18 2.9 – CASE STUDY: THE ORIGINS OF U.S. HEALTHCARE POLICY

CASE STUDY: THE ORIGINS OF U.S. HEALTHCARE POLICY

The desire for some form of national healthcare in the U.S. began in the second half of the nineteenth century. Soon after the U.S. Civil War, the development of germ theory catalyzed the idea that the majority of people could be effectively cured of many different diseases for the first time in human history. Technological advances in preventive care introduced efficient vaccines that would eventually eradicate a number of millennia-old diseases from the planet. While the brilliant scientific discoveries of nineteenth century researchers like Louis Pasteur and Joseph Lister introduced the prospect of living longer lives, they also introduced a new concept unfamiliar to Western civilization at the time: significant medical expense. With the overwhelming benefit of advanced medical technology extending and improving human life came the cost of having to pay for such effective modern practices.

The evolution of healthcare policy in the U.S. has differed significantly from other developed nation-states. American political culture’s deep faith in free market capitalism and limited government regulation has been the principle feature driving American healthcare policy decision making for almost 200 years. A historic lack of faith in central government efficiency also hampered the development of government-provided healthcare in the U.S. long after all other  economically developed nation-states implemented some form of government- sponsored healthcare.

After World War II, President Harry Truman (1945-1953) became the first American president to whole-heartedly support a national healthcare program. Truman’s vision of national healthcare policy reform called for universal comprehensive health insurance for all Americans. In the end, however, the growing Cold War with the Soviet Union and increased fears over socialism swelled the political strength of opponents of government-supported healthcare policy. The defeat of Truman’s universal healthcare policies created an environment where private health insurance would be available to Americans who could afford it and publicly funded welfare services would be available to those who could not. After this defeat, advocates of government-supported universal healthcare reform lowered their political expectations to provide basic healthcare insurance for retired, disabled, and indigent Americans. They would finally achieve success with the Johnson administration in the 1960s (Palmer, 1999).

President Lyndon Johnson (1963-1969) made another attempt at implementing healthcare reform. Johnson successfully expanded the Social Security Act of 1935 to include healthcare coverage for seniors and the disabled (Medicare) and the poor (Medicaid). The Social Security Act of 1965 made the federal government the largest single purchaser of healthcare services in the country (Moseley, 2008). 

President Ronald Reagan’s (1981-1989) administration oversaw less government regulation in the healthcare industry and an expansion of private health insurance programs. Reagan’s most important healthcare legislation, the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), allowed former employees to remain covered by their previous employer’s healthcare program, provided they agreed to pay the full monthly insurance premium (Ross and Hayes 1986).

President Bill Clinton (1993-2001) attempted to restrain the growth of healthcare costs with the Health Security Act of 1993. Clinton’s healthcare policy relied on a combination of government provided universal coverage and private insurance providers. Opposition to Clinton’s legislation proved too strong and the policy reforms did not survive Congress. Clinton was able to successfully sign the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which increased privacy protections for individuals and required medical providers to make available individual’s health records upon request. Clinton also signed legislation creating the Children’s Health Insurance Program (CHIP), which  expanded Medicaid coverage for uninsured children in families that could not otherwise qualify for Medicaid (Griffin, 2017).

The most significant healthcare reform in recent U.S. history came through the Obama administration (2009-2017). In 2010, President Obama took advantage of Democratic majorities in the U.S. House of Representatives and Senate by signing the Patient Protection and Affordable Care Act (ACA). President Obama’s signature legislation prohibited the denial of healthcare insurance to individuals with pre-existing medical conditions, ended the policy of private insurers limiting lifetime coverage for customers, extended the coverage of Americans on their parent’s health insurance to the age of twenty-six, provided basic requirements that all insurance plans must include, and required all Americans to acquire health insurance (individual mandate). In addition, the ACA expanded Medicaid coverage for those eligible (and in states that participated) while providing federal subsidies to lower and middle-income Americans to assist in the purchase of private health insurance. In general, the ACA was designed to build on the U.S. foundation of employer-backed healthcare coverage (60% of Americans receive healthcare through employers) and fill in the coverage gaps by expanding Medicaid and providing tax credits to make coverage more affordable for the lower income middle-class population (Garfield et al., 2019). While the Obama administration successfully passed healthcare reform policy, the actors involved traveled a difficult political road to get there.

As we mentioned earlier, the 2008 elections resulted in Democratic majorities in the U.S. House of Representatives (257-199) and Senate (59-41). The Democrat’s fifty- nine seats in the Senate—which included two independents who caucused with the Democratic party—were particularly important because they left the party one seat shy of a filibuster-proof supermajority. In April of 2009, Senator Arlen Spector, a Republican from Pennsylvania, changed political parties and joined the Democrats. With a strong majority in the House and a filibuster-proof majority in the Senate, President Obama’s healthcare reform legislation achieved a realistic chance of becoming the law of the land (Garfield et al., 2019).

The Democrat’s complete control of the Senate did not last long. In August of 2009, Senator Ted Kennedy of Massachusetts died, leaving his party with fifty- nine seats in the Senate. A January 2010 special election would allow the people of Massachusetts to select a permanent replacement. With their complete control of a united government intact, the Democratic party successfully passed the ACA in the House of Representatives on November 7, 2009 (220-215) and in the Senate on December 24, 2009 (60-39) (Price and Norbeck, 2014).

While passing landmark healthcare reform legislation in the House and Senate was an important milestone, it was far from the end of the legislative process. Legislation that has been successfully voted out of the House and Senate must be sent to a conference committee in order to reconcile the many differences that exist between the two versions of the bill. Conference committees comprise members of both chambers of Congress who must agree on significant changes to  the Senate and House versions of any legislation, often a monumentally difficult task to perform. The product of conference committee negotiations must then be sent back to both chambers for a final vote on the legislation before it is sent to the president for signature or veto. Given the Democratic party’s control of the House and Senate on Christmas Day, 2009, few expected they would have any difficulty getting the ACA through this last hurdle and on to the president’s desk. Those expectations turned out to be wrong.

The special election on January 19, 2010, in which the people of Massachusetts would select a permanent replacement for the late Senator Kennedy, provided an overwhelmingly surprising outcome. Republican Scott Brown, who ran on an anti-ACA platform, pulled off one of the more unexpected political victories in U.S. Senate history by winning the special election and becoming the first Republican Senator from the Commonwealth of Massachusetts since 1972. This upset victory by the Republicans deprived the Democratic party of their filibuster-proof sixtieth seat in the Senate prior to conference committee action.

President Obama and Speaker of the House Nancy Pelosi thus faced a unique political dilemma. Although the ACA had successfully passed through both chambers of the federal legislative branch, the Senate and House versions of the bill had to be identical before the president could sign it into law. The traditional method of this process would require a successful vote from both chambers on a conference committee’s version of the two bills. Without their sixtieth seat in the Senate, Democrats would be unable to prevent a Republican filibuster from “killing” the legislation at the literal last minute. To overcome this problem, Democratic leadership used an unconventional approach that would not require conference committee action. Democrats sent the House of Representatives the exact copy of the Senate bill for a vote. If the House approved the Senate version of the ACA in its entirety, there would be no need for conference committee action or a future Senate vote that would certainly be filibustered by Republicans. On March 21, 2010, House Democrats successfully passed the Senate version of the bill (219- 212). President Obama signed the Patient Protection and Affordable Care Act on March 23, 2010 (Price and Norbeck, 2014).

Successful navigation through the legislative and executive branches of the federal government was not the end of the political story for the ACA. As discussed above, the judicial branch represents another important actor in the public policy process. State governments, interest groups, and individual citizens (also important actors in the policy process) immediately challenged the constitutionality of the ACA after it became federal law. Twenty-six state governments and the National Federation of Independent Business challenged two specific provisions within the ACA on constitutional grounds: the individual mandate requiring individuals to purchase healthcare insurance or pay a penalty and the required expansion of Medicaid coverage by state governments to include all individuals at or below 138% of the poverty level. Opponents of the ACA argued that the individual mandate was outside  the constitutional power of Congress to regulate commerce or lay and collect taxes. The required expansion of Medicaid was argued to be a violation of the Tenth Amendment and a violation of the state governments’ right to exercise all reserved powers not specifically denied to the states by the Constitution.  The Supreme Court’s 2012 opinion in National Federation of Independent Business v. Sebelius upheld Congressional power to create the individual mandate (as a legitimate power to tax enumerated in Article One of the Constitution) and allowed the Medicaid expansion program to continue if state governments volunteered to participate.

President Donald Trump’s (2017-2019) healthcare platform included repealing and replacing the ACA. The Trump administration pushed for adoption of the American Health Care Act in 2017. Despite Republican majorities in the U.S. House of Representatives and Senate, President Trump was unsuccessful in replacing the ACA. Although the ACA remains the law of the land, the Trump administration limited its effectiveness by reducing federal funding for outreach and enrollment assistance programs and removing the individual mandate requirement (Garfield et al., 2019).