The History of Health Care Reform

Major health care reform has been attempted by several presidents. President Franklin Delano Roosevelt made the first serious attempt to establish a national health care program, but was discouraged from pushing for it when he faced strong opposition from the American Medical Association (AMA). At the time, health care costs made up a much smaller share of family expenses than they do today. The public was not clamoring for a national health care program, and Roosevelt decided that his administration had enough problems to address without taking on a bruising battle with the AMA.¹

Most Americans receive their health care through private insurers, and most private insurance is provided through employers. Employer-based health insurance emerged quite by accident due to wage controls during World War II. In the previous decades, insurance had been offered by hospitals in order to guarantee that doctors got paid and would continue to provide services. Labor shortages during the war gave employers an incentive to offer health insurance as a way to win a competitive advantage over their rivals in recruiting the best workers. Because it was a benefit that workers clearly valued and that affected their choice of employers, employer-sponsored insurance continued as the status quo once the war ended.

President Truman also wanted to establish a national health care program. This time around, health care faced opposition from within the president’s own party. To appease southern Democrats, who feared national health care would lead to the integration of hospitals, Truman backed off his health care agenda.² President Johnson managed to get Medicare and Medicaid, programs for seniors and poor people, enacted as part of a broader civil rights agenda known as the Great Society. Johnson knew the Great Society would discomfort southern Democrats. Ultimately, in fact, it led to the realignment of the South from predominantly a Democratic stronghold to the solid Republican base it remains today.

The penultimate effort to introduce a national healthcare plan occurred under President Clinton. The Clinton plan failed largely because the administration mismanaged its development and presentation. The plan was too complex for most people to understand; it was developed in secret, alienating members of Congress; and the administration underestimated the ferocity of the attacks from insurers, the AMA, and others. The interests vested in preserving the status quo also included an ideological base of the conservative movement which feared that health care reform might whet the public’s appetite for other interventions in the private sector by government.³ President Clinton did manage to pass the State Children’s Health Insurance Program (SCHIP) with bipartisan support, but SCHIP is a discretionary program, not an entitlement, so each year millions of children continue to go without coverage.

President Obama pledged to make health care reform a priority of his administration and has sought to address it early on. Much has changed in the years since the Clinton effort collapsed, including ever-increasing numbers of uninsured Americans, skyrocketing costs of care, and now more interest in reform among employers. The costs of insuring workers are taking huge bites out of company profits and undermining the competitiveness of U.S. firms in global markets. The automobile industry is a case in point. In 2004, health care benefits added $1,525 to the cost of every car sold by General Motors, compared to $201 for Toyota.⁴ The cost of health care was one of the reasons General Motors was forced to declare bankruptcy in 2009.

With employer-based health insurance unraveling, the question is what reform will look like. At this writing, the shape of reform is still unresolved and the debate remains rife with political infighting. Members of Congress with entrenched interests in protecting the status quo are as hostile to reform as ever. The health-care industry, with its armies of lobbyists, spends $1.4 million per day to influence how Congress views health care policy.⁵ Most of this money follows the powerbrokers of legislation. According to analysis by the Sunlight Foundation, a nonpartisan nonprofit organization promoting transparency in government, members of Congress who are influential in health care policy receive more donations from the health care industry outside their state than from donors within.⁶

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