ bill of rights” legislation passed by the House last August, which would allow patients to sue their HMOs, but on a limited basis.
Deep-rooted ambivalence underlies America’s stance on health care. It is viewed as a social good, but also a market commodity. Americans seem to consider it a basic need to which everyone is entitled, but also something to be earned that should be subject to free-market forces. One commentator has described the conflict in health care as the “struggle for the soul of health insurance.” [57]
[47] Jacob S. Hacker and Theda Skocpol, “The New Politics of U.S. Health Policy,” Journal of Health Politics, Policy and Law, April 1997, pp. 315-38.
[48] See Nathan Miller, Theodore Roosevelt: A Life (1992).
[49] State of the Union address, Jan. 5, 1945.
[50] State of the Union address, Jan. 5, 1949.
[51] See Niel M. Johnson, oral history for the Harry S. Truman Library, March 30, 1989.
[52] From a speech at Truman’s home in Independence, Mo., July 30, 1965.
[53] State of the Union address, Jan. 30, 1974.
[54] For background, see Sarah Glazer, “Managed Care,” The CQ Researcher, April 12, 1996, pp. 313-336.
[55] Address to Joint Session of Congress, Sept. 22, 1993.
[56] Health Research and Educational Trust, op. cit. Health-cost increases reached a low in 1996, but then began rising again. Average premiums increased nearly 5 percent in 1999, more than 8 percent in 2000 and 11 percent from mid-2000 to mid-2001.
[57] Deborah Stone, “The Struggle for the Soul of Health Insurance,” Journal of Health Politics, Policy and Law (1993), pp. 287-317. See also Rosemary Stevens, In Sickness and in Wealth: America’s Hospitals in the Twentieth Century (1989).
Drugs for the Elderly
Even before the distractions of national security, an economic slowdown and the deficits in federal and state budgets, few expected much to happen on the health-care front this year.
The Clinton administration’s blistering defeat fragmented and polarized Washington over the subject of health-care reform. With Congress so closely divided, only isolated, dike-plugging initiatives can survive, and action is more likely through the private insurance sector. Meanwhile, the numbers of uninsured undoubtedly will continue rising along with costs.
A longstanding barrier to change is the sheer clout of several players with a lot to win or lose. As commentator Robert G. Evans, a University of British Columbia economics professor, has pointed out, the U.S. health-care system is “inequitable, inefficient, unpopular and spectacularly expensive — but enormously profitable for some Americans.” [58]
The health-care industry, its profits severely diminished from the boom years of the 1990s, zealously guards its turf against any threat to the status quo. Health professionals so far have contributed nearly $58 million to the 2000 and 2002 presidential and congressional political campaigns, and the pharmaceutical industry has donated another $37 million. [59]
Another barrier to change is cost. Late last year, for example, while debating legislation to stimulate the economy, Congress avoided any discussion of extending coverage to all Americans, focusing instead on the less expensive option of providing coverage to those who lose their health insurance after losing their jobs.
But even that debate exposed an underlying fault line almost certain to keep Washington in gridlock. Democrats sought subsidies to help the newly unemployed keep their insurance or to cover them in the Medicaid program. Republicans favored giving the newly uninsured tax credits to help them buy insurance. The same philosophical debate underlies current sparring.
This year, at least one major health-care issue — the cost of prescription drugs for the elderly — appears to be emerging at the top of the political agenda. With both the House and Senate narrowly divided, the balance of power in Washington could rest in the hands of older Americans, who typically play a disproportionate role at the polls in midterm elections.
Winning seven more seats would give the Democrats control of the House; just one seat in the Senate would give Republicans control there. And though the issue certainly isn’t new, the volume at which it is being debated is a new wrinkle. Equally intense is the determination of skirmishing party leaders to pass a measure this year — or blame the opposition for the failure to accomplish anything.
“No senior should be forced to choose between putting food on the table or paying the rent or buying the medicines they need,” declared House Speaker J. Dennis Hastert, R-Ill., in May as he unveiled the Republicans’ $350 billion proposal to add a prescription drug benefit to Medicare. The same day, Senate Democrats unveiled their proposal, with a price tag of $400 billion to $500 billion. Other House Democrats and Senate moderates are working on alternatives, and President Bush has his own 10-year, $190 billion version.
A group supported by the drug industry, the United Seniors Association, launched a $3 million advertising campaign supporting House Republicans. The Democrats, meanwhile, released a video attacking a promise Bush made during the 2000 campaign to “help all people with prescription drugs.” Notes the ad: “By his own estimate, Bush leaves out more than two-thirds of seniors in need of prescription-drug coverage.”
A Republican campaign memo hinted at the reason for all the fuss: “Republicans passing a prescription-drug benefit would go a long way to leaving Democrats with very little on the table to try to use against us” in the midterm elections. [60]
Despite such traditional divisions, some compromise appears in the wind, given the coalescence of the once-adversarial special interests into the Covering the Uninsured coalition. The group, which includes older Americans, doctors, insurance carriers and hospitals as well as consumer and labor groups, is waging a huge media campaign urging an immediate solution to the problem of the uninsured.
Tax Credits
President Bush proposes to help the uninsured buy private health policies by offering tax credits — $1,000 for adults and $2,000 for families — costing a total of $89 billion. But only individuals with incomes below $30,000 or families with incomes below $60,000 would be eligible. “Too many workers get no coverage at all with their jobs,” the president said. Americans should receive “the help they need when they need it.” [61]
Economists at the University of Pennsylvania and Yale University say Bush’s plan could reduce the number of uninsured by about 8 million. The administration estimates that it would help 6 million uninsured people buy health insurance each year, but the amount of the tax credit and its reach are widely viewed as inadequate. [62]
“It’s like throwing a 10-foot rope to someone at the bottom of a 40-foot hole,” says Pollack of Families USA. For instance, a healthy, non-smoking 55-year-old woman living at the federal poverty level — less than $8,860 in income — would still have to spend $4,000 to buy health insurance, he points out.
Moreover, some opponents worry that the president’s proposal could unravel the current employer-based system, which, in effect, indirectly uses premiums of the relatively healthy to cross-subsidize those needing more care.
However, even the most generous expansion of prescription-drug benefits for the elderly or tax credits for select populations would not tackle the larger problems of rising costs and America’s uninsured. Nor will they make up for ground being lost every day, as governments drastically scale back the existing social net.
Shrinking Safety Net
With dwindling discretionary reserves in the federal budget, money for Medicaid and CHIP has vanished, and many private doctors are refusing to accept new Medicare patients, because Medicare HMOs are paying them less. Some Medicare patients who can’t afford drugs are turning to the Veterans Affairs hospital system, where rising numbers of patients and pharmaceutical costs — which have nearly doubled since 1996 — are overwhelming an already strained system.
Recession-crippled state budgets, which partially finance and administer Medicaid and CHIP, are running deficits and anticipate fewer revenues. States are tapping rainy-day funds, laying off employees and making across-the-board cuts. The recession, the economic fallout from Sept. 11 and the explosion in Medicaid spending have caused a $40 billion to $50 billion shortfall — the largest ever — in more than 40 states. Thus, legislatures are trimming services and making cuts in the safety net just when the uninsured need it most.
In Illinois, for example, a “welfare-to-work” initiative during the late 1990s added 100,000 women to Medicaid — yet by the end of 2001 Republican Gov. George Ryan felt compelled to eliminate it. The action netted $17 million in savings and sent many of the women — who work in low-paying jobs that lack benefits — back to the ranks of the uninsured.
“Governors are dealing with unprecedented fiscal pressure,” said Raymond C. Scheppach, executive director of the National Governors’ Association. “The growth rate is simply unsustainable.” With Medicaid at a “breaking point,” states need more than money from Washington. “Absent serious structural changes to the program down the road, states will be unable to meet the needs of recipients.” [63]
Even in better economic times, the safety net misses many. Millions of low-income people who are eligible are not enrolled in government programs. Welfare reform, otherwise known as the Professional Responsibility and Work Opportunity Reconciliation Act of 1996, successfully moved people from cash assistance into jobs — but often into jobs without health coverage. Among women who have been off welfare for more than a year, only half have either Medicaid or private coverage. The other half seek care from strained safety-net institutions like faith-based charities. [64]
[58] Robert G. Evans, “Sharing the Burden, Containing the Cost: Fundamental Conflicts in Health Care Finance,” in Theodore J. Litman and Leonard S. Robins, Health Politics and Policy (1997).
[59] Center for Responsive Politics, April 2002.
[60] Quoted in The Associated Press, May 9, 2002.
[61] From remarks Feb. 11, 2002, at Medical College of Wisconsin in Milwaukee.
[62] Some 25 percent of the uninsured would have enough money to obtain the policy they need, and another 25 percent would be able to buy policies by adding up to $169 a year per person, according to Mark Pauly and David Song, “Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured,” National Bureau of Economic Research, Working Paper No. 8457, September 2001.
[63] Comments made in releasing the association’s Fiscal Survey of States, May 16, 2002.
[64] B. Garret and J. Holahan, “Health Insurance Coverage After Welfare,” Health Affairs, 19(1), January/February 2000.
The CQ Researcher • June 14, 2002 • VOLUME 12, No. 23
© 2002 Congressional Quarterly, Inc. All rights reserved.
The CQ Researcher • June 14, 2002 • VOLUME 12, No. 23
© 2002 Congressional Quarterly, Inc. All rights reserved.
