© 2008 delmar cengage learning. chapter 9 privatizing health politics: the origins and enduring...

© 2008 Delmar Cengage Learning.

Chapter 9Privatizing Health Politics: The Origins and Enduring

Dilemmas of America’s Public-Private Insurance Framework

Jacob S. Hacker

© 2008 Delmar Cengage Learning.

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U.S. Health Spending:More than Meets the Eye

• At first glance, the U.S. (far right), appears to spend far less on health care than (otherwise) comparable nations…

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U.S. Health Spending:More than Meets the Eye

• Once one factors in tax breaks and publicly-regulated/subsidized private benefits, however, U.S. spending levels (again, far right) rise considerably.

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Rise of Private, Employer-Sponsored Health Coverage

• Early battle by progressives to enact national health insurance drew attention to the need to expand health coverage

• Such groups as AMA, insurance companies championed private coverage as an alternative to government intervention

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• Early treatment of employer contributions to health plans as non-taxable fringe benefits led firms to use employer-sponsored health plans as a means to entice, retain workers

Rise of Private, Employer-Sponsored Health Coverage

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Expansion of Private Health Coverage

• After first successful employer group insurance plan (Baylor Hospital, 1929) arose– Concept caught on across the country during

the 1930s and 1940s

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Expansion of Private Health Coverage

• Following second (failed) attempt to enact national health insurance in association with Social Security– Private insurers redoubled efforts to expand

coverage

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Expansion of Private Health Coverage

• Price/wage controls in wartime made health coverage particularly important as a recruitment tool

• President Eisenhower (1954)– Clarified tax status of private health plans,

confirming their tax-exempt status

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Covering the Consequences: Political Legacy of Private Health Coverage

• Spread of private health coverage gave rise to numerous parties with an interest in defending the status quo– Thus limiting the political “room” to enact

comprehensive reform

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Covering the Consequences: Political Legacy of Private Health Coverage

• Use of private enterprise to serve public goals gives government little leverage over the health care system/industry

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Covering the Consequences: Political Legacy of Private Health Coverage

• Most, though by no means all, receive some form of health insurance under present system, blunting demands for reform

• Costs for switching from largely private to public provision of health insurance would now be monumental

© 2008 Delmar Cengage Learning.

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The Dreamers: Attempting to Develop a System of National Health Insurance

• President Truman famously failed to attain national health insurance in late-1940s

• Passage of Medicare and Medicaid in mid-1960s represents first (and only) broad expansion of public health coverage

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The Dreamers: Attempting to Develop a System of National Health Insurance

• Competing visions of national health insurance in early-1970s withered in the shadow of Watergate

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The Dreamers: Attempting to Develop a System of National Health Insurance

• President Clinton’s attempt to enact national health insurance failed– Private insurers implemented portions of it– Shepherding policyholders into managed care

plans

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Chapter 9 Summary

• U.S. spends greater proportion of income on health care than it initially appears– Once tax breaks and private benefit structures

are taken into account

• Nonetheless, the redistributive aspects of health spending tends to favor the rich

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Chapter 9 Summary

• Though many have, over time, recognized the need for a greater government role in health coverage and spending– The rise of private insurance and its vast

consequences have made national health insurance little more than a perennial fantasy