User:Doc Tropics/United States health reform under Nixon

Former President Richard Nixon once said that "comprehensive health insurance is an idea whose time has come in America. Let us act now to assure all Americans financial access to high quality medical care." (quoted in Mayes:2004) The Nixon administration faced rapidly escalating health costs in Medicare and Medicaid, and assumed "the rhetoric of crisis." (Starr:1982)

The Nixon years were an auspicious time for National Health Insurance. The momentum for a national plan had been building strong bi-partisan support in Congress. (Wainess:1999) Health reform surfaced as an important issue as the recently enacted Medicare and Medicaid caused costs to rise. (Mayes:2004) Suddenly, many political players found vested interest in some type of reform. Unfortunately, the plan for National Health Insurance failed during Nixon's second term. (Wainess:1999)

Overall, Nixon was more interested in reforming health insurance and designing a "strategy" than actually enacting national health insurance. Although he did eventully present more comprehensive plans, initially, Nixon was "more interested in rationalizing health care than promoting national health insurance" (Hacker 80).

The issue

Background

In 1947, as Representative of California, Nixon proposed a health plan with Congressman (later Senator) Jacob Javits of New York. Their plan called for a government subsidized private nonprofit insurance system, that offered premiums scaled to subsciber income. This locally controlled proposal, unlike other Republican propositions, had no means test. (Starr:1982)

Nixon was not originally interested in starting a major healthcare program during his presidency. Market reforms however, remained appealing. "The administration wanted some kind of plan to control health care costs that would look uniquely Republican. Nixon hoped to promote market-oriented reforms designed to encourage competition in the health care market as a way of controlling costs. He was interested in developing a health strategy that would create a more efficient health care system, balance the supply of health care resources and demands, and at the same time assure equal access to health care" (Patel and Rushefesky 41). For these reasons, Nixon proposed HMOs.

How the issue got noticed

In January of 1970, popular magazine Business Week unfavorably compared medical care in the US to national health plans in Western Europe. Shortly thereafter, Fortune Magazine offered a special issue on medical care, warning that American medicine "stood on the brink of chaos" and that "most Americans are badly served by the obsolete, overstrained medical system" calling for "major radical change." (Starr:1982)

Rising health costs had to do with many factors. First, Medicare and Medicaid reinforced financing arrangements. Second, advances in science and technology since World War II created new demands for complex equipment and procedures. Third, Hospital employees demanded better than substandard pay, and worked to catch up to comperable workers. Fourth, Doctors were demanding more assistants to enable them to perform some of the new tests and procedures that came with new technologies. Fifth, and most importantly, hospitals were under constant strain for supplies and resources. (Starr:1982)

How the issue was framed

In an address to Congress proposing a comprehensive health plan in 1974, Nixon presented the needs of the American people, saying that "for the average American family, it is clear that without adequate insurance, even normal care can be a financial burden while a catastrophic illness can mean catastrophic debt." He also stated that 25 million Americans remained without any sort of insurance even though more citizens than ever had a health plan. Further, Nixon told Congress that of the Americans that did have insurance, it was often unbalanced and certainly not comprehensive. (Nixon:1974)

The medical care crisis in the US was understood to be a "crisis of money." Without reform, costs would continue to increase producing runaway inflation that was sure to price most Americans out. In short, "Medicine had overdrawn its credit." (Starr:1982)

Some believe that the existence of Medicare and Medicaid had a paradoxical effect by working well enough to create a facade for the problem of the uninsured and legitimizing government-financed health care without addressing the most pressing health concerns of the average American family. (Wainess:1999)

The policy stream

Policy entrepreneurs

Paul M. Ellwood, Jr., the head of the Minneapolis-based policy group InterStudy, believed in a prepaid group practice. (Kingdon:2003) As an alternative to fee-for-service and centralized governmental financing, he proposed creating comprehensive health care corporations, calling it "health maintenance organizations" (HMOs). The HMO Act established government-sponsored funding to expand the existing system and create new HMO markets throughout the country. It also exempted HMOs from state insurance mandates that restricted or prohibited the operation of HMOs within state borders. It required employers to offer fee-for-service healthcare coverage (Stahl 264). "The term 'Health Maintenance Organization,' introduced with premeditated ambiguity, referred not only to prepaid group practice, but also to comprehensive 'medical care foundations.'" (Starr 397) Under this system, patients and employers pay fees so that the HMO may provide necessary care without charging fees-for-services at every counter. (Kingdon:2003) Ellwood presented HMOs as competitors in the health care market, alleviating concerns about government intervention, while using market competition to regulate expenditures. (Kingdon:2003) Under HMOs, the government was a bit like a venture capitalist. The government introduced competition to hopefully contain healthcare costs bu creating incentives for channeling health services to less costly out-patient settings, promoting competition with traditional health care and by exerting market pressure to create preferential pricing (Patel and Rushesky 173).

Walter Reuther, head of the United Auto Workers labor union, made a push for national health care from 1968 until his untimely death in 1970. After pulling the UAW out of the AFL-CIO alliance when he and George Meany, President of the AFL, could not agree on labor goals or tactics, Reuther opened an office in Washington and organized the Committee for National Health Insurance. Reuther's goal was to plan a national health insurance program that could be built upon the existing system, but eliminate the existing waste and inefficiencies. The committee was made up of, among others, physicians, professors, and politicians, including Representative Martha Griffiths of Michigan and Senator Ted Kennedy of Massachusetts, also head of the Senate Labor and Public Welfare Committee. Reuther's committee drafted the Health Security bill, which promised to reorganize the health care system in "an American way" (Quadagno 2005: 112).

Senator Kennedy, after becoming chairman of the Senate Health Subcommittee in 1971, introduced the Health Security bill. He told Congress that changes to the health system were needed "if we are to escape the twin evils of a national health disaster or the total federalization of health care" (Quadagno 2005: 113). His plan, however, was delayed that summer when Senator Kenneday's car ran off a bridge on Chappaquiddick Island; Kennedy left the scene of the accident, leaving behind a young campaign worker, Mary Jo Kopechne, trapped in the sunken car. Kennedy pulled his name from the 1972 Presidential election race, but did go on a national speaking tour to promote his health care plan (Quadagno 2005: 118).

After Kennedy's removal from the race for the Democratic nomination, Wilbur Mills, chairman of the Ways and Means Committee, announced his claim for the nomination. During the campaign, Mills declared that he and Kennedy would develop a national health care plan together. Mills did poorly in the primaries, however, and lost the nomination to George McGovern when is was discovered that Mills had accepted $100,000 in illegal campaign funds from Electronic Data Systems, a major health insurance claims processor (Quadagno 2005: 119). Mills jumped back into the health care scene in 1974, though, when he and Kennedy finally formulated a national health care plan in response to Nixon's Comprehensive Health Insurance Plan. The Kennedy-Mills plan called for a single national health insurance program that featured a basic benefit package with high co-payments and deductibles. The AMA denounced it as "socialist" and the AFL-CIO claimed the plan hurt the lower and middle classes with such high co-payments and deductibles (Quadagno 2005: 121). Mills kept the plan alive, until he was pulled over for speeding on October 7, 1974. Mills staggered out drunk, and his passenger, a stripper who went by the name Fannie Fox, followed suit. When Mills appeared drunk at Fannie Fox's show at a Boston strip club soon after, he was removed as chairman of the Ways and Means Committee, effectively ending his push for the Kennedy-Mills plan (Quadagno 2005: 123).

The political stream

In 1971, the Nixon administration began to strategize how to reform the health care system; they sought plans that would lower cost without increasing government regluation. (Kingdon:2003) The economic and political forces in the US seemed ready to bring about changes in medical care over the opposition of providers, putting insurance companies, hospitals and physicians on the defensive. (Starr:1982)

The Presidency

Nixon's Comprehensive Health Insurance Plan (CHIP) consisted of an employer-mandate and a separate program designed to help the working poor and unemployed. The plan required employers to funnel 65% of employee health costs, eventually it would be 75%. Along with the mandates, a "system of subsidies" would be established for smaller businesses with less health options. Anyone not covered by the employer-mandate would be insured under the Assisted Health Insurance Program (AHIP) which included a combination of copayments, deductibles, and annual ceilings. (Wainess:1999)

In February of 1971, President Nixon declared HMOs to be innovations for health care that would be part of "a new national health care strategy." Nixon argued that the current system operated "episodically" and it had built in an "illogical incentive" that encouraged Doctors to benefit from patient illness rather than patient health. Believing that HMOs reversed the incentives of the traditional system, Nixon called on Congress to establish grant and loan programs to help HMOs grow. The goal was to create over 1,700 HMOs by 1976, enough to enroll about 40 million Americans. The proposal would have required employers to provide minimum health benefits under a National Health Insurance Standards Act. It also meant to establish a federal fund for the Family Health Insurance Program which would offer some coverage for low imcome homes. (Starr:1982)

As part of his "National Healthcare Strategy," Nixon contested that HMOs were important to help provide "equal access to health care for all citizens, creating efficiencies within the existing healthcare system and dealing with the economic impact of supply and demand on the health care market" (Stahl 264). By mid-1973, the Federal government had handed out $7 million in planning grants for HMO's, which had grown to serve over 5 million people (Hicks 1973: 37). HMO's were viewed as a way to move patient care from an expensive hostipal to a more manageable clinic, where diseases could be prevented or stopped before they became serious and expensive (Hicks 1973: 37).

Congress

Until now, Congress generally favored increasing heath expenditures. Medical care was regarded as a "prudent and popular social investment." After 1970 however, elected officials began to be intimidated by the rising aggregate costs of health care. Soon, there was doubt that "the investment was worth the return in health." (Starr:1982)

One large-scale proposal combined employer-mandates with a subsidy program for the poor. The response on the hill was mixed; Republicans felt the proposal was too expansive and the Democrats felt it was not expansive enough. Furthermore, the administration pointed out that health reform seemed to conflict with their political philosophy and that it alienated conservative politicians. (Wainess:1999) Nixon began to realize that it would be hard to pass any legislation, as Congress was dominated by Democrats and he could rarely find unity among his own party. Democrats began responding to Nixon's partisan politics by showing a surprising degree of party unity (Conlan 1984: 255).

Bureaucracy

In 1973, the new HEW secretary Caspar Weinberger dedicated himself towards developing a National Health Insurance Bill, urging President Nixon to present it to Congress in order to "regain the initiative in the health area" (Quadagno 2005: 120). Weinberger's goal was to produce a plan that would result in approval by the public and Congress. He acknowledged both the opinions of the Nixon administration as well as interest groups. He built consesus among all parties when writing legislation. This contributed to the effectiveness of his efforts.

On November 2, 1973, Weinberger, in a memorandum to Nixon, urged the administration to introduce a comprehensive plan that included a positive and effective position in health care, proving that the government was not stagnant on the issue. (Jackson) By 1974, Weinberger managed to meet with key interest groups and had solicited feedback from fellow cabinet secretaries. Building on the 1971 bill, he set out a more comprehensive plan consisting of employer-mandates. The "Comprehensive Health Insurance Plan," or CHIP, had special regard for the working poor and the unemployed and would be administered by private insurance companies (Wainess:1999).

The second part to the new bill was the Assisted Health Insurance Plan, in which states could hire private insurance companies to cover low-income and high risk individuals (Quadagno 2005: 120). Nixon announced the plan in his 1974 State of the Union address, and Senator Kennedy immediately announced he would oppose it. Kennedy saw the plan as a potential money-making machine for private insurance interests and abusive to the public interest (Quadagno 2005: 121).

Organized Interests

The American Medical Association (AMA) did not agree with Nixon's endorsements of HMOs, but was criticized for its apparent self-interested tactics of preserving private practice. In 1971, AMA membership was low, and other competing physician organizations emerged. In an attempt to regain more liberal supporters, the AMA shifted its concerns to the poor and family practice. The AMA sought to resist health reform by turning their attention to neighborhood health centers. This shift backfired however, and alienated staunch conservatives who argued that the AMA has "sold out its membership." This caused divisions within the medical profession and fueled right-wing protest against further government intervention in healthcare. (Starr:1982)

Like the AMA, authors and activists John and Barbara Ehrenreich also opposed the band-aid approach of Nixon. They believed that the present system needed a serious overhall. In their book, The American Health Empire: Power, Profits and Politics, they write, "the demand is to turn the medical system upside down, putting human care on top, placing research and education at its service, and putting profit-making aside. Ultimately, the growing movement of health care consumers does not want to 'consume' health care at all, on any terms. They want to take it -- because they have to have it -- even if this means creating a wholly new American health care system."

Labor

Arguably, unions precipitated the revival of the movement for national health insurance during the Nixon administration. (Starr:1982) Escalating costs were one reason for labor's renewed interest in national health insurance--as health costs rose, it became increasingly difficult for unions to bargain for higher pay. (Starr:1982b) At a meeting of the American Public Health Association in 1968, the president of the United Auto Workers, William Reuther, claimed that "'comprehensive high quality health care must be made available to every citizen as a matter of right.'" (Derickson:2002,188 quoting Reuther:1969,15) Reuther organized the Committee of 100 for National Health Insurance (later, the Committee for National Health Insurance, or CNHI). (Derickson:2002) The CNHI was a staunch supporter of a single-payer approach to national health insurance. In keeping with this position, Edward Kennedy brought CNHI's Medicare-style Health Security bill to Congress in 1971. (Quadagno:2004) Many other bills were also introduced around this time, but CNHI refused to compromise. (Starr:1982b) Ironically, while labor played a role in putting national health insurance back on the agenda during the Nixon administration, it became one of the biggest obstacles to enacting reform.

The policy window for health reform

Why the window for health care reform opened

The window for reform during the Nixon Presidency arose due to the discovery of a "crisis" in healthcare. During the time of Nixon, the country experienced a rapid increase in healthcare related costs. This resulted in a huge financial burden on Medicare and Medicaid. Over a period of five years after Medicare’s enactment, the annual expenditure rate for hospitals grew by 14% (Marmor 98). Furthermore, physician’s fees increased by 7.5% (Marmor 98). It was estimated at the time that there was a $60 billion deficit in the healthcare programs (Starr 381). Nixon attempted to implement price controls and wage limits on health care service charges and physicians' fees, but as soon as the price controls were lifted inflation in these areas soared. A formal structure for permanently monitoring health care costs was needed (Quadagno 2005: 106). Furthermore, the health care system was seen as an encourager of waste and inefficiency. No one had a reasonable explanation for why hospital charges for the same care could vary by up to $50 in the same county, why patients in Philadelphia averaged two extra days in hospital stays than the rest of the nation, or why hospitals in the Seattle area were planning on building space for 500 additional beds when the present beds were under 50% occupancy (Quadagno 2005: 104).

The presence of a crisis produced large national concern for healthcare. Trends also showed a steady decrease in the overall quality and effectiveness of the healthcare industry during the 1970s. These occurrences sparked political interest and involvement in the Nixon Administration.

Why the window for health care reform closed

Nixon had trouble gaining support for his proposal for National Health Insurance. The employer mandates and the offer of substandard care for poor Americans did not fare well in Congress. (Starr:1982)

The combination of a national recession and a rise in inflation stalled the passage of healthcare. Also, the distractions of the Watergate scandal negatively affected the healthcare campaign. The media and public shifted their interest from healthcare and focused on the scandal. Watergate decreased trust and credibility in the government. By the end of 1973, Nixon's Congressional support on legislation had dropped to the lowest of any president on record. Oil prices rose by over three hundred fifty percent and inflation jumped eleven percent. Because of this, the Nixon Administration was unable to make progress in healthcare reform.

References

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