An accident of history?

Still trying to work through the request pile, someone wanted commentary on the lack of universal health insurance coverage in the U.S. That lack is notable because all the other wealthy countries -- and even some unwealthy ones -- do have universal health care insurance. I've written a lot about insurance issues here, but I haven't really addressed the political history behind our peculiar non-system.

If the U.S. were not so abnormal, it wouldn't seem to require explanation in quite the same way. For people under age 65, who are not poor children or poor and disabled people, or poor people taking care of children, the vast majority depend on employer-provided insurance. 62.4% of the non-elderly population had employer sponsored insurance in 2004. For people who don't get insurance through their employers, it's quite expensive to buy, and, since they are usually in low wage jobs, they generally can't afford it. That's why we have something like 45 million uninsured people. As the price of health insurance keeps going up, employers are covering fewer workers and/or forcing employees to pay a higher share of the premiums. So, the number of uninsured people has been rising.

In the 1930s, when FDR launched his "New Deal" programs and established Social Security, there was debate about establishing a universal health care system as part of it. Probably the most important reason it didn't happen was because the American Medical Association, then one of the most powerful lobbies in Washington, was violently opposed to it. Remember that it was just around this time that medical care was actually starting to be worth having, so private insurance plans started to emerge.

During WWII, the government imposed a freeze on wages, but did not freeze benefits. Since there was a labor shortage, in order to compete for workers, employers started to offer health insurance. Harry Truman tried to establish a universal health insurance system, but by this time, the insurance industry had a stake in the status quo. So did unions, who could claim health insurance benefits as a victory they had helped deliver, and even employers, who saw it as a way of promoting worker loyalty. And, the AMA was still against universal health care. Since a substantial percentage of the population did have insurance, there was not strong pressure to fix the system. Remember -- and this is very important -- that health insurance was much cheaper then than it is now.

In 1954, the IRS decided that the premiums employers paid for workers' health insurance were not taxable income for workers. This further encouraged the growth of employer-provided insurance. Although universal health insurance seemed dead, there was an ongoing debate about providing health insurance to Social Security recipients -- the elderly and disabled. Continuing vociferous AMA opposition prevented the idea from going anywhere.

In 1960, JFK ran on a platform of providing "Medicare" to the elderly. Finally, after he was murdered, sympathy for the late president's goals, along with the legislative savvy of his succesor Lyndon Johnson and Democratic ascendancy in the Congress made passage of Medicare possible in 1965. Medicaid, for welfare recipients, also passed as a sort of afterthought. At the time, it covered a much smaller population and, again, was far less expensive, than it ultimately came to be. Medicare succeeded even though the AMA hired Ronald Reagan to make a record entitled "Ronald Reagan speaks out against socialized medicine," which was distributed to thousands of doctor's wives for use in house parties to raise opposition to Medicare. Reagan's speech concluded, "And if you don't do this [i.e., write and call your member of Congress and organize against Medicare] and if I don't do it, one of these days you and I are going to spend our sunset years telling our children, and our children's children, what it once was like in America when men were free."

Well, we've had Medicare for 40 years now, and most people don't feel enslaved by it. This signal defeat for the AMA probably helped to bring about a decline of the organization's status within the profession, which no longer generally shares the aversion to government-sponsored health care. However, the vast power of the insurance industry lobby has continued to stymie any further extension of government sponsored health insurance in the United States. The Bush administration, of course, ultimately wants to do away with Medicaid and probably Medicare as well. There is little prospect of that happening, but they are squeezing both programs. Meanwhile, the ranks of the uninsured keep growing.