Historical Background

In comparison to other advanced industrial societies the United States remains a "laggard" with respect to public medical-care

programs.^[1] Although the nation's preventive public health measures—water and sewage treatment, garbage collection, and inoculation against selective infectious diseases—are generally sound, public programs involving therapeutic medicine are distinctly more circumscribed in the United States than in comparable industrial societies. Most noticeably, the United States has no public program to assure universal or minimally widespread and comprehensive medical care. In the twentieth century four separate and lengthy efforts to achieve some form of national health insurance in the United States have failed.

The first of these crusades, in the years preceding World War I, was prompted by the American Association for Labor Legislation (AALL) and other progressive groups.^[2] AALL leaders saw public health insurance as a natural extension of workers' compensation insurance. Having had some success at the state level on the latter, the AALL began state campaigns for public health insurance programs. The AALL's proposals focused primarily on protecting low-income workers against poverty arising from illness. Provisions included sick pay and some coverage for the costs of medical services. Given the relatively low medical costs at the time, sick pay was as important as the insurance provisions.

The AALL argued strongly for the macroeconomic benefits of its plan: health insurance would improve economic efficiency by reducing various industrial costs—worker absenteeism—associated with existing working conditions. As the Progressive candidate for the presidency in 1912, Theodore Roosevelt put a political twist on this proposition, maintaining that no nation could be strong if its population was highly vulnerable to illness.

But business interests rejected these claims of economic efficiency. The AALL plan was also opposed by organized labor, particularly Samuel Gompers and the American Federation of Labor, primarily because they saw it as preempting the unions from winning medical benefits for their workers and thus undercutting the advantages of union membership. For a time the American Medical Association (AMA) cooperated with AALL, but members increasingly perceived the proposal as threatening.^[3] Having thus failed to establish broad-based support, the AALL campaign dissipated during World War I. The war effort distracted attention from public health insurance, and German social programs—from

which the AALL proposal borrowed—became the subject of a barrage of intense and highly negative propaganda.

A strikingly different campaign for public health insurance surfaced in the late 1920s. By this time medical care had become much more expensive, and now reformers focused on public health insurance as a vehicle for helping the middle class afford medical care. The Great Depression, however, posed more urgent social issues, and public health insurance did not get much attention from the New Deal until 1938. Physicians and hospitals had not been spared from economic disasters, and some welcomed talk of public health insurance as a means of expanding the demand for medical care. But by the time the Roosevelt administration sent its proposals to Congress in late 1938, Congress had become more conservative and resistant to New Deal efforts. In 1939 a related proposal, sponsored by New York Senator Robert F. Wagner, was also rejected. And again international turmoil and a world war turned everyone's attention away from domestic issues.^[4]

The third wave of reform began in 1943 and eventually led to the creation of Medicare in 1965. Unlike its two predecessors, this initiative was increasingly dominated by the federal government and garnered the support of new interest groups, particularly organized labor. These proposals looked to the federal government, rather than state governments, and more nearly embodied the concepts of universal and comprehensive coverage. The Wagner-Murray-Dingell bills, introduced in 1943, were the first such proposals. In 1945 President Truman wrested initiative from the Congress with a broader and in some respects more ambitious plan that called for federal funding of hospital expansion, medical research, and medical education and the expansion of the largely preventive public health program for mothers and children—the Maternal and Child Health Program.^[5] The most controversial point was Truman's proposal for a national health insurance scheme that would cover not only social security recipients but citizens generally.

Certainly Truman's proposals had several features that were attractive to medical providers: federal subsidies to enhance the profession's capital—hospitals, research, and education—and to finance demand for medical services. None of Truman's proposals

would have affected existing patterns of medical-care delivery; the dominance and autonomy of physicians were to remain intact. Nonetheless, the AMA, the American Hospital Association, and the Chamber of Commerce, among other groups, opposed aspects of the plan with varying degrees of ferocity. The AMA led the battle against a government presence in medical care with an unprecedented lobbying and public relations effort. As the Cold War intensified, opponents of national health insurance tarred the proposal as a socialist ploy.

In the aftermath of this defeat, proponents of national health insurance—officials in the Social Security Administration and a few other executive bureaucracies, specific members of Congress, some presidents, organized labor, and an assortment of liberal funders and intellectuals—generally adopted an incremental approach to achieving a legislative victory.^[6] A similar tactic proved effective in bringing disabled workers into the social security system, but the government's entry into the provision of medical care was more troublesome than adding disabled citizens to the social security rolls.^[7]

By the mid-1960s, however, the notion of public medical insurance for the elderly—a group generally held to be worthy, medically vulnerable, and of limited material means—had garnered fairly broad-based support. In 1965 innovative compromises within the House Ways and Means Committee resulted in a two-part Medicare program. Under Part A, Hospital Insurance (HI) became a standard social security benefit. An increase in social security taxes was authorized to finance this program. And under Part B, Supplementary Medical Insurance (SMI) for physicians' bills could be purchased by citizens sixty-five and older. This portion was financed in part through monthly premiums paid by beneficiaries and in part through general tax revenues. Finally, the legislative compromise expanded federal support of health care for the poorest Americans (Medicaid).

To reduce opposition from organized medicine, the architects of Medicare chose not to incorporate any provisions affecting the delivery of medical services.^[8] Most importantly, no effort was made to alter the prevailing high-technology, therapeutic orientation with its practices of hospital bills based on costs and physicians'

fees based on services rendered. Thus, Medicare bolstered the demand for medical care without creating any cost-control mechanisms, and the program exceeded cost projections from the outset. In the face of Medicare's rapidly rising costs, Congress has been unwilling to expand the program. Benefits were extended to disabled social security beneficiaries and end-state renal dialysis patients in 1972, but Medicare has not developed into the program of national health insurance that some of its early proponents had hoped for.

Indeed, the fourth campaign for national health insurance, during the 1970s, suggests that if national health insurance is ever developed, it is unlikely to follow the model of Medicare.^[9] For this fourth campaign resurrected a prominent theme of the AALL's pre-World War I crusade: economic efficiency. And in light of the federal budget deficits of the 1980s, any future proposal, even remotely universal and comprehensive in scope, would have to offer greater economic efficiency than Medicare.

From the standpoint of meeting the medical-care needs of the elderly, Medicare represents a distinct improvement over the conditions that prevailed prior to its enactment. However, Medicare's accommodation of existing practices in the medical-care professions limits both its effectiveness in assuring appropriate, efficient medical care and its value as a model for any expanded program of national health insurance.