“You can always count on Americans to do the right thing – after they’ve tried everything else.”
The quote – attributed to Winston Churchill – describes the evolution of the U.S. health system as well as any explanation.
The way in which health care is delivered and financed in the U.S. has grown in fits and spurts, often in disjointed ways. In fact, many experts argue that “health care system” is a misnomer: “(O)ur health care is delivered in an uncoordinated, misaligned and exorbitantly expensive fashion. For example, 1 in 5 Medicare patients are readmitted to the hospital within 30 days of discharge, doctors are paid to do more than to do what is right, and we pay more than twice as much per person for health care as other industrialized nations. Health care today is a series of patch-up jobs from nearly a century of legislation,” according to Manoj Jain MD, an infectious disease physician, a writer, and an expert in healthcare quality improvement.
While energy and most political attention is focused today on Obamacare – the Affordable Care Act – a look back at history reveals some key events that contributed to the current situation. These six events are among the historical actions and inactions that have contributed to today’s health system.
- In the first decade of the 20th century, the American Association for Labor Legislation promoted several reforms to labor law, including a proposal for mandated federal health insurance. The plan was taken up by President Theodore Roosevelt but support for a national law faded after he lost the presidency in 1912. The idea, though, didn’t go away. It was incorporated into community-based programs providing hospital insurance. In 1928, General Motors initiated health insurance coverage for about 180,000 workers; the coverage actually focused more on wages lost due to health problems, with only about 10 percent paid out in medical expenses.
- During World War II employers were constrained by federal price and wage controls. Instead of paying higher wages, many employers started to offer health benefits. A 1942 Supreme Court decision ruled that health insurance was subject to the Commerce Clause of the U.S. Constitution, meaning that the employer-offered health plans could be regulated by the federal government. In 1945, Congress passed the McCarran–Ferguson Act which didn’t require states to regulate insurance, but did state that federal laws governing insurance would not preempt state laws.
- In 1965, President Lyndon B. Johnson dramatically expanded the role of government in health coverage with passage of Medicare (coverage for the elderly) and Medicaid (focused on low-income Americans). Both programs – especially Medicare – have earned broad public support along with criticism, especially over the growing costs. In fact, within the first generation of Medicare and Medicaid, spending grew 10 to 15 times faster than original projections.
- Several presidents of both political parties continued to support the idea of a national health plan. President Franklin Delano Roosevelt initially wanted to include health benefits in Social Security, but gave in to opposition in order to pass the retirement program. His successor, Harry S. Truman, called for a national program, but also was unable to win congressional support in the face of opposition from the American Medical Association and the American Hospital Association. In 1971 and again in 1974, President Richard M. Nixon offered plans that would require employers to provide health benefits and share the cost; expand government-provided coverage for low-income Americans; and, expand Medicare. His plans lost to liberal opposition who worried that Nixon’s proposals didn’t go far enough. In retrospect, Nixon’s proposals would dramatically have changed the face of health coverage. Health policy researcher Gary Freed, M.D., MPH, writing for the University of Michigan Institute of Healthcare Policy and Innovation, made the case that Nixon’s plans were far more liberal than the Affordable Care Act and would have covered more people.
- A significant change that did occur during the Nixon administration was the passage of the Employee Retirement Income Security Act in 1974. While the law mainly was intended to regulate employer-provided retirement plans, federal oversight of most large employer health plans was included. These are “self-insured” plans – plans in which the employer assumes most or all of the financial risk of the underlying insurance coverage. About half of all Minnesotans receive health coverage through these large, self-insured plans.
- In 1985, Congress allowed pharmaceutical companies to advertise drugs directly to consumers. Advertising soared beginning in 1997 when the Food and Drug Administration relaxed requirements on companies to provide detailed information on the possible effects of drugs. That change made it possible for pharmaceutical companies to advertise more aggressively on television. In 1996, prescription drugs accounted for about 6 percent of all health spending. By 2015, the prescription drug share was more than 10 percent and still growing.
Certainly, there are many other turning points in health policy over the past 100-plus years, some just as significant as these six. But these half-dozen events show how health policy consistently has been at or near the top of the agenda for presidents and Congress, how unintended consequences come into play and how political allegiances and partisan priorities have changed over the years.