INTRODUCTION
For more than 100 years, reformers in the United States argued for the passage of a national health insurance program, a government guarantee that every person is covered for basic health care. Finally in 2010, the United States took a major, though incomplete, step forward toward universal health insurance.
The subject of national health insurance has seen six periods of intense activity, alternating with times of political inattention. From 1912 to 1916, 1946 to 1949, 1963 to 1965, 1970 to 1974, 1991 to 1994, and 2009 to 2015 it was the topic of major national debate. In 1916, 1949, 1974, and 1994, national health insurance was defeated and temporarily consigned to the nation’s back burner. Guaranteed health coverage for two groups—the elderly and some of the poor—was enacted in 1965 through Medicare and Medicaid. In 2010, with the passage of the Patient Protection and Affordable Care Act, also known as the Affordable Care Act (ACA) or “Obamacare,” the stage was set for the expansion of coverage to millions of uninsured people. National health insurance means the guarantee of health insurance for all the nation’s residents—what is commonly referred to as “universal coverage.” Much of the focus, as well as the political contentiousness, of national health insurance proposals concern how to pay for universal coverage. National health insurance proposals may also address provider payment and cost containment.
The controversies that erupt over universal health care coverage become simpler to understand if one returns to the four basic modes of health care financing outlined in Chapter 2: out-of-pocket payment, individual private insurance, employment-based private insurance, and government financing. There is general agreement that out-of-pocket payment does not work as a sole financing method for costly contemporary health care. National health insurance involves the replacement of out-of-pocket payments by one, or a mixture, of the other three financing modes.
Under government-financed national health insurance plans, funds are collected by a government or quasigovernmental fund, which in turn pays hospitals, physicians, health maintenance organizations (HMOs), and other health care providers. Under private individual or employment-based national health insurance, funds are collected by private insurance companies, which then pay providers of care.
Historically, health care financing in the United States began with out-of-pocket payment and progressed through individual private insurance, then employment-based insurance, and finally government financing for Medicare and Medicaid (see Chapter 2). In the history of US national health insurance, the chronologic sequence is reversed. Early attempts at national health insurance legislation proposed government programs; private employment-based national health insurance was not seriously entertained until 1971, and individually purchased universal coverage was not suggested until the 1980s (Table 15-1). Following this historical progression, we shall first discuss government-financed national health insurance, followed by private employment-based and then individually purchased coverage. The ACA represents a pluralistic approach that draws on all three of these financing models: government financing, employment-based private insurance, and individually purchased private insurance.
| 1912–1919 | American Association for Labor Legislation |
| 1946–1949 | Wagner–Murray–Dingell bill supported by President Truman |
| 1963–1965 | Medicare and Medicaid passed as a first step toward national health insurance |
| 1970–1974 | Kennedy and Nixon proposals |
| 1991–1994 | A variety of proposals introduced, including President Clinton’s Plan |
| 2009–2010 | Patient Protection and Affordable Care Act signed into law by President Obama |
GOVERNMENT-FINANCED NATIONAL HEALTH INSURANCE
In the early 1900s, 25 to 40% of people who became sick did not receive any medical care. In 1915, the American Association for Labor Legislation (AALL) published a national health insurance proposal to provide medical care, sick pay, and funeral expenses to lower-paid workers—those earning less than $1,200 a year—and to their dependents. The program would be run by states rather than the federal government and would be financed by a payroll tax–like contribution from employers and employees, perhaps with an additional contribution from state governments. Government-controlled regional funds would pay physicians and hospitals. Thus, the first national health insurance proposal in the United States was a government-financed program (Starr, 1982).
In 1910, Edgar Peoples worked as a clerk for Standard Oil, earning $800 a year. He lived with his wife and three sons. Under the AALL proposal, Standard Oil and Mr. Peoples would each pay $13 per year into the regional fund, with the state government contributing $6. The total of $32 (4% of wages) would cover the Peoples family.
The AALL’s road to national health insurance followed the example of European nations, which often began their programs with lower-paid workers and gradually extended coverage to other groups in the population. Key to the financing of national health insurance was its compulsory nature; mandatory payments were to be made on behalf of every eligible person, ensuring sufficient funds to pay for people who fell sick.
The AALL proposal initially had the support of the American Medical Association (AMA) leadership. However, the AMA reversed its position and the conservative branch of labor, the American Federation of Labor, along with business interests, opposed the plan (Starr, 1982). The first attempt at national health insurance failed.
In 1943, Democratic Senators Robert Wagner of New York and James Murray of Montana, and Representative John Dingell of Michigan introduced a health insurance plan based on the social security system enacted in 1935. Employer and employee contributions to cover physician and hospital care would be paid to the federal social insurance trust fund, which would in turn pay health providers. The Wagner–Murray–Dingell bill had its lineage in the New Deal reforms enacted during the administration of President Franklin Delano Roosevelt.
In the 1940s, Edgar Peoples’ daughter Elena worked in a General Motors plant manufacturing trucks to be used in World War II. Elena earned $3,500 per year. Under the 1943 Wagner–Murray–Dingell bill, General Motors would pay 6% of her wages up to $3,000 into the social insurance trust fund for retirement, disability, unemployment, and health insurance. An identical 6% would be taken out of Elena’s check for the same purpose. One-fourth of this total amount ($90) would be dedicated to the health insurance portion of social security. If Elena or her children became sick, the social insurance trust fund would reimburse their physician and hospital.
Edgar Peoples, in his seventies, would also receive health insurance under the Wagner–Murray–Dingell bill, because he was a social security beneficiary.
Elena’s younger brother Marvin was permanently disabled and unable to work. Under the Wagner–Murray–Dingell bill he would not have received government health insurance unless his state added unemployed people to the program.
As discussed in Chapter 2, government-financed health insurance can be divided into two categories. Under the social insurance model, only those who pay into the program, usually through social security contributions, are eligible for the program’s benefits. Under the public assistance (welfare) model, eligibility is based on a means test; those below a certain income may receive assistance. In the welfare model, those who benefit may not contribute, and those who contribute (usually through taxes) may not benefit (Bodenheimer & Grumbach, 1992). The Wagner–Murray–Dingell bill, like the AALL proposal, was a social insurance proposal. Working people and their dependents were eligible because they made social security contributions, and retired people receiving social security benefits were eligible because they paid into social security prior to their retirement. The permanently unemployed were not eligible.
In 1945, President Truman, embracing the general principles of the Wagner–Murray–Dingell legislation, became the first US president to strongly champion national health insurance. After Truman’s surprise election in 1948, the AMA succeeded in a massive campaign to defeat the Wagner–Murray–Dingell bill. In 1950, national health insurance returned to obscurity (Starr, 1982).
In the late 1950s, less than 15% of the elderly had health insurance (see Chapter 2) and a strong social movement clamored for the federal government to come up with a solution. The Medicare law of 1965 took the Wagner–Murray–Dingell approach to national health insurance, narrowing it to people 65 years and older. Medicare was financed through social security contributions, federal income taxes, and individual premiums. Congress also enacted the Medicaid program in 1965, a public assistance or “welfare” model of government insurance that covered a portion of the low-income population. Medicaid was paid for by federal and state taxes.
In 1966, at age 66, Elena Peoples was automatically enrolled in the federal government’s Medicare Part A hospital insurance plan, and she chose to sign up for the Medicare Part B physician insurance plan by paying a $3 monthly premium to the Social Security Administration. Elena’s son, Tom, and Tom’s employer helped to finance Medicare Part A; each paid 0.5% of wages (up to a wage level of $6,600 per year) into a Medicare trust fund within the social security system. Elena’s Part B coverage was financed in part by federal income taxes and in part by Elena’s monthly premiums. In case of illness, Medicare would pay for most of Elena’s hospital and physician bills.
Elena’s disabled younger brother, Marvin, age 60, was too young to qualify for Medicare in 1966. Marvin instead became a recipient of Medicaid, the federal–state program for certain groups of low-income people. When Marvin required medical care, the state Medicaid program paid the hospital, physician, and pharmacy, and a substantial portion of the state’s costs were picked up by the federal government.
Medicare is a social insurance program, requiring individuals or families to have made social security contributions to gain eligibility to the plan. Medicaid, in contrast, is a public assistance program that does not require recipients to make contributions but instead is financed from general tax revenues. Because of the rapid increase in Medicare costs, the social security contribution has risen substantially. In 1966, Medicare took 1% of wages, up to a $6,600 wage level (0.5% each from employer and employee); in 2015, the payments had risen to 2.9% of all wages, higher for wealthy people. The Part B premium has jumped from $3 per month in 1966 to $104.90 per month in 2015, higher for wealthy people.
Many people believed that Medicare and Medicaid were a first step toward universal health insurance. European nations started their national health insurance programs by covering a portion of the population and later extending coverage to more people. Medicare and Medicaid seemed to fit that tradition. Shortly after Medicare and Medicaid became law, the labor movement, Senator Edward Kennedy of Massachusetts, and Representative Martha Griffiths of Michigan drafted legislation to cover the entire population through a national health insurance program. The 1970 Kennedy–Griffiths Health Security Act followed in the footsteps of the Wagner–Murray–Dingell bill, calling for a single federally operated health insurance system that would replace all public and private health insurance plans.
Under the Kennedy–Griffiths 1970 Health Security Program, Tom Peoples, who worked for Great Books, a small book publisher, would continue to see his family physician as before. Rather than receiving payment from Tom’s private insurance company, his physician would be paid by the federal government. Tom’s employer would no longer make a social security contribution to Medicare (which would be folded into the Health Security Program) and would instead make a larger contribution of 3% of wages up to a wage level of $15,000 for each employee. Tom’s employee contribution was set at 1% up to a wage level of $15,000. These social insurance contributions would pay for approximately 60% of the program; federal income taxes would pay for the other 40%.
Tom’s Uncle Marvin, on Medicaid since 1966, would be included in the Health Security Program, as would all residents of the United States. Medicaid would be phased out as a separate public assistance program.
The Health Security Act went one step further than the AALL and Wagner–Murray–Dingell proposals: It combined the social insurance and public assistance approaches into one unified program. In part because of the staunch opposition of the AMA and the private insurance industry, the legislation went the way of its predecessors: political defeat.
In 1989, Physicians for a National Health Program offered a new government-financed national health insurance proposal. The plan came to be known as the “single-payer” program, because it would establish a single government fund within each state to pay hospitals, physicians, and other health care providers, replacing the multipayer system of private insurance companies (Himmelstein & Woolhandler, 1989). Several versions of the single-payer plan were introduced into Congress in the 1990s, each bringing the entire population together into one health care financing system, merging the social insurance and public assistance approaches (Table 15-2). The California Legislature, with the backing of the California Nurses Association, passed a single-payer plan in 2006 and 2008, but the proposals were vetoed by the Governor.
| 1. Government-financed health insurance plans | Money is collected through taxes or premiums by a public or quasipublic fund that pays health care providers |
| 2. Employer-mandated private health insurance plans | The government requires employers to pay for all or part of private health insurance policies for their employees |
| 3. Individual-mandated private health insurance plans | The government requires individuals to purchase private health insurance, with subsidies for low-income people |
| 4. Hybrid plans | Government-financed insurance for the elderly and the poor, employer-mandated private insurance for employees of larger businesses and their dependents, individual-mandated private insurance for employees of smaller businesses or the unemployed |
THE EMPLOYER-MANDATE MODEL OF NATIONAL HEALTH INSURANCE
In response to Democratic Senator Kennedy’s introduction of the 1970 Health Security Act, President Nixon, a Republican, countered with a plan of his own, the nation’s first employment-based, privately administered national health insurance proposal. For 3 years, the Nixon and Kennedy approaches competed in the congressional battleground; however, because most of the population was covered under private insurance, Medicare, or Medicaid, there was relatively little public pressure on Congress. In 1974, the momentum for national health insurance collapsed, not to be seriously revived until the 1990s. The essence of the Nixon proposal was the employer mandate, under which the federal government requires (or mandates) employers to purchase private health insurance for their employees.
Stay updated, free articles. Join our Telegram channel
Full access? Get Clinical Tree
