Today, January 1, 2013 Obamacare taxes hit all Americans.
This is the second in a series by Watchdog Wire to explain how we came to implement this, the most sweeping of all legislation in the history of America. To read the first column please click here.
The question to be answered is: Who and what got us to this point?
Jeanne M. Lambrew, Tom Daschle and Scott S. Greenberger in their book “Critical” published in 2006 stated, “UNTIL THE BEGINNING of the twentieth century, medical care in the United States was inexpensive because it was largely ineffective.” The authors provide no evidence for this statement but it is this progressive ideal that becomes the foundation for the Patient Protection and Affordable Healthcare Act (HR 3590) passed by the 111th Congress commonly known as Obamacare.
Lambrew, Daschle and Greenberger wrote in “Critical”, “When Progressive Era [1890-1920] reformers turned their attention to workers’ health, they decided to put compulsory health insurance on the national agenda for the first time. In 1914, the American Association for Labor Legislation began drafting legislation to provide workers with free medical care, paid sick leave, and a modest death benefit. By 1917, the AALL bill had been introduced in fourteen state legislatures. The fate of the legislation foreshadowed the health insurance debates that occurred throughout the twentieth century.”
The American Association for Labor Legislation was formed to promote uniformity of labor legislation and to encourage the study of labor conditions with a view toward promoting desirable legislation. The Association was founded as a branch of the International Association for Labor Legislation. Preliminary discussions about forming the group occurred during 1905 and culminated in the first meeting of the Association held on February 15, 1906, in New York City.
“Physicians, fearing that any third-party payer, especially the government, would regulate doctors’ fees vigorously opposed it. They were allied with the insurance companies, which worried that government health insurance would undermine the private life insurance market. In a 1918 referendum, the measure was soundly defeated,” wrote Lambrew, Daschle and Greenberger.
While the arguments against government health insurance remain the same the progressive movement did not let it die.
In 1918 some unions supported the bill, but others joined with employers to fight it. Samuel Gompers, President of the American Federation of Labor (AFL), denounced the proposal as “a menace to the rights, welfare, and liberty of American workers.” According to Lambrew, Daschle and Greenberger “[O]pponents of national health insurance would raise the specter of ‘socialized medicine’ to great effect.”
What happened next set the stage for the creation of the Human-care Complex.
Because people had so little money, hospital occupancy rates plummeted. In search of a steady source of revenue, hospitals began offering “prepayment” plans to certain groups, such as hospital employees, teachers, and firefighters. For a monthly fee, members were guaranteed free hospital care if they ever needed it. So began the road to human-care insurance based upon expanding access based on illness rather than health.
Lambrew, Daschle and Greenberger wrote, “The hospital prepayment plans endured, evolving into the Blue Cross system and becoming the model for group health insurance as we know it today. One crucial feature of the plans was that they were employment-based—that is, they were offered to groups of workers large enough to spread out the cost of caring for the sick or injured. Still spooked by the prospect of government-sponsored health insurance, many employers accepted the Blue Cross system as a more palatable alternative.”
But just like all private sector solutions created through necessity, the government took an interest and become more directly involved in human-care via the tax codes.
“Our employment-based system solidified during World War II, when the federal government [tax] exempted ‘fringe benefits’ such as health insurance from wage and price,” noted Lambrew, Daschle and Greenberger.
And so it grew. To attract workers, who were scarce because so many men were in the military during WW II, some employers offered them generous health coverage. The government’s decision to exempt health benefits from personal income taxes accelerated the trend. Unions bolstered the nascent insurance system by cutting their own deals with hospitals and later with the Blue Cross.
The next column will look into the expansion of the government/human-care industrial complex from 1945 to today.