Government’s Encroachment into the U.S. Health Care System

Government’s Encroachment into the U.S. Health Care System


The push for increased government involvement in the administration of health care in the United States dates back to 1912, when presidential candidate Theodore Roosevelt, campaigning on the Progressive Party ticket, called for the establishment of a national health insurance system modeled on what already had been established in Germany.

The proposal languished until the Great Depression, when a 1932 a governmental panel known as the Wilbur Commission reported that millions of Americans were unable to afford adequate medical coverage and recommended the expansion of group medical practices and group prepayment systems wherein the financial risks associated with potential illness or disability could be shared by many people who were covered by the same insurance company.

In 1934, President Franklin Roosevelt’s working groups on Social Security and unemployment insurance devoted some time to discussing the feasibility of a national health insurance program that would cover every American. But because of the financial crisis that continued to grip the nation and because the American Medical Association (AMA) was strongly opposed to proposals for government-run health care, efforts to promote legislation toward that end failed to generate any traction.

In November 1945, President Harry Truman called on Congress to initiate a ten-year plan to transform the existing American health care system into one where coverage would be compulsory for all people. The American Medical Association warned that such “socialized medicine” would be detrimental to Americans’ health care, and the plan ultimately stalled in Congress.

With the outbreak of the Korean War in June 1950, the Truman administration and Congress were forced to turn their attention away from the health care debate. Nonetheless, the issue of government-provided medicine was now an established part of the political dialogue in America. And the simple fee-for-service relationship whereby patients had paid doctors out of pocket was being replaced by insurance coverage. By 1951, some 77 million U.S. residents had purchased some type of voluntary accident or sickness insurance — an increase of 11 million over the previous year’s total, and nearly 40 million more than World War II-era levels.

In a televised speech to nearly 20,000 people at New York’s Madison Square Garden in May 1962, President John F. Kennedy advocated legislation to provide health benefits to Social Security recipients. Said Kennedy: “This bill serves the public interest. It involves the government because it involves the public welfare. The Constitution of the United States did not make the President or the Congress powerless. It gave them definite responsibilities to advance the general welfare, and that is what we’re attempting to do.” The plan, however, stalled in Congress once more.

On July 31, 1965, President Lyndon Johnson signed legislation creating the Medicare and Medicaid programs to provide comprehensive health care coverage for people aged 65 and older, as well as for the poor, blind, and disabled. By 1968, these new government programs had caused healthcare-related spending nationwide to skyrocket and to become a major political concern. America’s $50 billion in medical expenditures for that year was 25 percent higher than the corresponding figure for 1965; 500 percent higher than the figure for 1948; and 1,250 percent higher than the 1929 total.

In 1971, President Richard Nixon backed a proposal requiring employers to provide a minimum level of health insurance for their workers while also maintaining competition among private insurance companies. By contrast, Senator Ted Kennedy championed the so-called Health Security Act, a universal single-payer health reform plan  directed and financed entirely by the federal government. This marked the start of a career-long effort by Kennedy to overhaul the country’s health care system.

When Jimmy Carter was elected U.S. President in 1976, he promptly called for “a comprehensive national health insurance system with universal and mandatory coverage.” But when the nation fell into a deep recession soon after Carter took office, health care was relegated to the “back burner” of Congressional concerns.

In 1986 Congress passed the Emergency Medical Treatment and Active Labor Act, which required hospitals to screen and stabilize all emergency-room patients. It also proposed a test of the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, which allows employees to pay for coverage by their group health plan for up to 18 months after losing their jobs.

In July 1988, Congress passed (and President Reagan signed into law) the Medicare Catastrophic Coverage Act (MCCA), the most significant health legislation since 1965. Designed to protect older Americans from financial ruin due to illness or disability, the MCCA, financed entirely by a surtax imposed upon the nation’s 33 million Medicare beneficiaries, set ceilings on Medicare patients’ expenditures on hospitals, doctors, and prescription drugs. But within a few months after the bill’s passage, many hundreds of thousands of affluent senior citizens grew resentful over having to pay a surtax to help finance a program that merely duplicated benefits which many of them had already been receiving prior to MCCA’s enactment. Increasingly large numbers of protesters began to assail members of Congress at town hall meetings in virtually every congressional district, and, in a dramatic legislative reversal, Congress overwhelmingly repealed the program in December 1989.

In 1993 President Bill Clinton launched an effort to provide universal health care coverage based on the idea of “managed competition,” where private insurers would compete in a tightly regulated market. The plan  called for everyone, whether or not they were employed, to carry health insurance and to contribute to its cost, though government subsidies would be made available for the poor. Moreover, the plan required employers to bankroll 80 percent of all policy premium costs for workers and their families. People who were already covered by existing government programs — Medicare, Medicaid, Department of Veterans Affairs, Indian Health Service, etc. — would simply continue to use those programs. The Clinton plan proposed to cover all services related to hospitalization, emergency care, office visits, preventive care, mental health, substance abuse, abortion, prenatal care, hospice care, home health aides, laboratory and diagnostic tests, prescription drugs, rehabilitation, durable medical equipment, prosthetic devices, vision and hearing care, preventive dental care for children, and health education classes.

Americans rallied against what was called Hillarycare [after Hillary Clinton] because of the First Lady’s role in drafting the legislation. One of the reasons for their opposition was that Mrs. Clinton, who headed the 500-member Health Care Task Force (HCTF), attempted to conduct all HCTF business in secret meetings led off from public scrutiny. This modus operandi was in violation of so-called “sunshine laws” forbidding such secret meetings from taking place when non-government employees are present.

In 1997 President Clinton signed legislation to create the State Children’s Health Insurance Program (SCHIP), an initiative designed to provide federal matching funds (to states) for health insurance covering children whose family incomes were modest but too high to qualify for Medicaid. Because SCHIP’s funding formula gave states an incentive to add middle-income youngsters and even adults to its rolls, the program’s costs spiraled out of control. By 2008, the SCHIP program covered not only 7 million children but also 600,000 adults in fourteen states; in six states, more SCHIP money was being spent on adults than on children — even as the program had still failed to enroll almost 2 million children who qualified financially.

In December 2003, President George W. Bush signed the Medicare Modernization Act, which expanded Medicare to include prescription drug coverage. Democrats derided the President’s legislation as a sham that inevitably would destroy Medicare, and maintained that theirs was the only political party that could be trusted to protect the program. “Who do you trust?” Senator Edward Kennedy shouted. “The HMO-coddling, drug-company-loving, Medicare-destroying, Social Security-hating Bush administration? Or do you trust Democrats, who created Medicare and will fight with you to defend it — every day of every week of every year?”

During his 2008 presidential campaign, Democrat Senator Barack Obama promised to bring about sweeping health-care reforms for the estimated 47 million Americans he claimed could not afford health insurance. Obama had long advocated the creation of a federally administered, government-run, “single-payer” health care system. But when it became clear that such a plan would be too politically unpopular to have any chance of passing in the form of a single, sweeping piece of legislation, Obama and Congressional Democrats crafted a bill whose aim was to pursue that same ultimate objective in incremental steps rather than all at once. The chief method of promoting such incrementalism was the bill’s call for the establishment of health care “exchanges” through which people could purchase government-subsidized coverage. Details of this are provided below, in the section titled: “How Obama and the Democrats Laid the Groundwork for an Incremental Move Toward a Single-Payer System.”

Throughout 2009 and into early 2010, the political process of pushing the health care reform legislation through Congress was led by Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi. The process was extraordinarily rancorous. Reid, for instance, likened opponents of the bill to people who, in bygone eras, had defended slavery and opposed women’s suffrage:

“You think you’ve heard these same excuses before? You’re right. In this country, there were those who dug in their heels and said, ‘Slow down, it’s too early, let’s wait, things aren’t bad enough’ — about slavery. When women wanted to vote: ‘Slow down, there will be a better day to do that, the day isn’t quite right.’ And when this body [the U.S. Senate] was on the verge of guaranteeing equal civil rights to everyone regardless of the color of their skin, some senators resorted to the same filibuster threats that we hear today.”

The process was also replete with corruption, which in some cases took the form of special, privately negotiated payoffs funded by federal taxpayer dollars. These payoffs were intended, generally, to persuade reluctant Democrats to support the bill. One noteworthy deal was a $300 million federal subsidy to cover Medicaid expenses that otherwise would have been borne by state taxpayers in Louisiana; this bargain was designed to win the vote of that state’s Democratic Senator Mary Landrieu. In another high-profile pact, Nebraska Governor Ben Nelson won, for his state, a permanent exemption from its own share of the Medicaid expansion costs that were built into the health care legislation; that burden, which would amount to $45 billion over the first decade alone, was shifted onto the federal government.

Senator Reid was unapologetic about having struck these deals. “You’ll find a number of states that are treated differently than other states. That’s what legislating is all about. It’s compromise,” he said. But when political leaders in other states subsequently complained that they had not been offered arrangements similar to those lavished on Landrieu and Nelson, Reid and Pelosi amended the legislation to increase federal Medicaid subsidies not only to Louisiana and Nebraska, but to all 50 states through 2017.

Despite opposition from a significant majority of the American people, the Democrat-dominated House of Representatives passed the Affordable Health Care for America Act (Obamacare) on March 21, 2010. The margin of victory for the legislation was 220 to 215. In the final tally, 219 Democrats voted for the bill, and 39 voted against it. Louisiana Congressman Joseph Cao was the only Republican to support it. President Obama signed the bill into law two days later.

Pledging to extend health insurance to 32 million uninsured Americans, the new legislation greatly expanded the federal government’s role in the American health care industry. Among its more noteworthy provisions were the following:

  • The uninsured and self-employed would be able to purchase insurance through state-based exchanges with subsidies available to individuals and families earning between 133 percent and 400 percent of poverty level (i.e., up to $88,200 for a family of four). Separate exchanges would be created for small businesses to purchase coverage — effective 2014.
  • The Office of Personnel Management (OPM) would sponsor at least two health plans that would compete nationwide against private health plans. Critics predicted that this would lead to a de facto “public plan” dominated entirely by the federal government.
  • Medicaid would be expanded by some $430 billion by the year 2018, and 15 million new beneficiaries would be added to its rolls.
  • Medicare would be cut by approximately $455 billion.
  • Medicaid coverage would be extended to include childless adults up to age 26.
  • Policies with lifetime and annual limits on health-care services would be banned.
  • Insurance companies would not be permitted to reject any applicant because of a pre-existing medical condition.
  • Insurers would be required to charge healthy people the same premiums as those who chose not to buy a policy until they were sick. (That reform had previously devastated the private-insurance market in every state that had adopted it — pushing premiums so high that more than half of individual and small-group policyholders had dropped their insurance altogether.)
  • Approximately $20 billion in tax hikes would be imposed on medical-device companies.
  • Onerous new taxes would be levied on drug manufacturers.
  • Beginning in 2013, families with incomes greater than $250,000 (and individuals whose incomes exceeded $200,000) would pay an extra Medicare Payroll Tax of up to 2.35 percent, plus a new 3.8 percent tax on interest and dividend income.
  • Fines of $2,000 per employee would be levied on businesses with 50 or more workers if any employee received a subsidy from the federal government.
  • By 2014, everyone would be required to purchase health insurance or face a $695 annual fine. Critics of this provision warned that it would incentivize many Americans to pay the fine until they faced a major health expense, at which time they would purchase insurance at the higher, government-mandated rates.
  • Starting in 2018, “Cadillac” insurance plans — i.e., high-end policies whose premiums cost at least $10,200 annually for individuals or $27,500 for families — would be subject to a 40 percent excise tax.

According to the Congressional Budget Office, Obamacare would increase health care spending by some $210 billion over its first ten years. A report from the chief actuary at the Center for Medicare and Medicaid Services placed the figure slightly higher, at $222 billion.

When the Democrats passed Obamacare into law in 2010, they viewed it not as a final solution to the nation’s healthcare problems, but rather as a stepping stone toward the ultimate goal of a single-payer system administered entirely by the federal government. Indeed, they had been quite clear about their intentions during the years prior to Obamacare, and they have been even clearer since then:

  • At an AFL-CIO conference in 2003, Barack Obama said: “I happen to be a proponent of a single-payer health care plan…. ‘Everybody in. Nobody out.’ … That’s what I’d like to see, but as all of you know, we may not get there immediately.”
  • At an SEIU Health Care Forum on March 24, 2007, Obama declared: “My commitment is to make sure that we’ve got universal healthcare for all Americans by the end of my first term as President…. But I don’t think we’re going to be able to eliminate employer coverage immediately. There’s going to be, potentially, some transition process. I can envision a decade out, or 15 years out, or 20 years out …”
  • On August 4, 2007, Obama announced that he planned to pass healthcare reform legislation and then “build off that system to … make it more rational.” “By the way,” he added, “Canada did not start off immediately with a single payer system. They had a similar transition step.”
  • In the summer of 2008, Obama said: “If I were designing a system from scratch, I would probably go ahead with a single-payer system.”
  • And in June 2009, Obama told an American Medical Association audience that “there are countries where a single-payer system works pretty well.”
  • Nancy Pelosi told an audience of young people in March 2010: “I have supported single payer for longer than many of you have been—since you’ve been born, than you’ve lived on the face of the earth. So I think, I have always thought, that was the way to go.”
  • In early August 2013, Senator Harry Reid was asked whether his goal was to eventually use Obamacare as a springboard to a single-payer system. “Yes, yes. Absolutely, yes,” he replied. “What we’ve done with Obamacare is have a step in the right direction, but we’re far from having something that’s going to work forever.
  • In late October 2013, Rep. John Conyers stated that Obamacare was just “a very small and modest bill,” and that Congressional Democrats were already contemplating ways to pass “universal healthcare for everybody, single payer.” “That’s what the new direction is,” Conyers affirmed.
  • Kathleen Sebelius, the chief architect of Obamacare’s 2013 rollout, has candidly declared herself to be “all for a single-payer [healthcare] system eventually.” On October 7, 2013, she told interviewer Jon Stewart, “if we could have perhaps figured out a pathway [to single-payer], that may have been a reasonable solution.”
  • In 2019, Senator Bernie Sanders introduced a universal health-care plan called “Medicare for All,” which was crafted to create a government-run system that would effectively end the private health insurance market. “The current debate over Medicare for All really has nothing to do with health care,” said Sanders at a news conference unveiling the legislation. “It has everything to do with greed and profiteering. It is about whether we continue a dysfunctional system.”
  • In 2019 as well, Senator Kamala Harris told CNN’s “State of the Union”: “I support Medicare for all. It is my preferred policy.” “Medicare for All will extend health insurance to every single American, with no co-pays or premiums,” she said on another occasion. “… We have to change a system that allows big insurance companies to put profit over people’s health.”
  • Also in 2019, Senator Cory Booker spoke out in favor of single-payer health care: “We need to expand access to health care in this country and dramatically lower the cost for American families. Medicare for all achieves this goal by ensuring the fundamental right to health care to everyone at an affordable price.”

Additional Resources:

The Myths of Single-Payer Health Care
By David Hogberg

Five Myths of Socialized Medicine
By John Goodman
Winter 2005

Liberal Lies about National Healthcare (7-part series)
By Ann Coulter
August 2009

What’s Wrong with American Health Care?
By David Gratzer

What Should Be Done?
By David Gratzer

Single Payer: Why Government-Run Health Care Will Harm Both Patients and Doctors
By Robert Book
April 3, 2009

Words versus Realities
By Thomas Sowell
April 22, 2009

Medicare Administrative Costs Are Higher, Not Lower, Than for Private Insurance
By Robert Book
June 25, 2009


Dangerous Health-Care Myths
Interview with Sally Pipes
May 13, 2009

Myths and Facts about the American Health Care System
By Stefan Karlsson
July 16, 2007

Health Care Myths
By Elizabeth MacDonald
June 23, 2009

The “Costs” of Medical Care (4-part series)
By Thomas Sowell


Single-Payer Health Care: America Already Has It
By Prager University
April 2017

Obama In His Own Words Saying His Health Care Plan Will Eliminate Private Insurance
June 15, 2009

Jason Mattera Goes Undercover at ObamaCare Rally
August 25, 2009

Hey, We’re Happy to Pay for Abortions Through ObamaCare!
By Ed Morrissey
August 13, 2009


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