The Nixon years: failed national health reform from both parties.

In the November 1991 elections, popular support for national health reform (NHR) enabled Harry Worford to become a U.S. Senator from Pennsylvania. Since then a bevy of congressional proposals to reform America's health care system have emerged, with even national health insurance, or a single payer system, becoming a prominent contender for the first time in 20 years. National health reform is now a regular feature on the evening news. However, this is not the first time that NHR has attracted national attention. As pointed out in the first article in this series (Physician Executive, March-April 1992, page 23), there have been numerous efforts to enact NHR in the U.S. Each has failed because of strident opposition by interest groups, lack of active presidential interest in the specific legislation, and the absence of strong popular interest.

The prime objective of this series of articles on NHR is to provide an increased understanding to ACPE readers of the relevance of past legislative efforts to enact health reform in the current debate. The reader might question the relevance of past efforts at health reform in the current NHR debate or might ask which events one should take into account and how one should evaluate them. To address these concerns, it is useful to clearly define a framework that can assist both the casual reader and policy-makers in identifying which aspects of past debates have relevance. Such a framework is provided in a recently published book, Thinking in Time: The Uses of History for Decision Makers.(1) The authors, presidential scholar Richard Neustadt and diplomatic historian Ernest May, analyze historical events involving significant presidential involvement, including health care controversies. Neustadt and May place their analysis of these events into a framework they developed to understand whether policy decisions could have been affected if decision makers had examined relevant past historical events using this framework. They begin by posing fundamental questions:

"People facing difficult decisions should pause to define their concerns. They should take precautions to avoid being misled by analogies of one stripe or another. Then, to the extent possible, they should try to see their concerns in historical context, asking what major trends are relevant and what specifics in the issue's past--especially, we think, in its past politics--bear on the question of what to do now.

"What is action supposed to accomplish? What conditions do we want to bring into being in place of those existing now? Knowing how the concerns emerged, how the situation evolved can help. That knowledge by itself will not answer the questions. The future can never look exactly like the past. Usually it should not. But past conditions can offer clues to future possibilities. If a hoped-for situation never existed before, why not? ...Answers to such supplementary questions can correct for both too much and too little exercise of imagination.(1)

Neustadt and May use a very straightforward methdology. They first recommend summarizing all the relevant facts pertaining to health reform and divide them into three separate categories: known, unclear, and presumed. The policymaker needs to dispassionately analyze all the trends and facts and determine whether a fact or trend is clearly understood (known), not completely resolved (unclear), or simply assumed without the facts to back it up. An example of such an analysis is shown in figure 1, below. The categorization is applied to the ultimately unsuccessful push for NHR during the Nixon presidency. The known, unclear, and presumed categorization listed in figure 1 begins to reveal the miscalculations that both the Nixon and the Kennedy forces brought to bear in their respective efforts to enact NHR. For example, labor unions, liberals, and others favoring the Kennedy-Griffith Bill, to be described below, simply presumed that Americans would tolerate a radical change from a health care delivery system dominated by private health insurers to one essentially run by the government. With respect to the Nixon administration's Family Health Insurance Plan, the President assumed, incorrectly, that he would be able to devote his primary attention to foreign policy matters and still have his domestic legislative agenda enacted into law.

According to Neustadt and May, a rigorous categorization of the facts and strengths/weaknesses of various interest groups both before and during a legislative push can provide necessary information predicting ultimate success. If such an analysis provides an indication of weak prospects for legislative success, it could encourage the party to compromise with opposing interest groups. If such an effort at compromise had occurred in 1970, much stronger NHR legislation would have likely been passed than may be possible today.

Figure 1.  Neustadt-May Analysis of Nixon and Kennedy-Griffiths
NHR Proposals
Known
* Increases in cost
* Role of Medicare and Medicaid
* Cost of the Kennedy-Griffith Health Security Bill
* Cost of the Family Health Insurance Program
Unclear
* Role of managed care organizations
* Extent of public interest in health care reform
* Impact of foreign policy actions on domestic legislation
* Public support for increasing access for low-income and
  underinsured Americans
Presumed
* American society will not countenance a dramatic change
in an entire industry--from private to public ownership. (Nixon)

Neustadt and May provide us with a second analytic tool intended to better understand the relevance of past NHR efforts. According to the authors, each of the efforts at NHI should be divided into "likenesses and differences." The likenesses and differences between the push for NHR during the Nixon pesidency and the current situation are provided in figure 2, page 22. For example, President Nixon was and President Bush is primarily interested in foreign policy. A difference between these two presidencies is that the federal government had considerably greater monetary resources at its disposal during the Nixon administration than is currently available.

The analytic framework developed by Neustadt and May will be applied to each of the NHR efforts in the United States. This article will focus on NHR efforts during the Nixon administration. While out of chronological order, the conflicting proposals proferred by Nixon and Kennedy have certain striking parallels to current legislation. As figure 2 indicates, there are other likenesses (and differences), not the least of which is the presence in office of a Republican President in George Bush (arguably less ideological as compared to Ronald Reagan) and the control by Democrats of both houses of Congress.

Nixon's Welfare Reform Plan

While most Americans' view of the Nixon administration is colored by the Watergate affair culminating in his resignation in 1973, the first three years of his first term in office were marked by an effort to address America's domestic problems by involving many individuals of differing political persuasions. Though Nixon recognized that foreign affairs represented his strong suit and interest, he strongly perceived the need to address domestic concerns. It needs to be remembered that Nixon ascended to the presidency shortly after the assassinations of Robert Kennedy and Martin Luther King. The riots in many of America's ghettos, now a distant chapter in American history, were fresh in many people's minds.

In the months between his defeat of Hubert Humphrey in the November 1968 election and his assumption of assumption of office in January 1969, Nixon assembled several teams of nonpartisan experts whose mandate was examine possible proposals addressing domestic concerns.(2) Nixon's team of advisors on domestic policy was intellectually led by Daniel Patrick Moynihan, currently Democratic Senator from New York. Moynihan tackled welfare reform, the most important, yet (still) intractable, domestic problem facing the United States, head on. The domestic policy team believed that the legislative shape of administration proposals for NHR would be a natural by-product of any welfare reform legislative proposal. As a consequence, health care reform did not initially occupy Nixon's attention. Excerpts from three executive office memo's from the first year in Nixon's presidency illustrate his administration's desire to systematically approach health care reform while paying attention to the rapidly rising costs of Medicare and Medicaid.(3) The memo's also illustrate the Nixon administration's need to always keep in mind the Democratically controlled Congress. Finally, from a personal perspective, Nixon wanted to keep at bay any major legislative efforts undertaken by Edward Kennedy.

It is important to briefly review Nixon's overall domestic policy proposals, particularly welfare reform, as they provide the setting for his proposals for health reform. In addition, the failure of welfare reform provides a dramatic eye-opener into why sudden shifts in domestic policy, such as would have to occur for NHI to occur, have never succeeded in the United States. Nixon's welfare reform proposals were both sudden and dramatic. However, they did not become law. The reasons for their failure presaged what would befall Nixon's NHR legislation. A stalemate occurred between Congress and the administration, dooming any significant health reform legislation during his tenure in office. In addition, within Congress, splits along ideological lines served to block any efforts at compromise legislation. The Nixon administration's push on welfare reform under Moynihan's direction resulted in a dramatic proposal, entitled the Family Assistance Program, submitted to Congress only nine months after Nixon's inauguration. The Family Assistance Plan (FAP) forcefully articulated the need for government support for America's disadvantaged. In essence, it would have ended the present welfare system of providing assistance only to mothers and provided a federally guaranteed income equivalent across all states. At his news conference announcing the program, Nixon stated that "no child is worth more in one state than in another."(4) The program was not dependent on the presence of the father but was predicated on the level of family income. The proposed guaranteed income was to have been combined with a work requirement.

Democrats were stunned by Nixon's "radical" proposal. The Democratic Congress had no legislative proposals of their own on welfare reform. An excerpt from an editorial in the Economist exemplified the shock felt by Americans in general, and Democrats in particular, when they read the fine print of Nixon's centerpiece of domestic policy legislation:

"It is no exaggeration to say that President Nixon's television message on welfare reform and revenue sharing may rank in importance with President Roosevelt's first proposal for a social security system in the mid-1930s, which were the beginning of America's now faltering welfare state. Any one of the three main proposals in the message would rank as major legislation....As often happens in such cases, it is doubtful if most Americans feel that they are witnessing history in the making."(4)

The editorial went on to state that Americans are unimpressed if proposals do not become law. The FAP was the first, and very possibly the last, significant legislative effort to propose a welfare policy that included both a guaranteed income and training for low-income Americans. As has frequently occurred in most significant domestic policy legislation, including health reform, over the past quarter century, FAP was supported, albeit unenthusiastically, by the vast middle of the American electorate and vigorously opposed by the politically active sides of the ideologial spectrum. In a memo to Moynihan, a liberal Democrat and leader of the FAP effort, Nixon early on recognized that he would be pressured by the liberal wing to drastically expand benefits or risk strident opposition:

"The television networks, in their evening news program, film of welfare recipients for whom the President's welfare program would mean little or nothing. The implication here is that steam is building to force initial payments, the floor under the poor, up a good many notches. The President wanted this called to your attention and asked that you get working on the ansers."(5)

From the right wing of the Republican party, Vice President Agnew early on sent a "Confidential, Eyes Only" memo to the President complaining of "the continual surfacing of radical left ideas through the framework of HEW."(6)

Competing Visions for Health Care Reform

Simultaneous to the effort to enact FAP, the Nixon administration was developing a parallel health reform package that culminated in a speech by Nixon delivered in February 1971 and devoted exclusively to suggested changes in America's health care delivery system. It is important to emphasize that, while Medicare and Medicaid had recently been enacted, numerous problems remained.

* 30 to 55 percent of Americans had no inpatient medical insurance. Coverage varied dramatically from state to state.

* In a surprising focus on the lack of preventive services, the Nixon administration emphasized the lack of access to preventive services.

* In a presage of today's torrent of verbiage on excessive surgery, the administration highlighted the belief that "some surgical operations may be unnecessary.

* The rapid health care price rise in response to the enactment Medicare and Medicaid had already begun. For example, in four years, hospital prices had almost doubled.(7)

Nixon's proposal, Family Health Insurance Plan (FHIP), called for a subsidized program for basic private insurance for low-income families and for all employers to provide private health insurance for employees and dependents. Nixon's employer mandate proposal may sound familiar, as it is very similar to Senator Edward Kennedy's current legislative proposal. When asked about this odd juxtaposition, Kennedy stated that he simply wants some form of health care legislation enacted into law.(8) The specifics of the FHIP were:

* Benefits: FHIP (for low-income individuals) limited ambulatory and institutional care to 30 days. There were deductibles and copayments for all but the poorest. Medicare and Medicaid programs would be combined. The National Health Insurance Standards Act (NHIS, required of all employers) provided specified ambulatory and inpatient benefits subject to large deductibles and copyments (except for well-child and vision care). Catastrophic protection was also offered, again with a substantial deductible.

* Financing: Increased the Social Security tax base for catastrophic insurance. NHIS required employers to pay 6.5 percent of the cost of employees' coverage the first 2 1/2 years, 75 percent thereafter. The employee was to pay the balance. The federal government was to pay for the FHIP from general revenues.

* Administration: The private health insurance industry was retained and financially supported, but would have been subject to a higher degree of regulation. This bill would have supplanted and superseded existing state regulation of the health insurance industry.

While increased access to care formed the centerpiece of the legislation, other aspects of the legislation included an emphasis on prevention, support for increased medical manpower, establishment of professional standards review organizations (PSROs), and encouragement of the development of health maintenance organizations (HMOs). HMOs, except for organizations such as the Kaiser Foundation Health Plan, were still in their infancy and individual practice associations/preferred provider organizations were virtually unknown in the early 1970s.

The principal legislation in competition with Nixon's FHIP proposal came from the Health Security (HS) Bill, whose chief sponsors were Edward Kennedy in the Senate and Martha Griffiths in the House. The salient features of this bill were:

* Benefits: Full coverage of all U.S. residents for hospital physicians, optometry and podiatry services, devices, and appliances. There were limites on adult dental care, psychiatric care, nursing home care, and some prescription drugs.

* Financing: Health Security Trust Fund was to have been derived as follows: 50 percent from general tax revenue, 36 percent from a 3.5 percent tax on employer payroll; 12 percent from a 1 percent tax on the first $15,000 of individual income, and 2 percent from a 2.5 percent tax on the first $15,000 of self-employment income.

* Administration: The HS bill would have been a publicly administered program in an HEW policymaking, five-member, full-time Health Security Board appointed by the President. Field administration was to have been through the 10 HEW regions and approximately 100 subregions. Advisory councils would have been in place at all levels, with the majority of members representing consumers.

These two competing proposals for NHR could not have been more different. Kennedy's proposal called for the virtual elimination of any involvement of the insurance industry in health care. This approach to the insurance industry had doomed the NHI legislative package of 1916, the first effort for national health reform in the United States. In 1970 (and 1991), insurers were actively involved in marketing health insurance. Today's health insurers are also health care providers; many, in fact, own staff model HMOs. In 1916, the insurance industry had not yet entered the health insurance business. Then, the insurance industry merely insisted, and won, on its right to provide burial insurance.

With such disparate visions of national health reform, one cannot be surprised that there was little room for compromise. Both sides lambasted each other in the media. From the media's perspective, it appeared that the Kennedy-Griffith bill had a reasonable possibility of success. According to syndicated columnist Sylvia Porter: "Indisputably on the way in the United States is a national health insurance system with comprehensive coverage of health costs...socialized medicine will get the highest priority in the next, 92nd Congress."(9) The Little Rock, Ark., Gazette, in an editorial similar to many newspaper perspectives from around the country, argued that "Perhaps one fair test of Social Security and Medicare is to ask whether the people of the United States are better off for having had the program; the answer is overwhelmingly affirmative. NHI, we are confident, would quickly pass the same kind of test."(10)

The principal public backers of the Kennedy-Griffith legislation coalesced to form the Committee for National Health Insurance (CNHI). The poliitcal and financial backers for CNHI were labor unions. However, labor had recently split up, with the UAW leaving the AFL-CIO in 1967. Initially, Walter Reuther, the president of UAW, was the principal personal political force behind the bill. With Reuther's tragic death in a helicopter crash in 1970, Leonard Woodcock assumed the political leadership of the CNHI.

The AFL-CIO, while less active on health reform than the UAW, lent its considerable force in favor of the legislation (see figure 3, right). Numerous articles in the weekly AFL-CIO News were written on NHR in 1970-1971. George Meany, President of the AFL-CIO, devoted several radio addresses almost exclusively to health care. In his characteristically blunt style, he stated, "We in the AFL-CIO believe that the time has come to recognize, once and for all, that the right to a decent standard of health care is a right of all Americans--not just the privilege of those who can pay."(11)

While some interest groups, such as commercial health insurers, were opposed to both the Kennedy/Griffith and the Nixon proposals, a number of interest groups, such as Blue Shield, forcefully came out in favor of a national health policy. Their position was very similar to that of Nixon's FHIP, with the federal government assuming the role of insurer for catastrophic costs and low-income individuals.

Even Nixon and his advisors believed that health care was rapidly becoming an issue of major importance to the American populace. The presidential speechwriter and, currently New York Times columnist, William Safire highlighted health care in a two-page memo dated November 11, 1970, in which he tried to advise Nixon on what political tone he should adopt in 1972, a presidential election year: "The President should be...a man willing to fight for the kind of progress for which the time is ripe. The representative of all the people must not play it so cool as to refuse to do battle for their interests, and those interests are controversial....Health will be the issue; this should be given the major push for 1971."(12)

The Demise of All NHR Proposals

Despite the optimism of many newspaper columnists, the efforts of both Nixon and Kennedy to enact some form of NHR failed abysmally. By December 19, 1971, a headline in the New York Times predicted: "Health Care Plan Is Losing Support--National Health Insurance Backers View Outlook as Bleak."(13) In retrospect, it should have been easy to predict defeat for the Kennedy-Griffith national health insurance bill. Opposition did not merely come from interest groups, such as the American Medical Association, traditionally opposed to any form of NHR. Just as important, there was little popular groundswell for any form of NHR. While CNHI trumpeted support of the public, minutes from their committee meetings revealed that they did not expect public support to emerge.(13,14) As recently seen in the election of Harry Worford to the U.S. Senate from Pennsylvania, however, if public support for NHR is evident, it can provide critical impetus for political success of a candidate for public office. It can overwhelm traditional interest groups opposed to NHR.

Several other factors served to doom not only the Kennedy-Griffith Health Security Bill but also Nixon's FHIP, a proposal that would have provided significant improvements in access without the fundamental reform contemplated under Kennedy-Griffith. The war in Cambodia was in full swing by the time the FHIP was proposed. While they may have been typically in favor of such a program, liberals, primarily on the Democratic side of the aisle, were opposed to any program that might place Nixon in a favorable light. In addition, most liberals were already committed to Kennedy-Griffith. Conservatives were similarly opposed, on ideological grounds, not just to Kennedy-Griffith but also to FHIP.

With opposition from both liberals and conservatives, forceful leadership on the part of the President and senior HEW officials would have been necessary if any hope for compromise with the Kennedy-Griffith forces was to be consummated. Nixon was too preoccupied with Vietnam. It was up to Robert Finch, the liberal Republican in charge of the Department of Health, Education, and Welfare. He had fought tirelessly first for the FAP and then for FHIP. Tragically, the constant battles with liberal and conservatives in both the Congress and HEW bureaucracy took a toll on his health. On May 18, 1970, immediately prior to a scheduled meeting with HEW bureaucrats, dissatisfied with the Nixon administrations policies, Finch suffered an emotional collapse. He did not return to HEW. Several critical months without forceful HEW leadership ensued. Despite the appointment of Elliot Richardson as the new HEW Secretary, the Nixon administration found itself increasingly fighting rear-guard actions on the FHIP instead of attempting to rally public and congressional support for the bill.

In the final analysis, the enemies of the two proposals stayed constant; the friends did not. The issues that led to the defeat of any national health reform were not only the factors already mentioned. Ultimately, the existing health care delivery system served to stymie any significant health care reform. In words equally applicable to either FHIP, the Kennedy-Griffith bill, or any dramatic change in health insurance policy in the United States, Daniel Moynihan trenchantly summarizes the fundamental difficulty in enacting Nixon's welfare reform, the FAP: "Had the planners of FAP been free of any restraint, a straight negative income tax system could have been devised that would indeed have been simple. But they were forced to super-impose a new system on an old one and at points did not so much compound complexity as expose it. It was equally fatal.(3)

Similar to our welfare system, our health care system represents a complex patchwork of private enterprise intermixed with a confusing quilt of federal and state funded programs. Enacting a patchwork solution--the likely scenario in the coming years--may merely expose other warts. Despite the fact that a significant percentage of Americans would simply start afresh with a new health care system, such legislation is given a zero chance of congressional passage. The closest the United States came to enacting NHR (and NHI) came during World War I. This fascinating period in the history of national health reform in the United States will be the focus of the next article in this series.

References

(1.) Neustadt, R., and May E. Thinking in Time. New York, N.Y.: Free Press, 1986.

(2.) Moynihan, P. Politics of a Guaranteed Income: The Nixon Administration and the Family Assistance Plan. New York, N.Y.: Random House, 1973.

(3.) Erlichman files, April 1969-December 1969, Nixon Archives, Arlington, Va.

(4.) The Economist, Aug. 18, 1969.

(5.) Moynihan to Nixon, Nixon Archives, Arlington, Va.

(6.) Agnew to Nixon, May 16, 1969, Nixon Archives, Arlington, Va.

(7.) Excerpt from background slides for development of FHIP, Nixon Archives, Arlington, Va.

(8.) Exchange between Edward Kennedy, Elliott Richardson, and Joseph Califano, Senate Labor and Health Subcommittee, November 1991.

(9.) Porter, S. The Evening Star, Oct. 19, 1970.

(10.) Editorial. Little Rock Arkansas Gazette, Sept. 29, 1970.

(11.) AFL-CIO News, Oct. 31, 1970.

(12.) Safire to Nixon, Nov. 11, 1970, Nixon Archives, Arlington, Va.

(13.) Lyons, R. New York Times, Dec. 19, 1971.

(14.) Executive Committee Meeting of the Committee for National Health Insurance, Sept. 23, 1971, pp. 7-9, Walter Reuther Archives, Wayne State University, Detroit, Mich.