A Brief History on the Road to Healthcare Reform: From Truman to Obama

A brief history of healthcare reform in the U.S., through the years.

The healthcare and insurance industries, and all of us as healthcare consumers, are experiencing the birth pangs of the difficult roll out of the Patient Protection and Affordable Care Act. The natural inclination is to view the PPACA as unique in its scope, impact and political implications. But such a view is myopic, for the road to healthcare reform in America is well traveled. Every American presidential administration following the end of World War II has, to some extent, proposed or supported changes to the healthcare system in this country. And many of those previous reforms have been eerily similar to some of the provisions in the PPACA.

This is not the first time the nation has debated controversial healthcare reform proposals. This is not the first time bitter partisan politics have complicated, and sometimes obfuscated, attempts at reform. Some attempts at healthcare reform have succeeded and some have failed, and the political process has often been ugly and divisive. Here is a look at some past attempts at health care reform in the modern era: the good, the bad, and the ugly.   

The Truman Administration (1945-1953)
The first attempt at healthcare reform in the post-war era occurred during the administration of President Harry S. Truman. His predecessor Franklin D. Roosevelt did little to advance the cause, and healthcare accessibility was one of the few societal needs not addressed in the New Deal programs. There is evidence President Roosevelt intended to pursue some form of healthcare reform after the end of World War II, but he died before then, in April 1945. 

President Truman recommended to Congress a proposal for universal health insurance coverage, administered and paid for by a National Health Insurance Board. Opponents of the proposal, including the American Medical Association, decried it as "socialized medicine," and the bill died in Congress. Truman made a second effort at healthcare reform in 1948, following his re-election, but the outbreak of the Korean War proved to be the death knell of the proposal.

The Truman administration's efforts were not all for naught, however; its efforts to modernize and increase the number of hospitals in the U.S. was achieved. The Hospital Survey and Construction Act of 1946 (commonly known as the Hill-Burton Act) was passed by Congress in 1946. The law provided federal grants and loans to build, expand and modernize hospitals. The consequences of the resulting rapid and unregulated growth in healthcare facilities would require future legislation, during the Ford administration, to bring it under control.

The Eisenhower Administration (1953-1961)
With its focus on the emerging Cold War, the Eisenhower administration supported only limited healthcare reform proposals. In 1956 the "Military Medicare" program was enacted, providing payment for healthcare services for military dependents. The administration supported the Forand bill, which would provide health insurance for Social Security beneficiaries. Despite support from the AFL-CIO, the Forand bill never gained much traction in Congress. 

The Kennedy Administration (1961-1963)
The Kennedy administration pursued a more modest form of healthcare coverage than that proposed by President Truman. The Kennedy administration supported the King-Anderson bill, under which health insurance coverage would be limited to those 65 years of age and older and be part of the Social Security benefits package. In so doing, Kennedy laid additional blocks to the foundation of what would ultimately become Medicare. 

Frustrated by the efforts of special interests to kill the proposal, President Kennedy took his case on the road directly to the public. On May 20, 1962, a series of 33 public rallies were simultaneously held in various parts of the country. The President made a personal appearance and a nationally televised speech at the largest of those — Madison Square Garden in New York City with 17,500 attendees inside and a crowd estimated at 2,500 in standing room only outside the arena.  

In a speech at the rally, President Kennedy confidently predicted the King-Anderson bill would pass Congress "this year, or as inevitably as the tide comes in, next year." President Kennedy was wrong. Opposed by the powerful AMA and with help from conservative Democrat Wilbur Mills, chairman of the House Ways and Means Committee, the bill was defeated in Committee. President Kennedy did not live to see the proposal's chances through the following Congress, and the mantel was passed to Lyndon Johnson.

The Johnson Administration (1963-1969)
Lyndon B. Johnson won a landslide victory to be elected to a full term as president in November, 1964. With a Democratic super-majority in both houses, President Johnson had a receptive body for the extensive social reforms he dubbed the Great Society. 

Despite continued vocal opposition from the AMA and some conservative Republicans, legislation establishing the Medicare and Medicaid programs steam-rolled through Congress. It was introduced in the House Ways and Means Committee in March of 1965, gained final approval by the Senate on July 28, 1965 and was signed into law by President Johnson on July 30, 1965. 

As originally enacted, the Social Security Amendments of 1965 provided healthcare coverage to those 65 years of age and older, and to the poor, blind and disabled. It covered healthcare services provided by hospitals, physicians, nursing facilities and home care providers.  It would not be long before proposals for health coverage for those not covered under Medicare/Medicaid would surface. 

The Nixon Administration (1969-1974)
In 1971, the Nixon administration proposed the National Health Insurance Standard Act. The proposal called for government-prescribed minimal levels of insurance coverage, mandated to be provided through employers and financed by payment of premiums by employers and employees. This plan would maintain competition between private insurers and expand coverage. The NHISA would also provide government subsidies for premiums for certain employees. While the NHISA did not pass, Nixon was successful in gaining passage of the Health Maintenance Organization Act of 1973, which laid some of the ground work for managed care.

A competing proposal was advanced by a familiar Nixon nemesis, the Kennedys; this time it was Sen. Edward M. Kennedy of Massachusetts. Kennedy introduced the Health Security Act, calling for a single federal payer, providing comprehensive health coverage for nearly all Americans.  Although the Health Security Act never advanced far in Congress, it was the beginning of a career-long effort by Sen. Kennedy at major healthcare reform. 

The Ford Administration (1974-1977)
The abbreviated Ford presidency was consumed by healing the nation's post-Watergate wounds ("our long national nightmare" as President Ford termed it, and fighting run-away domestic inflation. The unrestrained and federally incentivized growth of healthcare facilites, ushered in by Hill-Burton in 1946, and exacerbated by the infusion of vast federal funds into the healthcare payment system, were seen as contributing causes to medical inflation.

The National Health Planning and Resources Development Act of 1974 was an effort to reign in escalating healthcare costs. The goals of the HPRDA were to reduce and avoid unnecessary duplication of healthcare facilities and services; it sought to do so by essentially mandating certificate of need programs in the states. Although the CON mandate of the HPRDA was repealed in 1986, thirty-six states and the District of Columbia still operate CON programs today.

The Carter Administration (1977-1981)
Jimmy Carter campaigned for president calling for national healthcare insurance with universal coverage, and as president he went to work to prepare a legislative proposal for the same. The American Hospital Association endorsed the concept in principle, but had reservations about any system that took a universal, "one-size-fits-all" approach. The details of President Carter's plan never received much of a congressional or public audience, as a deep recession and other economic issues took priority.

Other than the tepid support of the AMA, little other healthcare industry or public support was apparent. President Carter later maintained he had strong support from the chairmen of the House and Senate committees with responsibility for healthcare legislation and could have succeeded in passing his proposal had it not been for the abrupt withdrawal of support by one of those chairmen. Ironically, the vacillating Senate committee chairman was none other than Sen. Edward M. Kennedy. Senator Kennedy was to run against Carter for the Democratic presidential nomination in 1980. 

The Reagan Administration (1981-1989)
In his inaugural address, after lamenting the consequences of excessive government borrowing and deficit spending, President Reagan declared: "In this current crisis, government is not the solution to our problem. Government is the problem." Understandably, there were no administration proposals for new government-run or administered healthcare programs under President Reagan.

During President Reagan's term of office several new laws were enacted aimed primarily at reducing the growth in federal spending on health care, and improving efficiencies.  This was to be accomplished by changing Medicare reimbursement methodologies — in most cases reducing reimbursement to hospitals and physicians — and stepping up anti-fraud measures.

But the Reagan Administration also advanced through Congress the first major expansion of Medicare benefits: the Medicare Catastrophic Coverage Act of 1988. The law expanded Medicare coverage for outpatient drugs, put a ceiling on out of pocket co-pays for hospital and physician services, and modestly expanded payments for long term care. The program was to be funded entirely by Medicare beneficiaries through increased premiums and a surtax on wealthier beneficiaries based on income.  

The George H.W. Bush Administration (1989-1993)
President George H.W. Bush inherited a political catastrophe in the Medicare Catastrophic Coverage Act of 1988. Among the elderly there was wide-spread disappointment over the level of expanded benefits and strong resentment over having to pay higher premiums and taxes to fund it. These sentiments led to a senior revolt against the law, and in 1989 — just 17 months after it was enacted — a bipartisan effort in Congress repealed most of the MCCA.

President Bush's agenda for healthcare legislation consisted of additional measures to reduce the growth of federal health care spending and reduce fraud and abuse in the Medicare and Medicaid programs. Notable among the Bush healthcare legislative reforms was a prohibition on physician "self-referrals" for clinical laboratory services (Stark I).

The Clinton Administration (1993-2001)
Bill Clinton was the first Democrat elected president in 12 years, and his administration wasted little time in proposing major health care reforms. After the release of a report by a highly controversial task force headed by First Lady Hillary Clinton, President Clinton sent the American Health Security Act of 1993 to Congress. It proposed to provide affordable health insurance for all through a concept called "managed competition."

Under the Clinton proposal, health insurance coverage would be provided through private insurers competing for customers in a highly regulated market, overseen and coordinated by regional health alliances to be established in each state. All health plans would be required to provide a minimum level of benefits. Employers would be required to provide insurance coverage for their employees and pay 80 percent of the premium.   

The AHSA was opposed by much of the healthcare industry and the health insurance industry. It was subjected to bitter partisanship in Congress, with even Democratic lawmakers split and some offering alternative or compromise plans. By September 1994, the proposal was declared dead by Senate Majority Leader George Mitchell.

Other important healthcare reform measures were enacted during President Clinton's term of office. Among the notable reforms was The Health Insurance Portability and Accountability Act, a significant expansion of the Stark physician self-referral law (Stark II), and the State Children's Health Insurance Program.

The George W. Bush Administration (2001-2009)
President George W. Bush bore the burden of being President during the tragedy of 9/11. Much of his presidency, especially his first term, was consumed with the aftermath of that and the war on terrorism at home and abroad. It is understandable that healthcare reform was not at the top of his agenda for many practical as well as political reasons.   

President Bush's domestic legacy does, however, include one of the largest expansions of Medicare in the program's history. The Medicare Drug Improvement and Modernization Act of 2003 made numerous changes to the Medicare program, the most important of which is the prescription drug coverage benefit, created as Medicare Part D.

The MMA passed by narrow margins in both the House and the Senate. In each chamber, the vote was almost straight down party lines, with Republicans controlling the "Yea" vote.

The Obama Administration (2009 - present)
It came as little surprise that President Obama made healthcare reform one of his first priorities: He campaigned on the promise of sweeping changes to the healthcare system in an effort to reduce costs and make coverage available to most Americans. He sent a major reform bill to  Congress within six months of the inauguration.

A painful political process ensued. Bitter partisan divisiveness, debates over the public option health plan, public misinformation (e.g., allegations the legislation provided for "death panels") and charges of socialized medicine filled the airwaves, internet and print media. After much political maneuvering and intrigue rarely seen even in Washington, the legislation gained the final necessary House of Representatives approval on March 21, 2010. The PPACA was signed into law on March 23, 2010.

On June 28, 2012, the United States Supreme Court issued its ruling in National Federation of Independent Business v. Sebelius, which called into question the PPACA's constitutionality.  In a creatively crafted opinion, Chief Justice Roberts wrote for the majority upholding the constitutionality of all but one of the major provision of the PPACA. The Court ruled:

  • The individual mandate is a permissible exercise of Congress' taxing power and thus constitutional.
  • The Medicaid expansion "cram down" provision (essentially requiring all states to expand Medicaid coverage to all otherwise eligible individuals with incomes up to 133 percent of the federal poverty level) is an impermissible exercise of Congressional power and thus unconstitutional.
  • In its irreducible essence, the PPAACA provides for:
  • A mandate for "large" employers to provide health insurance coverage for its employees;
  • A mandate for virtually all citizens to have health insurance coverage through an employer sponsored plan, a government plan or an individual plan;
  • Creation of federal and/or state healthcare exchanges to facilitate obtaining healthcare insurance;
  • Federal financial subsidies for health care insurance for individuals meeting low income standards;
  • A mandate that all health plans provide a certain minimal level of essential benefits; and
  • Prohibitions against denials of coverage based on pre-existing conditions and against lifetime benefit limits.     

The PPACA is in some respects a conglomeration of some of the pieces of past proposals for major healthcare reform. The provision of health insurance coverage through private insurers instead of directly through the government, employer mandated health insurance, the creation of state, regional or national clearinghouses for insurance, federal subsidies for low income individuals, and "guaranteed eligibility" have all been proposed in previous attempts at reform.

Likewise, partisan divisiveness, bitter congressional fights, grassroots campaigns and political intrigue have been ubiquitous characteristics of healthcare reform efforts. But in the end, the democratic process has worked. Legislation deemed not in the public interest has been defeated in Congress, and enacted legislation that proved to be unpopular or unworkable has been repealed. The surviving reform measures have improved and saved the lives of millions of Americans.

We have traveled this long and bumpy road to healthcare reform before. We have not yet arrived at the destination of a more accessible, cost efficient and high quality heath care system, but that destination is surely worth the difficult journey.  

Jerry W. Taylor, JD, is a member of Stites & Harbison, PLLC, located in the Nashville, Tenn., office. His practice focuses on healthcare law, business transactions and commercial loan financing. He has practiced healthcare law in both private practice and for government regulatory agencies. He is a member of the Nashville Bar Association, Tennessee Bar Association and the American Health Lawyers Association.

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