Facts & Research

Health Care Reform Time Line

Compiled by Camilo Marquez, MD November 2012

1860’s -      Beginning in Germany in the 1860’s, by the 1920’s most of the European countries had implemented some form of universal health care generally in the form of compulsory sickness insurance. They were begun by center and center right administrations to accommodate pressure from the left and prevent socialists from acceding to power.

1900’s      The American Association of Labor Legislation (AALL) a group of academic reformers and prominent economists of the Progressive Era proposed legislation providing limited coverage to the working class. It was initially supported by the American Medical Association and opposed by the fledgling labor movement. The AMA reversed course due to resistance from state and local medical societies’ objections. They were joined by the for profit insurance companies because of the inclusion of death benefits in the proposed legislation which encroached upon their growing life insurance business. This was the first attempt to expand health care coverage to a wider base and it was the first of many efforts to thwart these attempts by a fierce political opposition that used fear as its weapon. As we entered WWI, the legislation failed to move forward, but California did go ahead with a referendum in 1918 vigorously opposed by physicians, the insurance industry, and the pharmaceutical manufacturers. It was the first systematic effort to defeat health care reform by special interests which employed now well-worn red-baiting propaganda. In 1919, the New York State Senate passed a health insurance bill that was defeated in the Assembly.

1920’s      No organized efforts at reform were undertaken, but health costs were rising due to greater utilization and rising hospital costs became a larger share

of family budgets. The Committee on the Cost of Medical Care (CCMC) privately funded by eight philanthropic foundations was a group of fifty economists, physicians, public health specialists, and major interest groups that began meeting in 1926. Their report proposed a range of changes in the organization and financing of health care, stopping short of compulsory insurance. The AMA treated the report as a radical document advocating socialized medicine that was an “incitement to revolution.”

1930’s      The decade of the 20’s was a period of growing income inequality and a shrinking middle class. Income disparities made access to health care worse, medical costs were rising and sickness became a leading cause of poverty. Physicians and hospitals had more difficulty covering costs and increasingly welfare agencies began to support medical care for the poor. Roosevelt appointed a Committee on Economic Security (CES) in 1934 to study all forms of social insurance and make recommendations. They were never made public due to intense opposition from the AMA and fear that the inclusion of health insurance would weaken the Social Security bill. There were other efforts to deal with national health issues, but the recommendations of the National Health Conference in 1938 and legislation for a National Health Act submitted by Sen. Robert Wagner did not go forward due to political opposition.

1940’s      For the second time, war put an end to any possibility for achievement of national health insurance. The War Labor Board ruled in 1943 that certain work benefits, including health insurance coverage, should be excluded from wage and price controls. Generous health benefits attracted workers bolstering the group health plans and leading to the establishment of the American system of employer-based health insurance system. Before he died, Roosevelt indicated that he wanted to resume the effort to establish national health insurance when the War was over. Truman promised to carry out his intentions. The Wagner-Murray-Dingle bill introduced in 1943 called for compulsory national health insurance funded by a payroll tax. Opposition to the bill was intense and utilized vicious red-baiting attacks on its proponents. Truman was the first president to champion a single universal comprehensive health insurance plan, but he met with Cold War anti – communism that made “socialized medicine” a symbolic issue. Truman tried to assure doctors and the public that they would still be able to keep their private providers and hospitals, but there was a massive lobbying campaign funded by the AMA and relying upon a large public relations firm that spent $1.5 million, the largest ever lobbying effort in the United States. Despite Truman’s large win in 1948 and the election of a Democratic Congress, Southern Senators in key committee positions blocked Truman’s initiatives using fear that federal involvement in health would lead to desegregation of hospitals and doctor’s offices. No further efforts at reform would be made until the 1960’s. The AFL-CIO supported Truman’s legislation, but the UAW accepted General Motors offer of health insurance benefits and pensions believing that they could secure better deals in negotiation. In 1953, the IRS allowed contributions for health benefits to be excluded from income tax contributing to the shift to control of health care by large for profit health insurers through employer based policies. By 1963, nearly 80% of Americans were employer insured.

1960’s      The Kerr-Mills Act provided states with federal grants pay for health care for the elderly poor. Only 28states signed on. John Kennedy proposed legislation in 1962 for hospital care for seniors under Social Security but opposing Southern Democrats in the House blocked it. Nevertheless, support was building and after his landslide election in 1964, Johnson made Medicare a priority. The passage of Medicare and Medicaid legislation in 1965 was the most significant milestone in the history of health care reform in the United States. Other than medical care of military personnel and veterans, this was the first federal health care program for designated populations since the establishment of the Indian Health Care Service in 1955. Interestingly, it came about partially as a result of the success of the private health industry in thwarting the establishment of public health programs. Insurance companies used “experience based” ratings to set health care premiums, making it difficult for those who were sicker or older to obtain affordable coverage. Company health plans with benefits for retirees – mostly union - had to increase premiums to cover rising costs. The elderly, poor and uninsured were creating larger demands on state and local charity and became the focus of health care reformers. And, for the first time in the history of reform, there was a groundswell of grass roots support for legislation in response to the neglect of the poor and elderly. Again, the AMA fought back, but here we begin to see the first tectonic shift in the political and institutional wall of resistance to reform. The American Hospital Association and some big insurers recognized the need and benefit to them of governmental programs for the elderly, as it affected their profitability.

1970’s      By 1970, growing health care costs and increased numbers of uninsured among the non-elderly led to concern for more health care reform. There was a wide consensus that the country was facing a health care crisis. Sen. Ted Kennedy held hearings around the country and issued a report, “The Health Care Crisis in America,” generating support for his bill, the ‘Health Security Act,’ a universal single payer plan with a national health budget, no consumer cost-sharing, financed through payroll taxes. To compete with Kennedy, President Nixon proposed an employer mandate, requiring employers to either provide basic coverage or pay a tax to create an insurance pool for the unemployed. There was a bipartisan effort to pass legislation which generated a lot of debate, but it was controlling health care costs that won over and the Congress only succeeded in passing a bill to support the formation of HMO’s. Efforts to achieve a compromise between the Kennedy-Mills bill which included some cost sharing, offending union supporters, and Nixon’s measure were scuttled by the Watergate affair and Wilbur Mill’s drunk-driving arrest in the company of Fanny Fox.

The Hill-Burton Act which provides federal funds to states to finance construction of medical facilities became law on August 13, 1946. It stipulated that hospitals constructed with federal funds could not discriminate on account of race and that they were required to devote “a reasonable amount of services” to people who were unable to pay. These provisions were not enforced until the issuance of regulations on July 22, 1972 by Sec. Elliot Richardson of HEW after a series of court cases challenging the enforcement deficiencies. In one of these cases Newsom v. Vanderbilt, Judge Morton found that an individual had a constitutional right to receive care. Much of that decision was reversed on appeal, but the regulations issued after that decision were upheld.

1980’s      The era of national health insurance (NHI) as conceived by liberals was over. The mid 1970’s marked the end of shared prosperity. Economic inequalities increased and there was a decline in incomes. Focus on health care shifted from coverage to costs which jumped by double digits when price controls expired in 1974. A rift opened between those who believed NHI could itself be a way of controlling costs and those who insisted that cost containment had to precede the extension of coverage. President Carter submitted cost control legislation that did not pass. Kennedy broke with him over this and challenged him in the primaries. With the election of Ronald Reagan, Republicans promised to reverse the expansion of government. Nevertheless, Reagan signed a bill for the expansion of Medicare Catastrophic coverage later repealed and Congress passed an expansion of Medicaid. The Reagan administration sought and received stronger regulation to control prices Medicare paid hospitals. Reagan cut taxes and expanded the Military in 1981 and the economy plunged into recession. Hospital costs rose 18%. The measure implementing prospective payments for hospitals also included additional payments for teaching hospitals and institutions caring for a disproportionate share of the poor and uninsured. Pressing down on Medicare reimbursements led hospitals to shift costs to privately insured patients driving up premiums. Employers began to require workers to pay co-pays and deductibles, leading to an acceleration of the managed care (HMO’s) system. The Emergency Medical Treatment and Active Labor Act, adopted in 1986 in response to dumping of patients without insurance, expanded access to medical care. In 1984, through the efforts of Henry Waxman, Congress extended coverage under Medicaid to low income pregnant women and children. In 1989 and 1990, Congress mandated states cover children of families whose incomes fell beneath the federal poverty line and all children under five up to 33% over the line. The repeal of the Reagan Catastrophic Coverage act left in place Medicaid coverage of Medicare deductibles and co-pays and other expenses of the elderly poor, the so-called “dual eligibles.” Cost control measures did not slow the rate of growth of health care costs during the 1980’s which went from 9.3% to 13.6% of GDP between 1980 and 1992.

1990’s       By 1990, there was a recession, the United States had the most expensive health care system in the world with 38 million people without health insurance. Private insurance premiums increased 90% and wages 28% between 1987 and 1993. There was wide recognition that reforms in the health care system were necessary. Many different proposals were put forward from market oriented expansion of the private system to single payer and some in between such as the “managed competition” idea of the Clinton campaign. As president, Clinton appointed a task force to develop the concept into legislation, the Health Security Act (HSA). It would have created universal coverage, employer and individual mandates, competition between private insurers within “health purchasing alliances” with costs regulated through “global budgets.” It was very complex and Democrats did not unite behind it. Opposition was well-funded at $300 million dollars by the health insurance lobby with their allies and well-organized with effective use of public relations and media campaigns. The bill never made it out of committee. In 1997, a bipartisan bill for coverage of low-income children, the Children’s Health Insurance Plan (CHIP) was enacted built upon the Medicaid program.

2000’s       President Bush signs Medicare Prescription Drug Improvement Act into law in 2003.

2010      An adequate summary of the background and components of the Patient Protection Affordable Care Act signed into law March 3, 2010 by President Obama is beyond the scope of this space. It will be discussed in detail at a presentation Dec. 4th. Details will be announced.

What lessons for the incomplete struggle to achieve universal health care can we take from a review of the history?

1. The obvious one is that history repeats itself and knowledge of it arms one for the next engagement.

2. After the defeat of the HSA, Hillary Clinton acknowledged “I did not appreciate how sophisticated the opposition would be in conveying messages that were effectively political even though substantively wrong.” Here, she is saying three things:

First, we cannot allow the stakeholders who oppose reform to frame the message.

Second, the opposition will confuse and obfuscate the realities of health care with distortions and lies.

Third, the media which conveys and controls the message works at the bidding of the corporations paying them.

3. Turning to the stakeholders for solutions or support risks being manipulated by them.

4. Corporate power in the enormous medical-industrial complex which accounts for one-sixth of the GDP overwhelms the democratic process.

5. Grass roots initiatives are essential to passing legislation as happened with Medicare.

6. National insurance is an ideological controversial matter that involves enormous financial and professional stakes.

7. Legislative success requires active presidential leadership, commitment of political capital and the exercise of persuasion and arm-twisting.

8.The more complex and tailored to centrist appeal a bill is, in an effort to respond to conflicting political interests, the more its legislative and public support erodes.

9. Incrementalism has not succeeded in producing real reforms in health care.

10. Red-baiting is the undying vampire unleashed by the opponents of health care reform and can be neutralized by engaging the lessons of Occupy which confront the persistence of the narrow vision of middle class politics.

11. The majority opinion on national health insurance can overcome repression and coercion by the capitalist corporate dominant class, the one percent.

For a deeper analysis of the historical issues, you may find these books helpful:

Altman, Stuart and Shactman, David; Power, Politics and Universal Health Care, Prometheus Books 2001

Geyman, John M. D.; Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans, Copernicus Healthcare , 2012

Geyman, John M. D.; Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform, Common Cause Press, 2010

Geyman, John M. D.; Do Not Resuscitate: Why the Health Insurance Industry is Dying and How to Replace It, Common Cause Press, 2009

Navarro, Vicente, The Politics of Health Policy, The US Reforms, 1980 – 1994, Blackwell, 1994

Navarro, Vicente, Crisis, Health and Medicine; A Social Critique, Tavistock, 1986

Potter, Wendell; Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans, Bloomsbury Press, 2010

Reid, T.R.; The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care, Penguin, 2010

Reich, Robert, Beyond Outrage: What has gone wrong with our economy and our democracy and how to fix it. E book, Alfred Knopf, 2012

Starr, Paul, Remedy and Reaction: the peculiar American struggle over health care reform, Yale University Press, 20011

Stiglitz, Joseph E., The Price of Inequality: How today’s divided society endangers our future, W. W. Norton & Company, 2012