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COMMENTARY: For 100 years, the markets have failed on health insurance


After eight years of listening to Republicans raging against the Affordable Care Act, after hearing countless promises to deliver better versions of health insurance, including Donald Trump’s insistence that he would give us all more for less, and after watching Congress voting to repeal the ACA, were you surprised that “Ryancare” would take health insurance away from 20-million-plus Americans?

You shouldn’t have been, not if you know anything about the history of health insurance in this country. Republicans have insisted that “market-based” health insurance will deliver better care at lower costs. But for roughly 100 years, the market failed to do that, and it failed spectacularly.

Though Theodore Roosevelt was the first to campaign for a national system of health insurance, it wasn’t until the 1920s that the government stepped in where the private market refused to tread. Specifically, Congress created the Veteran’s Bureau in 1921 primarily to address the health issues of the doughboys returning from World War I who were not able to get treatment for their injuries. The Veteran’s Bureau, among other things, established a network of hospitals to care for these men.

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Both President Franklin Roosevelt and his successor, Harry Truman, proposed national health care programs, and both proposals died in Congress amidst fierce opposition from those, like the American Medical Association, who wanted a health insurance system instead.

So what emerged after the Second World War was health insurance for veterans – and a lot more of them now – provided by the government, and private insurance for everyone else, usually attached to your job. Unions fought hard to have health insurance packages as part of their contracts, and big corporations could afford the cost of providing insurance to their employees.

The obvious problem with this cobbled-together approach was that it left out millions who were neither veterans nor in the workforce. Like the poor and the unemployed. And even more so, the retired and the elderly. They often faced illness with nothing.

That’s why Congress invented Medicare and Medicaid in the mid-1960s. Medicare in particular has worked as it was intended to, and most elderly people who use it depend on it, even if they don’t always understand how it’s funded. Who can forget that angry woman in South Carolina in 2009 screaming at her Congressman: “Keep your government hands off my Medicare!”

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In the last quarter of the 20th century, therefore, the private sector was responsible for providing health insurance to anyone who wasn’t poor, a veteran, or retired. Only it didn’t. Plenty of small employers couldn’t afford health insurance plans for their workers, and plenty of those plans refused to carry you if you had a pre-existing condition or didn’t pass your physical exam, or they capped coverage in ways that made getting sick unaffordable.

So as a consequence, by 2008 roughly 40 million Americans did not have access to or could not afford private-market health insurance. All while standards of medical care continued to rise. Diseases that were a death sentence a generation ago are now routinely cured, but only if you have health insurance to cover the treatment. The private sector, in essence, was making basic decisions about who lived and who died, based purely on who could afford the premiums.

The Affordable Care Act was necessary precisely because those people had no other way to access health insurance. It wasn’t an intrusion into a market that was working, so much as it cleaned up the mess left by our ad-hoc private insurance system.

So the next time you hear a politician talk about a “market-based solution” to health insurance, dial 911. The market has had 100 years to provide a solution, and it has failed to do so.

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Steven Conn is the W. E. Smith Professor of History at Miami University.



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