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A Short History of the Efforts to Extend Health Coverage for All Working Americans

It’s Labor Day, and we should all take a moment to remember the long fight to establish health care for all working people. This effort began in Germany in the late 19th century led by trade unions and passed by the very conservative Chancellor Otto Von Bismarck. By the end of the 20th Century, 32 of 33 developed countries had established universal health insurance for their working families.

In America, the efforts began under the leadership of unions and President Theodore Roosevelt in the early 20th Century. In 2014, the US is scheduled to join the other developed countries. This is sometimes referred to as ObamaCare.

Universal health programs differ from country to country. Some are private; some are public, and some are mixed systems. For example, the Canadian system is somewhat like Medicare – a fee for service system with private doctors and hospitals reimbursed by Canadian provincial governments (equivalent to our states). Canada established its universal health program in 1966. This is known as a “single payor” system in that there is no private insurance, just government insurance. It is financed by taxes.

In the British system established just after the Second World War by a Labor Government, the government owns the hospitals and employs doctors. This is like a public hospital system in some counties in the US. The British public system, however, is for everyone, while in the US, public hospitals are primarily for the poor who are uninsured or have Medicaid. The British system is typically categorized as “socialized medicine” since the government is the employer of the doctors and nurses and owns the hospitals and other health facilities. It is financed by taxes.

In Germany, Switzerland and Holland, universal coverage is built on private insurance, private doctors and hospitals. The building block was private insurance through employers, employees and individuals. These systems include mandates for employers to offer and individuals to enroll in health insurance coverage as well as subsidies to assure affordability for lower wage workers and their families. This is the private insurance road to universal coverage, and in the United States, this approach is frequently referred to as “managed competition”. These systems are financed by employer, employee and individual premiums and by taxes.

Our current US system is a mix of public insurance such as Medicare and Medicaid for the poor, the disabled and the elderly, and private insurance, offered mostly through employers. Both the public and private systems are tax supported though in different fashion. The US public-private system is closest those of Germany, Switzerland and Holland. Unlike all other developed countries, we have a large number of workers who are uninsured. In the United States in 2012, over 50 million Americans are uninsured. This varies by state, with 25% of Texans uninsured and only 2% of Massachusetts’ residents uninsured. Seven million Californians are uninsured, roughly 1 in 5 California residents.

The uninsured typically lack coverage because their employers do not offer coverage and because their incomes are too high or family composition is not right to qualify for Medicaid (Medi-Cal in California) because Medicaid excludes individuals without minor children living at home unless they are seniors or disabled. In other words, many are moderate-income working families and individuals; many work for small businesses; many are self-employed; others work in micro-businesses such as child care or home care; many work several jobs with not enough hours to qualify for coverage; many are changing jobs; many are young workers fresh out of college, high school or graduate school; others are older workers who have raised their children; some are in the difficult process of divorce or separation from their spouses. Over 80% of the uninsured are workers and their family members. In California, 80% of the uninsured are US citizens and legal permanent residents.

In the early 20th Century, during the Progressive era, President Theodore Roosevelt was the first American President to stand up for the cause of health insurance for every American. This was opposed and defeated by the American Medical Association (AMA).

During the Great Depression and after World War II, Presidents Franklin Roosevelt and Harry Truman again took on this task. Universal health insurance was again defeated by the AMA. Voluntary tax-favored private insurance through employers resulted from these struggles. This is supported by employer and employee premiums and by taxes (i.e. it is a tax free benefit).

In the Civil Rights era of the 1960’s, President Lyndon Johnson secured passage of Medicare and Medicaid to offer coverage to all seniors and some of the poor over the opposition of the AMA and the private insurers. The federal government would administer Medicare for seniors, and the states would administer Medicaid for some of the poor. Medicare is supported by employer and employees’ payroll taxes, seniors’ premiums and federal income taxes. Medicaid is supported by a combination of federal and state taxes.

In the 1970’s, the national debates focused on the different visions to cover all Americans, offered by President Richard Nixon and Senator Ted Kennedy. President Nixon’s efforts were built on the model of competitive private insurance relying on mandates on employers and individuals. It was supported by insurers and the AMA. Senator Kennedy’s efforts were built upon expanding public programs like Medicare leading to a single payor system, administered at the national level. His efforts were supported by organized labor. No compromise emerged, and both efforts failed.

In the 90’s, President Bill Clinton developed a proposal to cover all Americans built on the managed competition approach, building coverage through a mandate on private employers and requirements that health insurers offer to all Americans regardless of their pre-existing conditions. Senator Bob Dole and many of his Republican colleagues countered with an approach designed around an individual mandate to purchase coverage. President Clinton’s efforts were memorably opposed by some insurers and some small employer organizations in the Harry and Louise advertisements. These efforts failed.

In 2006, Democrats in the Massachusetts legislature and then Governor Mitt Romney agreed on a bi-partisan compromise combining employer, employee, government and individual responsibility. This was the blueprint for the Affordable Care Act that Congress considered, debated and ultimately approved.

In March 2010, President Barack Obama signed the Affordable Care Act. It offers coverage for every American through employers, through the Exchanges and through Medicaid. It was supported by many unions, employers, insurers, doctors, hospitals, and drug manufacturers. It was opposed by some on the left because it was not single payor and did not contain the “public option” (Medicare) in the Exchange.  It was opposed by some on the right because it was “socialized medicine”.

What does it actually do for working Americans? Beginning in 2014 it will offer coverage for all US citizens and lawful permanent residents as follows. First, it creates Exchanges where uninsured workers, the private individually insured and small employers can purchase private insurance coverage. Second, it makes coverage more affordable for the moderate and middle income individuals and working families and for small employers through refundable tax credits. Third, it requires large and mid sized employers to offer coverage to their employers or contribute towards the cost of the refundable tax credits used by their employees in the Exchange.  Fourth, it expands Medicaid for the lowest income workers. And last, it requires all insurers to make coverage available regardless of an individual’s pre-existing condition and requires all individuals (with religious and financial exemptions) to enroll in some form of coverage. These components are described in greater detail in the Appendix.

The United States is now poised to cover every American worker and their families; coverage will be available at work, during job changes, layoffs and for new hires. This is a struggle and an accomplishment for working families indeed worth celebrating this Labor Day 2012.

The full report, including an appendix, is available for download:
A Short History of Health Reform A Short History of Health Reform.pdf

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