Health Reform's Been Tried and Tried


Health care insurance reform may be an idea whose time has come, but it is not a new idea. Nor is it an American idea. National health insurance has existed in Europe since the late 1880s, when it was put in place in response to pressure from an activist labor movement. Germany was the first country to have a national health insurance plan, and the other European countries followed.

As this country moves forward in the examination of our latest health insurance reform proposal, it is helpful to look at the history of this effort in the United States. Before the introduction of the Clinton proposal, there were three major efforts to pass some form of health insurance reform in this country. Each was in response to both a practical need and to the political ideology of the time.

The first national health insurance framework was introduced by the American Association for Labor Legislation (AALL) in 1915 during the Progressive era. This was a time when labor unions were looking at a wide spectrum of reforms to protect their workers. Unions and their supporters were devoting their energies to establishing a minimum wage, limiting the length of the work day, preventing industrial accidents and setting up workers' compensation programs.

The main intent of this first health insurance bill was not so much to provide access to care as to help pay partial wage costs for sick workers. This was a time when extended illnesses such as tuberculosis could wipe out a family financially -- and often did. Covering medical costs was secondary to covering lost wages, since sickness was often a cause of poverty.

Initially, the medical profession was sympathetic to health reform legislation and supported plans that did not place restrictions on the practice of medicine. By 1917, the American Medical Association had turned against the legislation because of its opposition to government control and fears that it might affect doctors' incomes.

At the same time, there was a split in the labor movement. Some leaders of the American Federation of Labor opposed health insurance because they wanted unions to maintain control over sickness insurance. Most workers, however, favored a national system of health insurance. American business was firmly opposed, especially small businesses. Leading the battle were the insurance companies, which were making a great deal of money by selling death benefits.

Despite this turmoil, a national health insurance plan remained a live issue up until the beginning of the first World War. With World War I came a backlash of anti-German sentiment and a profound opposition to ideas associated with that country. In 1917, the Russian revolution produced a fear of everything that carried the taint of socialism or communism. In the "red scare" of that period, many socialists and progressives were thrown in jail.

The '20s were quiet and conservative. As the cost of medical care began to rise steeply and specialties emerged, access to care became an issue. The middle class began to complain about health care costs.

As a result, in 1932 the Committee on the Cost of Medical Care (CCMC) produced its final report, which outlined the issues that were to dominate the '30s. Led by progressives and supported financially by a coalition of large private foundations, the CCMC argued for group practices, regional organization of medical care around hospitals, an emphasis on primary care and rational use of specialist services. Although the CCMC worked diplomatically and took pains to include both the AMA and insurance companies, the AMA condemned the report as an "incitement to revolution."

At the same time, during the Depression, hospitals began offering health insurance as a way to keep themselves alive economically. This insurance was also helpful to physicians, since it helped assure that they would get paid.

Blue Cross plans begun by the hospitals started slowly but became quite successful, eventually emulated by an entire industry of insurance providers separate from the hospitals.

Franklin D. Roosevelt was the first president to take up the banner of national health insurance. He initially planned to include health care insurance in his Social Security Act of 1935. But he decided that fighting for this measure would prove a political liability. FDR realized that he would have to choose his battles and count his votes. Faced with violent opposition from the AMA, Mr. Roosevelt jettisoned national health insurance and focused on the widely popular issues of unemployment insurance and the national pension plan we now know as Social Security.

World War II also created changes by bringing about a huge expansion of employer-based insurance plans. With the strict controls on wages brought about by the war, unions found themselves able to negotiate successfully for health benefits in lieu of wage increases. In addition, the government made health benefits a tax-free expense for businesses.

As a result, a division gradually emerged between unionized workers, who had good benefits, and non-union workers, who could not negotiate as individuals and were often left with no benefits at all. In part because of their ability to negotiate benefits for their workers, the unions grew as a political power during this time.

The reformers, however, had not given up on a comprehensive national system. Health insurance bills were proposed in 1939 and again in 1943.

When Harry Truman assumed the presidency in 1945 on the death of FDR, he proposed national health insurance financed by an increase in Social Security taxes. A bill was introduced and hearings were held, but it went nowhere in the Republican-controlled Congress.

In response to these efforts, the AMA raised a war chest to defeat any health insurance proposals and became dramatically successful at defining the terms of the debate. Aided by the beginning of the Cold War and paranoia about communism and socialism, the AMA prevailed, and health insurance reform was killed. The '50s were dominated by a conservative administration, relative prosperity and very little agitation on the political front. The prospects of health care reform faded away.

With the resurgence of social movements in the 1960s, measures to make the government more responsible for the health and well being of the nation once again gained popular attention and political support. Both John F. Kennedy and Lyndon B. Johnson laid out broad social programs aimed at improving the lives of the indigent and the elderly.

By 1960, almost 75 percent of American families had some kind of health insurance coverage, and many people believed that the majority of the population was adeuqately covered -- unless they were poor or old. With the emergence of the visible poor as the target of Mr. Johnson's War on Poverty, efforts began to give them the health benefits they needed. The result was Medicaid, with grants to the states for health care for the poor, and Medicare, which provided health care for the elderly.

Despite initial opposition, hospitals and physicians clearly benefited from these programs. Medicare was always politically popular because it was viewed as a universal benefit. Medicaid had less widespread support because it was viewed as part of the welfare system. Neither program in any way challenged the organization of the medical care system. They were simply deals to pay medical bills, and as such they escaped the fire of the medical establishment.

Through the '70s and '80s, with no restraints on costs and no challenges to the medical system from the political realm, the power of the specialties grew. Hospital care became increasingly dominant over primary care. Costs spiraled out of control with the use of new technologies and built-in incentives to use those technologies. By the late '80s, Americans knew the system was out of control, but nothing was actually done until the Clinton administration seized upon health insurance reform -- the key issue for Harris Wofford in his upset election to the U.S. Senate from Pennsylvania -- as the key to political success.

Today most Americans agree that there has to be some form of control, but the Clinton plan has a tough road ahead. What the president proposes has never been done before. It is a new model, likely to be met with suspicion on the part of the insurers, unease on the part of the medical community and uncertainty on the part of the public.

The Cold War is over, and with it the overriding fear of communism or socialism. The AMA is weaker than it has ever been politically. There is clearly popular support for health care reform, especially if it is organized to benefit all people. The time seems right. Yet the key questions lie in the details of the plan -- and the balance of political forces when it comes to the Congress and to the people for approval.

Elizabeth Fee is professor of history and health policy at the Johns Hopkins University School of Hygiene and Public Health and editor of the historical section of the American Journal of Public Health.

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