The Inability to Compromise: A Brief Health Reform Outline-1752–2015 (c)

In the 1990’s I asked a respected, seasoned health policy professional 10 years my senior what he saw as the major obstacles to health care reform.  Without skipping a heartbeat he said:  “The inability to compromise.”

We Americans actually have more in common than we think when it comes to health care: safe, quality, effective and affordable–and caring. We just don’t hear that from the political parties, especially in election season. What we hear instead are rote political answers.  I thought for years that if we could just listen to each other without the rhetoric that we might actually be able to learn from each other, find what we have in  common and move forward.  What was I thinking?

Our failure to listen to each other is our fatal flaw. Our politics is still stuck in state vs. federal rights and stuck in our failure to agree on how to balance personal responsibility with social good. Our failure to listen is reflected in the long piecemeal, contradictory, costly and bitter fights over health care policy since the 1800’s.

With that in mind and in lieu of editorial comment, I offer parts of my outline of the long and often ugly history of health care reform in our country:

  • 1752—Benjamin Franklin founds insurance industry with Philadelphia Contributionship of Houses from Loss of Fire.
  • 1854—President Franklin Pierce vetoes bill to create asylums for ‘indigent insane’ saying social welfare is the responsibility of the states.
  • 1800’s—Tribal treaties often include Health Care for American Indians
  •  1869—in Paul vs. Virginia Supreme Court decides “issuing a policy of insurance is not a transaction of commerce.”  Decision makes states responsible for taxation and regulation of insurance.   The beginning of an-going and continuing issue over state vs. federal regulation.
  • 1911—Flexner Report eliminates naturopathic medicine, homeopathy and chiropractic professions from the new medical school curriculum. Medical school restricted to medical students. Women, Blacks, Jews and immigrants excluded from  medical schools.
  • 1912—Teddy Roosevelt advocates for health care reform.  Reform was labeled as ‘Socialist.’ Major opposition to health  reform came from life insurance companies. Roosevelt was defeated.
  • 1929—1932—Committee on the Costs of Medical Care created by the American Medical Association (AMA) with private foundation funding.  Committee charged with examining ways to control health care costs and prevent bankruptcies for American families.  Committee proposed having salaried doctors and community health planning.  Failed with major opposition from AMA, which had originally formed the Committee.
  • 1929—Baylor University in Texas creates pre-paid, provider controlled hospital insurance for teachers to help hospitals during depression. Became the first Blue Cross plan.  Doctors later formed the provider controlled Blue Shield plans based on fee for service payments. These insurance arrangements were designed to help faltering hospitals and physician practices during the Depression.
  • 1930—Congress creates Veterans Administration for care primarily for WWI Veterans
  • 1933—Franklin D. Roosevelt removes health care from New Deal legislation for fear of failure for the New Deal legislation and  Social Security.
  • 1942—Wage-price freeze. War Labor Board rules wage price controls do not apply to fringe benefits, such as health care.  Health care benefits become a form of employee compensation.   National Labor Relations Board later rules that employee benefit plans are subject to collective bargaining during WWII wage /price freeze. Beginning of health care as a form of employee compensation.  FDR administration.
  • 1944—Supreme Court in Southeastern Underwriters decision rules insurance is commerce and therefore subject to federal regulation and oversight. Reverses 1869 decision ruling that insurance is not commerce.
  • 1945—Congress enacts McCarren-Ferguson Act and gives states continuing authority to regulate and tax insurance and declares  that state regulation was in best interest of consumer.  Insurance exempt from federal anti-trust laws.  This act over turned the 1944 Supreme Court Southeastern Underwriters decision that made insurance regulation subject to federal regulation.  Returns insurance oversight to the states.
  • 1945—Truman calls for national health insurance with voluntary fees. Killed by AMA.
  • 1954—IRS rules health care insurance offered by employers is exempt from taxation.
  • 1964—Civil Rights Act prohibits discrimination based on color or country of origin, thus prohibiting hospitals and physicians from legal segregation and admission by race.
  • 1965—Medicare and Medicaid passed by Congress.  Bill barely passed.  Strong opposition from AMA.
  • 1965—Supreme Court rules contraceptives are legal for use by married couples.
  • 1972—Supreme Court rules contraceptive coverage legal for unmarried people.
  • 1973—Supreme Court rules abortions are legal before 2nd trimester.
  • 1974—Nixon introduces comprehensive health care reform through employers and subsidies for others.  Failed with Watergate Scandal.
  • 1974—Nixon orders new wage price freeze. Freeze leads employers to expand health care coverage in lieu of wages as in WWII.
  • 1974—Nixon introduces ERISA (Employee Retirement Insurance Security Act) part of which exempts large employers from state insurance regulations and opens the door to employer self-funding of health insurance benefits which are exempt from state insurance regulations and taxes.
  • 1976–Carter proposes national health insurance, fails in part because of recession.
  • 1985—Reagan introduces COBRA (Consolidated Omnibus Budget Reconciliation Act)allowing employees to pay for their health care benefits at employer’s rate
  • 1988—Reagan introduces Prospective Payment System (PPS) including DRG (Diagnostic Related Groups) payments to hospitals to control health care costs—reaction to Johnson’s payment based on patient stay.  Hospitals add outpatient services and medical testing not governed by DRGs as way to replace lost income.
  • 1988—Reagan—Medicare Catastrophic Care act passed to add prescription drug coverage for seniors and coverage for catastrophic costs. Passed and repealed within one year by angry seniors over payment methods.
  • 1990—Congress passes Americans with Disability Act to prohibit discrimination against people with disabilities in employment, transportation, public accommodations, communications and governmental activities.
  • 1992—George H.W. Bush introduces Relative Based Scale Value (RBRVs) to adjust salary value for physicians to minimize differences between specialists and primary care doctors.
  • 1992—G H.W. Bush calls for electronic medical records within one year.  Not yet realized.  In 2013, over 100 companies offered Electronic Medical Records. Few communicated with each other.
  • 1993—Clinton advocates for universal coverage. Universal health care failed.
  • 1996—Clinton—Congress passes HIPPA (Health Insurance Patient Protection and Privacy Act) passed to protect patient privacy in health insurance and guaranteed that patients could transfer and keep coverage if they changed employer.
  • 1997—Clinton—Congress passes Sustainable Growth Rate (SGR) to adjust growth of physician salaries.
  • 1999—Congress passes Financial Services Modernization Act of 1999 also known as Gramm-Leach –Billey Act.  Reaffirms states regulation of insurance.
  • 2003—G.W. Bush—Congress passes Medicare Part C—Medicare Advantage, private managed care Medicare plans and Medicare Part D, prescription coverage.  Medicare prohibited from negotiating rates with pharmaceutical companies—left to individual insurance plans.
  • 2010—Obama—Congress passes Patient Protection and  Affordable Care Act  (PPACA  but known as  ACA) that  focuses on quality, safety and outcomes for payment and requires all individuals to purchase health insurance or be fined. Includes Medicaid expansion to encourage state to expand coverage. Includes single low-income males for the first time. Mandates essential benefits for all insurance plans.
  • 2010—Dodd-Frank Act renewal creates Federal Insurance Office in Department of Treasury to collect and inform Congress on insurance regulation.  Does not replace power of states to regulate and tax insurance. States responsible for solvency oversight and regulation of insurance marketplace behavior.
  • 2012—Supreme Court declares ACA’s individual mandate and Medicaid expansion are  constitutional.
  • 2013—Mental Health Parity and Addiction act and ACA mandate mental health and addiction coverage be on par with health care medical and surgical coverage
  • 2014—Supreme Court rules that individual subsidies are constitutional.
  • 2014—Congress passes Veterans Access, Choice and Accountability Act which addresses backlog of patient care and permits Veterans to use private health care facilities when VA facilities are distant.
  • 2015—Supreme Court rules state and federal exchanges are constitutional.

Supreme Court cases rule in favor of ACA. Appeals continue.

Kathleen O’Connor (c) June 2016

Resources and References:

Medical Care For The American People, The Final Report, Committee on the Costs of Medical Care, University of Chicago Press, October 1932

Social Transformation of American Medicine, Paul Starr, Basic Books, Inc.,  1992 Paul Starr

National Association of Insurance Commissioners

Department of the Treasury, Federal Office of Insurance

National Bureau of Economic Research

International Association of Risk and Compliance Professionals

About Kathleen

Kathleen O’Connor: 30+ year health care consumer advocate, non-profit executive and author. For more information about Kathleen, please see “About” on the main content bar above.

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