Myth Busters #12: Universal Health Care

In just 15 years the focus of health policy moved from concern about rising hospital prices to the uninsured.

We began by trying to control the expansion of hospitals and moved on to trying to control hospital prices, to trying to address uncompensated care, all without a hint of success. The best efforts of the policy makers had no beneficial effect whatsoever. Yet these efforts cost many billions of dollars and likely damaged or killed thousands of patients. Yet no one was ever held to account. All were well paid for their efforts and all slept soundly at night thinking, “At least we tried to do something good.”

Now they had discovered the uninsured and decided to apply their talents to fixing that problem. In an earlier “Myth Buster’s” post I explained how these efforts also failed. In 1987, about 85% of the population had health insurance and 15% did not, as measured by the Current Population Survey of the Census Bureau. Twenty-three years later, in 2010, that ratio had barely budged. It has been about the flattest “trend” conceivable in human behavior.

Some of the policy people invested in this issue will argue that their effort to expand insurance coverage is what kept the trend flat. Government programs have grown as private coverage has shrunk. It’s actually far more likely to be the reverse — that as government programs have grown, private coverage has shrunk because the (free) government coverage was available. This is known as “crowd-out.”

The premise can be tested. If government programs expanded in response to shrinking private coverage there should be a lag time between the two, i.e. private coverage shrinks, the uninsured rise, then a couple of years later a new program comes on line to fill the gap and the numbers of uninsured drop again. There is no evidence for that. The very stability in the rate of the uninsured suggests the opposite.

In either case, if the goal was to reduce the numbers of uninsured, the policies have been yet another stark failure. And not for lack of trying — as with health planning a decade before, the entire health system was mobilized to implement the swell new ideas the policy community developed.

In the 1980s, as “the uninsured” became a discrete issue, the so-called policy community tended to go in two separate directions — universal health coverage or reform of the small employer market. We will look first at Universal Health.

Most of the advocates assumed there was little chance of getting universal health legislation enacted on the federal level with Ronald Reagan and then George H. W. Bush occupying the White House, so they took aim at the states.

Steffie Woolhandler, Benjamin Day, and David Himmelstein present a succinct history of the state efforts to enact universal health care in the International Journal of Health Services.

It began in 1988 when aspiring presidential candidate and governor of Massachusetts Michael Dukakis got the legislature to enact a universal health care bill. He was quoted at the time as saying, “I am proud of the fact that Massachusetts will be the first state in the country to enact universal health insurance for all its citizens.”

The following year Oregon passed a similar law and governor Barbara Roberts crowed, “Today our dreams of providing effective and affordable health care to all Oregonians has come true.”

In 1992, three states, Minnesota, Tennessee and Vermont all passed sweeping legislation that was widely heralded as parting the seas to Nirvana. The New York Times characterized Minnesota’s law as, “the most sweeping effort yet to provide health insurance to people who lack it.” Tennessee’s governor, Ned McWherter, promised the state would cover “at least 95% of its citizens with health insurance by the end of 1994.” Vermont governor Howard Dean promised universal coverage by 1995, saying “this is an incredibly exciting moment that should make all Vermonters proud.”

Now, we expect empty promises and hyperbole from politicians, but what about the news media and “objective” analysts who are supposed to counter-balance political hype? Looking back on the coverage of the time, Benjamin Day reflected in 2009:

 Articles by our most respected news organizations hailed state reform after state reform as pioneering, likely to serve as models for the nation, and designed to control costs and extend health coverage to the uninsured. No reasonable reader of the news available at the time these laws were passed would expect that they might fail entirely to reduce the uninsured over time, or that they might not succeed in controlling costs at all.

He goes on to cite specific examples of major media outlets that were at least as enthusiastic about the new laws as their political sponsors were. Mr. Day observes that the media coverage was often devoted to the politics of the reforms, but indifferent to the economic viability of the ideas. This was especially true when there was bipartisan support for the ideas, as there often was.

But, as it turned out, not one of these laws worked as promised. In some cases they slightly reduced the number of uninsured for a couple of years, mostly by expanding Medicaid, but the effect soon evaporated, partly because they did nothing to control costs. All of the laws were soon repealed.

Next time we’ll look at small group reforms.

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