© 2008 Delmar Cengage Learning. Chapter 9 Privatizing Health Politics: The Origins and Enduring Dilemmas of America’s Public-Private Insurance Framework Jacob S. Hacker

© 2008 Delmar Cengage Learning. 2 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…

© 2008 Delmar Cengage Learning. 3 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.

© 2008 Delmar Cengage Learning. 4 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

© 2008 Delmar Cengage Learning. 5 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

© 2008 Delmar Cengage Learning. 6 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

© 2008 Delmar Cengage Learning. 7 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

© 2008 Delmar Cengage Learning. 8 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

© 2008 Delmar Cengage Learning. 9 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

© 2008 Delmar Cengage Learning. 10 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

© 2008 Delmar Cengage Learning. 11 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. 12 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

© 2008 Delmar Cengage Learning. 13 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

© 2008 Delmar Cengage Learning. 14 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

© 2008 Delmar Cengage Learning. 15 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

© 2008 Delmar Cengage Learning. 16 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