How Healthcare Became a Political Issue
The following is adapted from Rich & Dying by Jeb Dunkelberger.
Modern-day health insurance was born in Texas in 1929 with the formation of the first Blue Cross health plan. The plan arose out of the efforts by administrators at the Baylor University Hospital trying to find a way to make hospital care more affordable for its patients, many of whom were public school teachers in Dallas. The cost was fifty cents a month, and the plan was a form of prepayment for up to twenty-one days of hospital care. The plan was an immediate success, and soon, administrators were enrolling workers in other professions across the city. Blue Shield evolved in a similar way for physicians and medical groups, and the two companies began to come together in the 1940s.
The Great Depression and massive unemployment that swept the country in the 1930s led to the creation of the welfare state and its safety net, embodied in the Social Security program. From the first, the program depended on today’s workers to support retirees; the money they pay in goes right back out. The first Social Security check was issued on January 31, 1940, to Ida May Fuller, who retired at sixty-five. A legal secretary, Ida May paid a total of $24.75 in Social Security taxes; her first check of $22.54 nearly offset her contribution. She lived to one hundred and collected a total of nearly $23,000 in benefits.
I add Ida May’s details because people love to showcase Social Security as the epitome of what government programs can do. It’s not the government at work here; it’s just math. The system worked for Ida because at the outset, we had 150 people working and paying taxes into the system for every single Social Security beneficiary on the other end of the equation. We’ve barely modified the system since, people are living longer, and now we’re at three people working for every Social Security beneficiary.
It’s a lot like healthcare. With the government underpaying (based on the current state of efficiency in care delivery) for services it delivers through Medicare, what happens when commercial lines of business can no longer keep rising because employers and employees have buckled under the weight of cross-subsidizing the feds? What happens when the percentage of people over sixty-five climbs from 15 to 20 percent? We’re on track to do just that in the next few decades. When math stops being math and becomes politics, it doesn’t work.
The country came to a fork in the road on healthcare following World War II and arguably took the wrong path. As millions of soldiers came home from war, the government capped wages in order to control inflation. That left businesses to find other ways to compete for talent. One of the benefits they created to attract workers was employer-sponsored health insurance, which remains today the single most common form of health coverage. The result was inequity: the employed population had access to insurance, and those who were disabled or unemployed did not. Other developed countries did not follow suit. At about this time, for example, Canada opted for its single-payer system.
The pressure to address that issue gave rise to Medicare and Medicaid, passed into law in 1965 through a massive push by President Johnson, a master of political dealmaking. Medicare, which provided health coverage for the elderly, and Medicaid, providing it for the poor, were initially far more limited than they are today. Together with CHIP, which provides coverage for children in need, they are administered by the Centers for Medicare and Medicaid Services (CMS) and provide coverage to more than 100 million Americans. That makes the government the single largest insurer in the country — and the single largest buyer of healthcare as measured by covered lives.
Perhaps not surprisingly, we’ve been fighting over the government’s role in health insurance ever since these programs were created. In the 1980s, Republican Ronald Reagan made his case against big government with quips like this: “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’ ” On the other side of the aisle, Democrats pushed for more, not less. Clintoncare, an ambitious reimagining of American healthcare, fell flat, though he still delivered CHIP. Barack Obama made expanding healthcare access a priority and won passage of the Patient Protection and Affordable Care Act in 2010. Of course, no one calls it the PPACA; it’s Obamacare. What could be a better indication of the politicization of American healthcare than that?
So here we stand today, where our views on healthcare are determined by our political outlook. We’ve moved completely away from a standard of care based on facts grounded in science and math. Instead, we’re playing a game of political ping-pong, left versus right, and it shows no sign of ending.
For more information on the politics of healthcare, you can find Rich & Dying on Amazon.
Jeb Dunkelberger is the CEO of Sutter Health | Aetna and the author of more than one hundred articles about improving the healthcare industry. With a career that spans executive roles in Fortune 5 companies to building some of Silicon Valley’s most disruptive healthcare startups, Jeb holds healthcare-related degrees from Virginia Tech, London School of Economics, London School of Hygiene and Tropical Medicine, Cornell, and Penn. Outside of work, Jeb enjoys riding motorcycles, traveling, and relaxing with his wife and pets.
