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Why was the Obama health plan so controversial and difficult to understand? In this readable, entertaining, and substantive book, Stuart Altman—inter-nationally recognized expert in health policy and adviser to five US presidents—and fellow health care specialist David Shactman explain not only the Obama health plan but also many of the intriguing stories in the hundred-year saga leading up to the landmark 2010 legislation. Blending political intrigue, policy substance, and good old-fashioned storytelling, this is the first book to place the Obama health plan within a historical perspective. The authors describe the sometimes haphazard, piece-by-piece construction of the nation’s health care system, from the early efforts of Franklin Roosevelt and Harry Truman to the later additions of Ronald Reagan and George W. Bush. In each case, they examine the factors that led to success or failure, often by illuminating little-known political maneuvers that brought about immense shifts in policy or thwarted herculean efforts at reform. Despite its importance in history, few people know that Richard Nixon marshaled the best attempt to enact universal health care; or that he arranged secret health policy meetings with aides to Ted Kennedy in the basement of a Washington, DC, church. Who knew that the American Medical Association (AMA) publicly questioned the surgeon general’s report that tobacco was harmful in order to defeat the Medicare bill, or that three separate sex scandals obstructed the road to universal health care? The authors look at key moments in health care history: the Hill–Burton Act in 1946, in which one determined poverty lawyer secured the rights of the uninsured poor to get hospital care; the "three-layer cake" strategy of powerful House Ways and Means Committee Chairman Wilbur Mills to enact Medicare and Medicaid under Lyndon Johnson in 1965; the odd story of how Medicare catastrophic insurance was passed by Ronald Reagan in 1988 and then repealed because of public anger in 1989; and the fact that the largest and most expensive expansion of Medicare was enacted by George W. Bush in 2003. President Barack Obama is the protagonist in the climactic chapter, learning from the successes and failures chronicled throughout the narrative. The authors relate how, in the midst of a worldwide financial meltdown, Obama overcame seemingly impossible obstacles to accomplish what other presidents had tried and failed to achieve for nearly one hundred years. This book is essential reading for every American who must navigate the US health care system.
"A riveting journey through the history of US health care reform. This book is a must-read for anyone who wants to understand America’s elusive search for universal coverage and affordable care. Altman and Shactman do the impossible—make sense of our complex health system in an accessible and compelling way."
-Jonathan Oberlander, PhD, professor at the University of North Carolina at Chapel Hill and author of The Political Life of Medicare
"Stuart Altman and David Shactman’s new book does a superb job of capturing the essence of the meandering odyssey of health care policy.... They describe the pivotal events and characters of the development of universal health care with the intimacy of good storytelling. The authors make you feel like you are there."
-Charles N. Kahn III, president and CEO of the Federation of American Hospitals and former staff director of the House Ways and Means Health Subcommittee, 1995–1998
"There is not an American who has been more active and relevant in the health reform debate for the last forty years than Stuart Altman. With his talented partner, David Shactman, he has produced a well-written, insightful personal recollection of the evolution of health reform. It is an invaluable contribution to understanding how all major reforms are built on the triumphs and failures of past attempts and cannot be achieved without the application of lessons learned, leadership, good timing, and luck."
-Chris Jennings, former senior health reform adviser to President Bill Clinton, 1994–2001
"Rendered more in the riveting prose of a spy novel than in the turgid text that usually emits from academia, the authors present an insider’s narrative of the major defeats and small victories in the century-old quest to provide all Americans, rich and poor, financial and physical access to timely health care without bankrupting their families."
-Uwe E. Reinhardt, PHD, James Madison Professor of Political Economy at the Woodrow Wilson School at Princeton University
Secret Meetings in the Church Basement
Stuart Altman steps out the rear door of the taxicab and glances up and down the sidewalk. Seeing no one he recognizes, he heads up the walkway toward the church. It would be unlikely to encounter a familiar face in this neighborhood, but just the same, he is cautious. It is June 1974, and Richard Nixon is president. Altman (the deputy assistant secretary for planning and evaluation—health), and two colleagues from the Department of Health, Education, and Welfare (HEW), are about to attend a secret meeting in the basement of the church. They know President Nixon would not be pleased if they were seen.
The Saint Mark's Episcopal Church sits on the corner of Third and A Street in Washington, DC, just behind the Library of Congress. Originally built in 1888 in the Neo-Romanesque style, the church has long served the Capitol Hill community. Altman is a Jewish boy from the Bronx, so he has not come to worship. He enters through the side door of the church and steps into the empty sanctuary. With no one else inside, an eerie quiet is broken only by his footsteps echoing off the stone walls and concrete balustrades. He walks down a steep staircase and enters a gathering room in the basement of the church known as "the pub."
"Good morning, Stuart," comes the greeting from Stan Jones, who arrived a few minutes earlier. Jones, a former divinity student, is a close friend of the church's rector, Jim Adams. The rector has kindly lent Jones this room where the participants can meet in secret. With all the intrigue, you might think of conspiracies from The DaVinci Code or Angels and Demons, but Jones is an aide to the liberal senator Edward M. Kennedy, and he is here to talk about health care legislation. Kennedy does not want anyone to know he is negotiating with the Nixon administration.
Two minutes later, a third member of the triumvirate enters the basement room. Bill Fullerton is an aide to Wilbur Mills, the Democratic representative from Arkansas and the powerful chairman of the House Ways and Means Committee. Everyone in the room knows that health reform will not happen without the support of Wilbur Mills.
There is such an easy camaraderie among the group that it seems odd to meet in secret. But in 1974, like today, there are widely divergent views about health care reform. All three factions advocate positions strongly favored by their own constituencies, and they do not want to alienate their supporters by appearing to compromise with their opponents. How did these three factions from different parties and different ends of the political spectrum come to meet secretly in the basement of a Washington, DC, church? We begin the story with a brief look at the players.
Faction no. 1: Ted Kennedy
Universal health care was Ted Kennedy's issue. His brother, the slain president, championed theMedicare program but did not live to see it enacted by Lyndon Johnson in 1965. Ted Kennedy filed his first universal health care bill in 1971. It was based on a proposal by the Committee of 100 for National Health Insurance, a group Kennedy cochaired with Walter Reuther.
Reuther was head of the United Auto Workers (UAW) and had successfully negotiated many of the generous health benefits the autoworkers secured in the '50s. The big automakers could afford the concessions to labor because they had little competition in the '50s and simply added the cost of health benefits to the price of their cars. However, as the cost of providing health benefits increased, Reuther saw the wage gains of his workers becoming smaller. Early on, he understood the damage that runaway health costs could do to both American workers and industry. After withdrawing the UAW from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), he formed the Committee of 100 for National Health Insurance. The members consisted of union activists, academics, medical professionals, and politicians—the most important of whom was Ted Kennedy. In 1969, the committee formulated its Health Security Plan. It was a universal health plan that combined all public and private health plans into one single-payer plan financed by federal taxes. The plan included a global budget and provided incentives for prepaid group practices (later called HMOs).
The proposal from the Committee of 100 became the basis for the Health Security Act that Kennedy filed after he became chair of the Subcommittee on Health in 1971. Although the bill never made headway, the effect that the committee and Kennedy had on Richard Nixon was significant. Always the cunning political observer, Nixon anticipated that Kennedy would win the Democratic Party's nomination and challenge him in the 1972 election. He did not want to cede the health reform issue to Kennedy. Hence, in 1971, goaded by public pressure from Kennedy and the committee, Nixon surprised his fellow Republicans by issuing his first proposal for comprehensive national health care reform.
From the start of his political career, Kennedy had aligned himself with big labor and other traditional, liberal Democratic constituencies. In concert with their positions, he advocated a single-payer health system in which the federal government provided everyone's health insurance and financed it largely with general revenues (taxes). Nixon, on the other hand, proposed an employer-based system that retained private health insurance. Liberal Democrats and labor unions believed the Democrats were likely to capture the White House in 1972, and they opposed Nixon's plan, figuring they could enact a single-payer system when they held power. Of course, they were proved wrong when Nixon easily won reelection.
The debate over national health reform continued through Nixon's second term, and Ted Kennedy faced a conundrum. Universal health insurance was, quintessentially, his issue. He cared about it deeply and wanted it to become a reality in the United States as it was in virtually all other developed nations. Yet he was realistic about the political opposition to his single-payer proposal. The health insurance lobby was strong, and its members would cease to exist or, at most, play a diminished administrative role if the government provided everyone's insurance. The American Medical Association (AMA) feared that government-provided insurance would eventually lead to regulation and price controls. Opponents branded Kennedy's plan "government-run health care" and claimed it would be the first step toward socialized medicine. Kennedy realized the opposition to single-payer was too powerful and feared he might become marginalized as Congress debated more moderate alternatives. He did not want to be left out, and he certainly did not want Nixon and the Republicans to get all the credit for national health insurance.
Hence, in early 1974, Kennedy met secretly with Wilbur Mills to create a more liberal version of the plan proposed by the Nixon Administration. In April they announced the Kennedy–Mills bill, surprising everyone, but disappointing Kennedy's liberal supporters. The bill was a modified single-payer that retained private health insurers, but mainly in the role of fiscal intermediaries. The proposal also required insured individuals to make substantial copayments. Liberals and big labor wanted a pure single-payer and opposed the bill, thinking they could wait out Nixon's second term. But Kennedy was determined to pass national health insurance and wanted to explore whether a bipartisan bill could be developed. At the same time, he was leery of further alienating his supporters, many of whom would be outraged if they knew he was negotiating away single-payer with Richard Nixon. That was why he sent Jones to meet secretly with Altman and Fullerton in the basement of the Washington, DC, church.
Faction no. 2: Wilbur Mills
There may never again be a committee chairperson as powerful as Wilbur Mills. During Nixon's presidency, the structure and operation of Congress was much different than it is today. The major congressional committees were autonomous power centers that could push through or block any legislative initiative. The chairs of these committees, who by definition were always in the majority, dictated the procedures and ruled like kings. The Ways and Means Committee, chaired by Wilbur Mills, was the most powerful. Not only did it have undivided jurisdiction over important areas such as taxes and federal health policy, but it had no subcommittees. Mills did not have to delegate authority to subcommittee chairs, who would then have autonomy over their particular niches. Mills was also Chair of the Committee on Committees, and thus was able to delegate who got committee assignments throughout the House of Representatives. As a result, when Mills's Ways and Means Committee reported out a bill, it nearly always passed the full House. In the Ninety-Third Congress (1973–1974), thirty-nine of forty-five bills reported out by his committee passed the full House.
Today's committee chairs would be envious of Wilbur Mills, and some of the blame can be visited on Richard Nixon. Partly as a reaction to Nixon's imperial view of presidential power, and his subsequent downfall from the Watergate scandal, a large congressional turnover occurred, replacing many of the old guard. The unusually large body of younger politicians sought to democratize the old power structure. The power of committee chairs was dispersed. Jurisdiction over large areas of policy became divided over several committees. The number of subcommittees grew exponentially, devolving much of the power to subcommittee chairs. Most importantly, seniority rules were relaxed, making it more difficult for a small clique of aging House members to cling to power.
These changes in the structure and operation of Congress may seem esoteric, but their impact on health reform legislation has been considerable. When Wilbur Mills was Chair of Ways and Means, decisions could be made by a few individuals. You could meet behind the scenes with a few powerful chairmen (and they were men), forge secret deals and alliances, and be nearly assured your bill would pass the full House. For the Clinton and Obama administrations, it was infinitely more difficult. The committee chairs could no longer deliver on promises without seeking wider support. Negotiating with a broad range of people, interests, and factions was a political necessity, and the ability to make backroom secret deals was limited.
Wilbur Mills occupied a central spot in the political spectrum. As a southern Democrat in the majority, he had the power to move democratic legislation through his committee and to block Republican initiatives. Not infrequently, however, he sided with conservative southern Democrats supporting the Republican side, particularly in matters that concerned race.
In 1971, Nixon sought Mills's help in his first effort at passing national health reform. He knew that Mills was interested in running for the presidency in 1972, and he suggested to John Ehrlichman, the assistant to the president for domestic affairs, that if they offered to let Mills get credit for the legislation, they might be able to win his support. Apparently, Mills expressed interest, but his support never materialized and Nixon's 1971 plan died a quiet death. One reason may have been Mills's earlier experience with Lyndon Johnson and Medicare, when the actual cost turned out to be wildly higher than Johnson had projected and Mills decided he had been snookered. Mills and other conservative members of Congress were wary of repeating that mistake with national health reform.
As the 1972 primary season approached, Kennedy was being coy about whether or not he would run, and Mills decided to enter the race for the Democratic presidential nomination. Lee Goldman, Kennedy's staff director, knew Mills had no chance to win the party's nomination, but he saw an opportunity to use Mills's ambition to push national health reform. Goldman and Stan Jones had a tradition of beginning each morning with coffee in the Senate cafeteria. One morning Goldman suggested to Jones, "I'll bet you he [Mills] would go for a liaison with Kennedy on the assumption that maybe Kennedy will run and he'll be his vice presidential candidate." 4 Kennedy, an astute political player, slyly agreed with Goldman's idea, but he did not want to ask Mills directly. So Kennedy decided to use an intermediary, Wilbur Cohen, who was chairing a meeting of the Democratic Platform Committee in Mills's home state of Arkansas. During the meeting, Cohen casually suggested to Mills that he might try to work something out with Kennedy on health reform.
After returning to Washington, Mills shocked his aide, Bill Fullerton, by asking him to contact the liberal Kennedy and arrange a meeting. They met secretly about four or five times in Mills's famously huge office just off the House floor. Jones attended the meetings, but Mills would not let Fullerton attend. Apparently it would have been an affront to Mills if anyone thought he needed a staffer. And he didn't. Mills knew nearly every detail of Medicare, Medicaid, and the tax code. As a result of the meetings, Mills and Kennedy put together a compromise plan. It never gained any traction but was an important forerunner to the Kennedy–Mills bill in 1974. It was also an early example of how Ted Kennedy would amass an impressive legislative record by compromising with some of his fiercest opponents. The Kennedy–Mills effort did become a plank in the 1972 Democratic platform, but it died along with the woeful presidential campaign of George McGovern.
Mills's primary results were dismal, never capturing more than 5 percent of the vote. He could not overcome his record on race with nonsouthern Democrats. Mills tried to explain that segregation was a "dead issue" and stated, "I voted as I did over the years [against civil rights] because it was necessary to vote that way if I was to stay in Congress." Evidence uncovered in the Watergate investigation a few years later revealed that Mills had accepted an illegal campaign contribution of one hundred thousand dollars. The contribution came from a Texan who was amassing a fortune processing Medicaid and Medicare claims. The company was Electronic Data Systems and the Texan, Ross Perot, would later make his own run for president.
After Nixon's reelection, Mills's committee became the central focus for health reform legislation. The wily Mills agreed to cosponsor Nixon's 1974 health reform bill (HR 12684), but later met secretly with Kennedy and announced the Kennedy–Mills proposal. It was a significant compromise for Kennedy, who broke with his usual constituency in order to compromise and strike a deal. However, if there were to be further negotiations, the need for secrecy was clear. Each side knew there were many on the left and right who would do everything they could to scuttle the idea of a compromise between a conservative Republican president and the titular head of the liberal wing of the Democratic Party. Each side also knew they could not achieve their objective without the support of the House Ways and Means Committee and its all-powerful chairman, Wilbur Mills. It was this same Wilbur Mills who, with President Johnson in 1965, passed the Medicare and Medicaid programs—the most far-reaching pieces of health care legislation in American history. Sitting quietly in the middle of this political drama, and wielding enormous power, Wilbur Mills sent Bill Fullerton to meet secretly in the basement of the church.
Faction # 3: Richard Nixon
Why did Richard Nixon propose national health insurance? Here is the man who earned his political stripes as an anticommunist conservative. He assisted Joe McCarthy in his prosecution of Alger Hiss. He won election to Congress by red baiting Helen Gahagan Douglas. He campaigned for the presidency by inventing the "Southern strategy;" appealing for law and order and exploiting fear and racism in the South. He opposed busing, nominated conservative Supreme Court justices, and took a hard line against war protestors.
Excerpted from POWER, POLITICS, AND UNIVERSAL HEALTHCARE by STUART H. ALTMAN DAVID SHACTMAN Copyright © 2011 by Stuart Altman and David Shactman. Excerpted by permission of Prometheus Books. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Posted April 3, 2012
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