History of healthcare reform in the United States
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The United States' healthcare system is unique among Western countries. The United States has eschewed universal national insurance in favor of a private, employer-based system, with government programs covering only certain vulnerable groups. While many have criticized the United States for its lack of government action on healthcare, others have praised the supposed innovation and diversity resulting from the private healthcare industry.[1] Some of the healthcare policy issues debated throughout the United States' history have been
Over the past few decades, the government's involvement in healthcare has increased. By 2013, government expenditures represented 43 percent of healthcare spending; private households, 28 percent; and private businesses, 21 percent. Government health insurance accounted for 33 percent of all insurance plans, and employer-based plans constituted 48 percent.[2] Today, the healthcare industry is an immense part of the United States economy. Overall healthcare spending amounts to about one-sixth of the nation's gross domestic product and for about one-fourth to one-third of state budgets. Healthcare regulation and policy is complex, with nearly "every aspect of the field ... overseen by one regulatory body or another, and sometimes by several." Such regulations are enforced by federal, state, and local governments, and even private organizations. The 2010 passage of the Affordable Care Act (ACA), also known as "Obamacare," introduced experimentation and uncertainty into the industry, which has been and will be watched closely over the next several years to gauge the lasting effects of its policies.[3][4][5][6][7] HIGHLIGHTS Major healthcare legislationMajor healthcare legislationLyndon Johnson signing the Medicare bill, with Harry Truman, July 30, 1965 President Lyndon Johnson signed Titles XVIII and XIX of the Social Security Act into law on July 30, 1965. Title XVIII established Medicare, which provided public health coverage to seniors over the age of 65. The Medicare law consisted of Part A and Part B:[8]
The Medicare insurance program followed the fee-for-service model, in which the government reimbursed hospitals and doctors for the "usual, customary, and reasonable" fees they charged for each service and did not manage any hospitals or provider networks. The reimbursement process generally functioned through "fiscal intermediaries," private companies that wrote checks on behalf of the government. Title XIX established Medicaid, which provided public health coverage to poor families receiving Aid to Families with Dependent Children (AFDC). The program was administered through matching grants, in which federal and state governments both provided funds. States were left some discretion over administering and determining eligibility for the program. When the Medicare program began in 1966, 19 million people enrolled. By 2015, 55 million people were enrolled in Part A and 51 million people in Part B. People could be dual-eligible for both programs, and by 2010, one in five Medicare beneficiaries were also receiving Medicaid. In 2012, 91 percent of doctors accepted new Medicare patients, while 71 percent accepted new Medicaid patients.[9][10] President Richard Nixon signed Public Law 92-603 on October 30, 1972, which amended Title XVIII of the Social Security Act. The law expanded Medicare coverage to disabled people who had been receiving Social Security benefits for at least two years, and to people with serious kidney disease.[11] Upon signing the legislation, President Nixon stated that it "reaffirms and reinforces America's traditional efforts to assist those of our citizens who, through no fault of their own, are unable to help themselves. America has always cared for its aged poor, the blind, and the disabled--and this bill will move that concern to higher ground."[11] The eligibility expansion in 1972 contributed to Medicare's increasing costs. In 1967, Medicare's yearly expenses were $4.2 billion; by 1973, they had risen to $9.3 billion. In 2002, the average yearly cost to cover an elderly beneficiary was $6,002, but the average yearly cost to cover a person with serious kidney disease was $41,696.[12] Health Maintenance Organization Act of 1973President Richard Nixon signed the Health Maintenance Organizations Act on December 29, 1973. The law promoted a particular type of health insurance—prepaid group practice service plans, or health maintenance organizations (HMOs), as opposed to the more traditional fee-for-service plans. The law promoted HMOs in several different ways:
President Nixon hoped that the act would signal the beginning of a comprehensive healthcare strategy. In his signing statement, he commented: "The signing of this act marks another milestone in this Administration's national health strategy. The major task of providing financial access to health services should be addressed in the next session of this Congress with the enactment of an appropriate and responsive national health insurance act."[14] Consolidated Omnibus Budget Reconciliation Act of 1985
In 1993, the RAND Corporation reviewed existing studies and found that between 20 and 25 percent of people eligible for COBRA coverage actually purchased such coverage.[16] Health Security Act of 1993See also: "Hillarycare"The Health Security Act of 1993, also known informally as Hillarycare, was a healthcare bill proposed by President Bill Clinton's administration, but which failed to pass Congress. Shortly after President Clinton was inaugurated in January of 1993, he established a healthcare task force led by first lady Hillary Clinton. Paul Starr, a White House advisor who was part of the task force, later wrote that "there seemed to be a historic opportunity to complete what Democrats had long regarded as the chief unfinished business of the New Deal—national health insurance."[17] The task force created a 1,342-page bill, which President Clinton unveiled before a joint session of Congress on September 22, 1993. He asked Sen. Robert Byrd, the presiding officer of the Senate, to introduce the bill as part of the budget reconciliation process, but Byrd refused. The bill was then introduced on November 20 by Rep. Richard Gephardt in the House, with 103 cosponsors, and Senator George Mitchell in the Senate, with 29 cosponsors. Although the Senate version eventually reached a floor debate, Congress entered recess without coming to a conclusion on the bill, and Senator Mitchell admitted in 1994 that he considered the bill dead.[18][19][20][21] The bill proposed the following regulations:[22][23]
Health Insurance Portability and Accountability Act of 1996Seal of the U.S. Department of Health and Human Services President Clinton signed the Health Insurance Portability and Accountability Act (HIPAA) on August 21, 1996. He stated that "this Act will ensure the portability of health benefits when workers change or lose their jobs and will protect workers against discrimination by health plans based on their health status."[24] HIPAA limited the extent to which insurance companies could exclude people with pre-existing conditions. For instance, pregnancy could no longer be excluded as a pre-existing condition. Employer-based insurance plans could not exclude employees or charge them higher premiums on the basis of preexisting conditions or genetic predispositions. HIPAA also enabled workers to retain their health insurance after losing or changing jobs. The law required health insurance companies to extend coverage to workers they had been covering under COBRA and whose COBRA coverage had expired. These two provisions were intended to enable individuals to maintain health insurance coverage through various life events.[25] HIPAA also established national standards for the privacy and security of electronic health information. Of the four sets of standards in the law, the two most well-known were referred to as the Security Rule and the Privacy Rule. The Security Rule, health information that is stored electronically and could be used to identify a patient is required to retain the utmost confidentiality, and providers are legally responsible for protecting this information from unauthorized access. Under the Privacy Rule, patients retain full access to their health records and can restrict their disclosure and use. These were the most substantial provisions of HIPAA and they came with complex compliance requirements. Most people's experience with the privacy requirements is when they are visiting a doctor's office for the first time and are asked to review a HIPPA Notice of Privacy Requirements and sign a consent form.[26][27][28] States were given the option of either allowing the federal government to enforce HIPAA regulations in their state, or adopting and enforcing their own measures that would be at least as stringent as the ones outlined in the federal legislation. Kala Ladenheim of George Washington University Medical Center wrote, "the legislation is important because it creates a statutory framework for the federal government to use in collaborating with state governments to regulate insurance markets."[29] Balanced Budget Act of 1997President Clinton signed the Balanced Budget Act on August 5, 1997. One aspect of the omnibus legislation created Title XXI of the Social Security Act, also known as the State Children's Health Insurance Program or S-CHIP. The law provided block grants for states to offer health insurance to children who weren't previously eligible for Medicaid and whose families earned less than 200 percent of the federal poverty line. States could offer such coverage in three ways: expanding their existing Medicaid programs to cover more children, creating a new program to cover them, or using both Medicaid expansion and new programs.[30] After CHIP had been in place for three years, states were required to return any unspent S-CHIP funds to the federal government. Almost half of all federal funds were returned, due to difficulties that states encountered in enrolling children in the program. By 2009, 5 million children were enrolled in the program, while 7.5 million children remained uninsured.[30] The law also instituted important changes to Medicare. The Tax Equity and Fiscal Responsibility Act of 1982 had given Medicare beneficiaries the option of enrolling in Medicare through private plans rather than through the traditional fee-for-service Medicare plan. The Balanced Budget Act of 1997 expanded and formalized this option, later known as Medicare Part C or Medicare Advantage. Under Part C, the federal government paid the private plans for each beneficiary accepted, amounting to 95 percent of the Medicare average cost per enrollee. The insurance plans were not allowed to choose which individuals could enroll, but they could choose which geographic areas to serve. They were required to offer all traditional Medicare benefits but could also offer additional benefits beyond traditional Medicare, such as vision and dental benefits. By 2015, about 15 million Medicare beneficiaries—30 percent of all Medicare beneficiaries—were enrolled in Medicare Advantage plans. Studies have shown that Medicare Advantage HMOs (but not other types of Medicare Advantage plans) tended to perform better than traditional Medicare in providing preventive services and controlling overall costs; however, beneficiaries perceived traditional Medicare more favorably. Because of these perceptions, older and less healthy recipients tended to enroll in traditional Medicare, so the private Medicare Advantage plans may have actually received higher payments than they needed for their relatively healthy enrollees. The Balanced Budget Act also encouraged states to offer HMO options to Medicaid recipients.[9][31][32] Medicare Prescription Drug, Improvement and Modernization Act of 2003While Medicare Part A covered hospitalization costs, and Medicare Part B covered doctors' visits, Medicare had not originally covered any prescription drug costs. The price and importance of pharmaceutical drugs had increased sharply over the decades since Medicare's original passage, and by 2004 the average Medicare beneficiary was spending over $1,000 out-of-pocket each year on prescription drugs. When President George W. Bush was elected in 2000, he promised to provide prescription drug coverage to seniors. Congress designed a program, endorsed by the American Association of Retired Persons (AARP), that functioned through private insurers. President Bush signed the bill on December 8, 2003 and it took effect on January 1, 2006. The law, sometimes known as Medicare Part D, established four tiers of coverage.[33]
Enrollment in the coverage was voluntary. Medicare beneficiaries who chose to enroll could do so in three ways: by purchasing separate drug coverage, if they were already enrolled in the government plan for Parts A or B; by enrolling in a private Medicare plan; or through their former employer's retirement benefits program. Beneficiaries paid premiums to enroll in the program, which were higher for those with higher income. At the time of its passage, the program was officially estimated to cost $400 billion for the first 10 years of operation. However, controversy arose when an actuary from the executive branch estimated the true cost to be $530 billion, yet kept his estimates secret from Congress until months after the bill was signed. But by 2014, the Congressional Budget Office concluded that Medicare Part D spending had proved lower than either estimate.[34][35][36] By 2014, about 37 million Medicare beneficiaries were enrolled in the prescription drug program.[37] In addition to establishing Medicare Part D, the law also introduced changes to Medicare Part B by charging higher premiums to higher-income beneficiaries (individuals with incomes over $85,000 and couples with incomes over $170,000). The law also granted both Medicare and non-Medicare recipients a tax exemption for health savings accounts (HSAs), which allow people to save money for out-of-pocket medical expenses. Patient Protection and Affordable Care Act of 2010See also: Effect of the Affordable Care Act in the United StatesThe Patient Protection and Affordable Care Act, also known as Obamacare, was signed into law by President Barack Obama on March 23, 2010. The aim of the law was to provide an expansion of health insurance coverage to more Americans through both individual health insurance exchanges as well as through employer-provided plans. Minimum requirements of coverage were established and both individual and employer mandates, enforced by tax penalties, were established over a period of years in order to achieve the goal of expanded coverage. Subsidies and tax credits were provided to individual consumers based on income level and dependents, and the law provided for an expansion of Medicaid to cover low-income childless adults. Small businesses were given tax credits based on the level of insurance offered to employees, as well.[38] The law also specified ten essential benefits that plans created after the law's passage need to include. Existing plans were grandfathered in, but by 2014, few of the grandfathered plans remained due to frequent changes to health insurance policies. The ten essential benefits outlined by the Affordable Care Act included the following:[39][40]
Most of the law's major provisions were implemented in 2014. Between 2013 and 2014, the number of uninsured individuals nationwide declined by 18.8 percent. Meanwhile, annual Medicaid enrollment increased by 9.5 percent. Nearly 10 million individuals purchased insurance through the new exchanges as of November 2015, about 35 percent of the total number of estimated potential enrollees. Numerous studies have been conducted to assess changes in insurance premiums since the passage of the ACA; some have found large increases while others have found little or no change.[41][42][43] Development of modern health insuranceDevelopment of modern health insuranceNational health insurance proposalThroughout the twentieth century, Progressive groups repeatedly called for national health insurance in the United States. The Progressive Party, also known informally as the Bull Moose Party, was formed in 1912 and nominated former President Theodore Roosevelt as its candidate for the presidential election. Its platform called for a National Health Service and public insurance for the elderly, unemployed, and disabled. The proposal for government health insurance was controversial and was opposed by influential organizations such as the American Federation of Labor, the American Medical Association, and fraternal organizations. Roosevelt finished second in the 1912 election, losing to Democratic candidate Woodrow Wilson. The Progressive Party performed poorly in the 1914 congressional elections and was dissolved in 1916; however, its idea of social insurance continued to influence reformers such as President Franklin Roosevelt.[44][45] By 1920, 16 European countries had adopted public health insurance. In contrast, the United States rejected the European models and instead developed a system of private health insurance in which many employers provided plans to employees and their families. This system emerged in the late 1920s when hospitals began offering health plans to public school teachers.[46] In 1929, the Dallas public schools entered into a contract with Baylor Hospital. Under the agreement, teachers would pay a monthly fee in exchange for guaranteed care at Baylor. The plan proved a success and was imitated by administrators around the country. The creator of one such plan illustrated his advertising posters with a picture of a blue cross. The American Hospital Association then adopted the blue cross as an insignia for plans they approved, while the American Medical Association adopted a blue shield for their approved plans. The Blue Cross/Blue Shield plans gave rise to a fee-for-service employer-sponsored insurance model, in which insurance companies reimbursed claims for services their enrollees received. According to one historian, "Blue Cross paid whatever the hospital charged. Blue Cross was not designed to monitor hospital costs."[47][48][49] In the 1930s, an industrialist named Henry Kaiser employed 5,000 workers on an aqueduct project in Southern California, with only one hospital nearby. Kaiser agreed to pay the hospital a fixed rate for each worker, and in exchange the hospital would provide all medical care for the workers' occupational injuries. The arrangement gave rise to the Kaiser Permanente Health Plan, a health insurance plan that operates its own hospitals and physicians' groups. The Kaiser system created managed care, which is the model for today's health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Under the model of managed care, the insurance company involves itself more directly in medical care, often by owning hospitals, paying salaries to doctors, controlling referrals, or limiting the treatments covered.[50] Spread of employer-sponsored insurance and managed careThe employer-sponsored model of health insurance spread during World War II, when a labor shortage prompted the federal government to institute wage controls with the intent of preventing inflation. In 1943, the War Labor Board ruled that wage controls did not apply to fringe benefits offered by employers, such as health insurance. In response, employers began offering greater health benefits rather than higher salaries in order to attract workers. The model grew more popular after the war when payments by employers toward employee health insurance were made tax-exempt.[51][52][53] By 1963, 77 percent of Americans had hospitalization coverage, and over 50 percent also had coverage for routine medical expenses.[54] In the 1980s, the RAND Corporation conducted a randomized study assigning people to different types of private health insurance, fee-for-service or managed care. The managed care organization in the study proved better at controlling costs, leading to public policies encouraging this type of private insurance.[55] Early history of healthcareEarly history of healthcareUniversity of Pennsylvania School of Medicine, the first medical college in the United States In the early years of the United States, healthcare was provided by wives and mothers in the home, with occasional home visits by doctors. Medical colleges were established starting in the late 1700s, providing formal scientific training and licensing to physicians. The role of doctors became more authoritative and pronounced with further advancements in science and the growth of cities, which presented health hazards due to overcrowding, poor sanitation and attendant disease.[56][57][58] In 1846 a group of physicians formed the American Medical Association (AMA) with the early mission—and achievement—of state regulation of pharmaceuticals. As medicine grew more professionalized, private health insurance pools were established, and employers and unions began offering some medical benefits to workers.[56] Though once housing primarily very poor and terminally ill patients, hospitals evolved to more closely resemble the institutions they are today, in two ways. First, the development of antiseptics allowed for more sanitary treatment conditions and better education of physicians. Second, hospitals began offering health plans for public school teachers, which allowed the teachers to go to hospitals more often for routine care and sparked the development of the employer-sponsored insurance model.[56][59] See alsoFootnotes
When did healthcare reform start in the United States?The groundwork for the enactment of Medicare and Medicaid began in the late 1950s and early 1960s. As employer-based health coverage grew, private plans began to set premiums based on their experience with health costs and the retired and disabled found it harder to get affordable coverage.
What is healthcare reform in the US?Health reform in the US refers to the overhaul of its health care system and is frequently used interchangeably with the Affordable Care Act (ACA). Health reform includes addressing the ever- increasing costs of national health care by individuals, families, and the government.
How did healthcare start in the United States?In 1915, The American Association for Labor Legislation proposed a bill for compulsory health insurance. In 1929, Dallas-based Baylor University Hospital worked with local schools to provide healthcare to teachers for a monthly fee of $6, forming the start of Blue Cross health insurance plans.
What is the history of managed care in the United States?The origins of managed care in the United States can be traced to the late 19th century, when a small number of physicians in several U.S. cities began providing prepaid medical care to members of fraternal orders, unions, and other associations of workers.
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