Health Care Reform

Obama now moved ahead on his promise to reform health care. Veteran politicians and pundits smiled at his bold words. In 1993 President Clinton, a formidable politician, had mounted a major campaign to enact a health care reform spearheaded by his wife, Hillary. They failed.

But by 2009 nearly everyone agreed that medical costs had spun out of control. In 1990, per capital medical expenditures were $3,000; by 2009, they exceeded $8,000. That year, though nearly 18 percent of the nation’s gross domestic product went for medical care, some 46 million Americans lacked any coverage whatsoever. When struck by serious illness, they were denied treatment or were hit with staggering bills. More than half of the nation’s personal bankruptcies were precipitated by illness.

The Increasing Cost of Health Care, 1960-2008 (% increase) By the 1990s, health care cost increases greatly exceeded the increase in the Consumer Price Index.

Medical profession for failing to weed out incompetent doctors. Nearly everyone blamed the insurance companies, which earned large profits by processing forms. A major factor was Medicare itself: By pushing so much money into health care, the federal government, which paid for nearly half of all health care expenses, increased the price of health care services and goods. Technological improvements, too, rendered medical treatment more costly.

Obama’s goal was twofold: to provide health care to Americans who lacked it and to reduce health care costs. Some advocated a government-run system, such as Franklin Roosevelt had done with old age pensions through Social Security. Many European governments operated health care systems along similar lines. But opposition to socialized medicine in the United States was intense. Polls showed that few Americans wanted their doctors to be employees of the federal government.

Supported by Democratic leaders in Congress, Obama proposed a system that combined private and public health insurance. Elderly and poor Americans would continue to be covered by the government; private insurers would continue to insure millions of Americans, but they could not kick people out of their systems when they became ill; companies with more than fifty employees would be required to provide health care insurance for employees and their families or else face stiff penalties; most other persons would be eligible for publicly supported health insurance.

Republicans almost uniformly denounced the plan; they insisted that Americans did not want the federal government to control health care. Republicans instead recommended tax incentives or state initiatives to encourage private employers to broaden coverage. Republicans added that the federal government, with a looming annual deficit of $1.8 trillion, would be hard-pressed to pay for Medicare in the future; to embark on a major new commitment was madness.

The Democrats, despite strong majorities in both houses of Congress, were themselves divided on Obama’s plan. The final compromise provided for his reform to be phased in over ten years at a cost of $1 trillion, and coverage would not be universal: By 2019, 24 million people would still lack health insurance, about a third of them illegal immigrants.

In March 2010, Congress approved the measure—the vote in the House was 220 to 207. No Republican voted for the bill. Obama had nevertheless engineered the first major health care reform since 1965, when President Lyndon Johnson signed Medicare into law.