The political climate of America has evolved over the past
century from one that emulates other countries to one that attempts to set
policy that others emulate. Initiated by Bismarck in 1883 in Germany, a social insurance model provided insurance to workers. This type of insurance
expanded to cover whole populations in European countries. In 1911, the idea
spread to the United States. However, at this time in history, social welfare
was considered a state government function instead of a federal government
function. The need to introduce the concept of social welfare insurance
separately in each individual state extended debate beyond the onset of World
War I. This extension of debate allowed the political climate to change from
one of support of European ideas to one that was opposed to anything that
originated in Germany
With the end of the war, the following period of economic prosperity made
social reform initiatives a low priority for the majority of the population.
However, health issues were still a matter that required attention. In 1927,
the Committee on the Costs of Medical Care (CCMC) was formed to conduct the
first comprehensive study of medical economics. This study made
recommendations to reorganize the medical profession. The first
recommendation would eliminate solo practice by confining physicians to
hospital practice. The second recommendation proposed financing medical care
through either taxation, private insurance, or a combination of both. The
third recommendation proposed planning a way to extend health services to the
public outside the hospital. The fourth recommendation proposed changes in
the education of all medical practitioners.
The developments envisioned by the majority of the CCMC members, which would
have tended to institutionalize medical care, represented a radical departure
form the existing philosophy and practice. For this reason, the prospect was
alarming to some doctors. When the majority report was published, it drew
adverse reactions from within the medical profession. The AMA leadership
denounced it and immediately undertook to refute it. The ultimate effect of
the report (and the dissent), therefore, was to sharpen the cleavage between
physicians and those outside the profession (as well as the minority of
doctors) who advocated changes in the health care system. Any subsequent
attempt to enact Government health insurance would take place within the
context of this unresolved and fundamental conflict. (Corning, 1995, chap. 2,
he publication of this report, in 1932, coincided with the period of the
Great Depression. The economic climate had changed from prosperity to
poverty. Social welfare initiatives were vital in the effort to help the
people of this country survive. Under the direction of President Franklin D.
Roosevelt, the federal government initiated many social welfare programs to
reduce unemployment and in 1935, the Social Security Act was signed into law.
"With this measure, the Roosevelt administration supplemented (and eventually
replaced) its clutch of temporary relief programs with a structure of
permanent social welfare institutions" (Corning, chap. 2, p. 7). However, a
universal health plan was strongly opposed by the American Medical
Association (AMA) and it had no strong supporters.
Even though there was no strong political group that promoted universal
health care, the American public was advocating for health insurance. After
the government completed the first National Health Study, which determined
that a large portion of the population could not afford medical care, debate
on this issue increased. Government interest in a national health program
resumed with Congress introducing legislation, but, in 1939, World War II
Health issues did not stagnate during this war. The Social Security Board
produced annual reports, starting in 1939 that explored ways to expand health
benefits. Congress kept the issue alive by formulating legislation that would
expand the Social Security Act to include health benefits. However, other
special interest groups joined the AMA in opposition and succeeded in
defeating the legislation. President Roosevelt in his speeches to the public,
along with the revolutionary fireside chats, showed increasing support to
expanding the health care benefits of the population with government
initiatives. However, with his death in 1945, the political support for these
initiatives faded. President Truman was in favor, but he was in the minority.
The switch to a conservative Republican Congress, along with post-war
inflation and opposition to the labor unions who supported the legislation,
contributed to defeat of health care initiatives.
In 1948, with the election of President Truman, control of Congress returned
to the Democrats. Health care legislation was reintroduced, but there were
still enough conservative members to defeat the bill. In addition,
unemployment was on the rise predicting a poor economic future. Labor groups
began promoting employer insurance coverage plans. The political climate was
changing and anti-Communist sentiment was increasing. Social welfare
initiatives that would compel the country to have only one choice of
insurance were equated to communism. In 1950, the Korean War started. In
1952, Dwight D. Eisenhower, a Republican, was elected and the national health
insurance issue was eliminated from the agenda of Congress with the support
of the AMA. The Catholic Church, who had reversed their position in 1948,
along with the majority of other social and political organizations, totaling
1,829 in all, also supported this action.
Four events in the 1956, session of congress presaged a revival of the debate
over health insurance under social security. One was the enactment of a
permanent program of Government health protection for dependents of
servicemen—the so-called military "medicare" program....The second was an
expansion of payments to medical vendors for the provision of health care to
welfare clients. And the third (and least noted) event was the approval by
Congress of a $30,000study of the problems of the aged....By far the most
significant portent of a renewal of the health insurance debate, though, was
the struggle to add to the social security program cash benefits for totally
and permanently disabled persons aged 50 and over. (Corning, 1995, chap. 4,
This time, health care insurance legislation had the support of the labor
unions, along with the American Hospital Association (AHA), the American
Nurses Association, and the National Social Workers Association. The
opposition included the AMA, the National Chamber of Commerce, the National
Association of Manufacturers, the Health Insurance Association of America,
the Pharmaceutical Manufacturers Association, and the American Farm Bureau
Federation. By 1960, with Democratic candidates endorsing legislation,
Republican leaders began to look for a way to compromise. With the election
of President Kennedy by the American people, health care legislation was once
more at the forefront of the political agenda for the new administration.
However, it was decided to delay initiation until 1962, due to not having a
Democratic majority in Congress. During this waiting period, the White House
and the Democrats mobilized the senior citizens to form a coalition to
support legislation, now called Medicare that would offer health care
coverage to seniors over age 65. Between 1960 and 1965, public support for
the Medicare program increased. This was shown by the overwhelming majority
of Democrats elected in 1964, along with President Johnson’s return to office
in a landslide victory. On June 24, 1965, Medicare was passed into law.
In 1965, before the establishment of Medicare, only about half of those in
the United States who were 65 or older had health insurance....In 1965, elderly
persons spent an average of about 19 percent of their income on health care.
That share fell to about 11 percent in 1968; today it is more than 20
percent....Without Medicare, however, most people would pay even more for
health care or go without it. (Lee & Estes, 2003, p. 402)
Political factions have continued to create debate over issues concerning the
administration of Medicare. Each ten-year period had its own particular
political agenda in relation to Medicare. Between 1966 and 1971, the original
administrators did not want to alienate the AMA any further, so reimbursement
of claims was based upon reasonable costs. "In the first five years of
operation, total expenditures rose over 70%, from $4.5 billion in 1967 to
$7.9 billion in 1971"(Marmor, 200, p, 7).
In the 1970’s, the cost of health care increased. The Medicare program was
expanded to include the disabled and the person with chronic kidney disease.
In addition, role of Medicare in insuring quality standards of hospitals was
expanded with the passing of the Civil Rights Act. Medicare required
participating hospitals to demonstrate that they did not discriminate due to
race in order to receive reimbursement. It became a vehicle for social
In the 1980’s, the reimbursement system changed to a set per services charge
for physicians and a diagnosis related set payment for hospitals. "When
Medicare finally adopted the diagnosis-related group (DRG) system, it was an
important advance for all who reimbursed for hospital care, and it has made
lengths-of-stay in U.S. hospitals the shortest in the world" (Ball, 1995, p.
During the 1990’s, political maneuvering by both the Democratic and
Republican parties caused confusion. There were predictions by economists
that Medicare would be financially insolvent by 2002. In response to those
predictions, Congress with the support of the AMA, the AHA, the National
Right to Life organization, the American Association of Retired People
(AARP), and the United Seniors Association, passed the Balance Budget Act of
1997 that allowed managed care options, revised payment systems, and expanded
The primary problem with expanding Medicare’s managed care options is the
potential for risk selection—healthier persons will enroll in managed care
plans, while less healthy persons will elect the fee-for-service option.
Given the extreme variability in health care spending among Medicare
beneficiaries, there is great leeway for plans to select healthier
beneficiaries for whom capitated rates exceed true costs. If managed care
plans succeed in attracting and retaining relatively healthier Medicare
beneficiaries, Medicare will overpay for those who enroll in managed care plans,
while continuing to pay the full cost of the sickest Medicare beneficiaries
who are unattractive to managed care plans. (Moon & Davis, 1995, p. 3)
In the present decade, managed care options have not been an effective
program for Medicare reform.
The managed care initiative was sagging, in part, because of declining health
plan interest. In 1999, for example, 45 plans left the Medicare market while
54 others reduced their service areas....But while the health plans cite
inadequate reimbursement as the main explanation for their exit, several
studies also suggest that federal officials are actually losing money on the
managed care initiative. The problem is that Medicare capitation rates are
set based on the health care experience of the average client in a particular
community, while the typical enrollee is healthier and less costly than
average. (Kovner & Jonas, 2002, p.323)
It seems that managed care programs are not the answer to medicare reform.
President George W. Bush is advocating adding prescription drug benefits to
Medicare. The Democrats agree and they have proposed their own prescription
drug benefit plan. As in prior political conflicts over health care, it will
take committee revision in Congress over a period of time that could last for
years to prepare a final bill that is acceptable to both political parties.
Stakeholders that could oppose this legislation are the pharmaceutical
companies due to the possibilities of government control of costs and the
supplemental insurance companies that offer prescription benefits at costs to
the consumer that ensure profits for the company.
Private supplemental (Medigap) plans --- which serve about on fourth of
beneficiaries --- are becoming unaffordable for those with an average
income....Medications are a critical part of a comprehensive health care
system. Medicare beneficiaries are finding it increasingly difficult to pay
for prescription drugs, particularly because they also have other health care
expenses. (Lee & Estes, 2003, p. 406)
Stakeholders that would support adding drug benefits to Medicare are the
elderly and their families, who are represented by AARP and other senior
advocate special interest groups. Other stakeholders in support of this
legislation could include the AMA, the AHA, the American Nurses Association,
and other health care organizations. Organization of special interest groups
in a unified coalition is essential to success of any legislation. "If all
plans had to offer a basic drug benefit and if payments from Medicare to these
plans were increased to reflect the new benefit, competition might improve"
(Lee & Estes, p. 406). Equalizing Medicare with private insurance plans
by adding benefits would only improve the present system of health care.
Medicare has not kept pace with medical advances, new care strategies, and
accompanying coverage needs, including interventions for sensory impairment
and psychiatric care. Optimal management of chronic illness requires close
coordination with long-term services....Supplemental insurance cannot
adequately bridge these gaps, particularly for lower-to-middle income
populations. (Cassel, Besdine, & Siegel, 1999, p. 1)
Managed care plans have kept pace with medical advances. The addition of a
managed care choice should have been a solution to updating Medicare.
However, it was found that Medicare was more cost effective for the healthier
individual than managed care and that, due to adverse risk selection, managed
care companies did not accept the sicker individuals that would benefit from
the advantages of managed care plans. Republicans still have hopes that using
a voucher system to allow individuals to go out of Medicare to access managed
care plans. However, the voucher system would not solve the problem that
managed care companies do not want the sicker individual due to the higher
costs of service for these individuals.
However, cost containment is also an issue that concerns policy makers. "By
2030, the program is expected to serve 77 million people ---- more than one
of every five Americans ---- and to account for about 4.4 percent of the
gross domestic product" (Lee & Estes, 2003, p. 401). Expansion of
benefits to equalize Medicare with managed care would also increase costs.
Medicare reform that adds one benefit at time, such as the proposal to add
prescription benefits, increases legislative costs due the years it may take
for Congress to come to an agreement that is acceptable to all stakeholders.
It might be more beneficial to initiate Medicare reform that can encompass
all the needed additions to make Medicare benefits equal to managed care.
However, comprehensive reform would alienate some of the major stakeholders,
such as the insurance companies, who might persuade other major interest
groups to oppose the bill.
The political system in America is multilayered with many special interest
groups that form coalitions to oppose or support legislature. It is essential
in the proposal of legislation to be aware of which particular special
interest groups that would benefit, be neutral, or would be inclined to
oppose or support the proposed legislation. Prior to proposing legislation,
many politicians send out surveys to their constituents to garner information
regarding the proposed issues. Special interest groups also speak to legislators
or give literature that show support or opposition to certain issues.
Compared to the era when Medicare was initiated, special interest groups are
more vocal, more cohesive, and better funded. The view of ordinary people is
still important. However, special interest groups have more access to
politicians and more political power. Grassroots campaigns, public meetings,
rallies, and petitions to support, to oppose, or to initiate certain issues
are still effective. However, it may take a longer time for the issue to be
addressed by politicians in government than it would for the special interest
groups, depending upon the issue.
A prescription drug benefit for the elderly is an issue that was discussed
during the failed health care reform initiative that was proposed by
President Clinton, who was a Democrat. While he was in office, the
Republicans opposed health care reform. However, a prescription drug benefit
is an issue that is a top priority with many special interest groups.
Up until now, however, the GOP commitment to a prescription – drug benefit
could remain theoretical. With the control of the government divided first
between a Democratic president and a Republican Congress and then between a
Republican House and a Democratic Senate, there was little possibility that a
benefit would become law....The issue was simply too valuable to them as a
weapon of political war ever to be compromised away. Now, though, everything
has changed. (Frum, 2002, p.1)
There is a Republican President and a Republican Congress. It is likely that
the prescription drug benefit, along with some sort of Medicare reform, will
become law. A compromise bill will attempt to make all special interest
groups happy. In order, to have the pharmaceutical and insurance groups
comply, their input on limiting coverage will be considered. However, the
bill will not be so limited as to be useless. Compromise is an essential tool
in the political process. All sides need to be considered. However, in many
cases, the bill will only be passed if it is politically beneficial to either
the Democrats or the Republicans. REFERENCES
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