Progressive Era
Reformers who were interested in labor legislation during the progressive era of the 20th century understood that what we call health insurance was actually something called sickness insurance. The argument was that if a worker becomes ill, his family would need protection from the cost of his absence from work. These costs covered both the time lost at work and the cost of medical care. The Social Insurance Committee of American Association for Labor Legislation presented a plan that included provisions for wage replacement as well as medical services such as doctor visits, nursing, and drugs and supplies.
Americans were inspired by Europe to bring sickness insurance to the United States. For example, in 1911, the English passed British National Insurance Act. This added to existing programs in Germany and Austria. It also included parts of Scandinavian and eastern Europe. The German program included features such as medical and surgical care for up to 26 weeks. However, like European counterparts it emphasized cash benefits for workers. These were meant to replace some forgone wages. The German program covered only manual laborers and members of the working classes. Because the focus was on workers in England rather than the whole population, primary benefits were not available to wives of workers (Rubinow 1916; Falk 1936).
American reformers who wanted to establish a sickness insurance program in America noted that the lost wages of workers due to illness were much more expensive than the medical costs. Rubinow (1916). cited an American 1911 study that revealed lost wages of $366 million, and medical expenses of $285 million. This is why temporary disability insurance, later called health insurance, took precedence over the latter.
Rubinow, like other progressive reformers did not ignore the issue of medical care. Rubinow cited data from the U.S. Bureau of Labor's eighteenth annual report that showed that even the most well-off families spent less than $30 per year on medical expenses, and that some of that money was used to pay for a funeral. He concluded that this amount was too low to spend on medical care, and claimed American workers should be entitled to more medical care ( Rubinow; 1916). He emphasized that social insurance was about cash benefits and not the payment of medical care.
Rubinow focuses on passing sickness insurance laws in the States and not on creating a national insurance law. Because of the weight of precedent and constitutional restrictions on Federal activity and the heterogeneous American conditions, social reform at the time was primarily focused on the State and not on the Federal Government. In the Northeast, a program that works well in rural Nevada may not work in heavily urban states. The major battles for health insurance during the Progressive Era were fought in Sacramento, California, and Albany, New York, rather than Washington, D.C.
Medicaid
What became known as Medicaid was not a major focus of the high-profile negotiations about Medicare. The idea of financing public assistance beneficiaries' medical care has a long history. For example, the earliest New Deal relief programs included at least some provision for medical care. The same legislation that created a new welfare category to support the permanently and completely disabled in 1950 also established vendor payments. This allowed Federal money for welfare beneficiaries to be spent ( Stevens & Stevens, 1974). The Kerr-Mills program was established by Congress in 1960 to provide Federal grants to States for medical care for the elderly who are medically disabled.
Mills continued to be interested in the Kerr-Mills programme even after Kerr's death at the start of 1963. Mills, who was pressed for time in the Medicare debates, argued that the Kerr–Mills approach with its emphasis on the States, benefits for the poor, and should be allowed to develop in order to determine if it is adequate to address the issue of elderly health insurance. It was slow to get off the ground. In 1963, only 30 States had started Kerr-Mills programs. The program was only well-developed in a handful of States ( Berkowitz 1991). Mills responded to the slow start by pushing for its expansion. Mills wanted to make Kerr-Mills more palatable to the States. He could create financial incentives to encourage States to establish Kerr-Mills programs. This would also fill in any gaps in welfare coverage.
Mills was interested in expanding Kerr-Mills because of the interest of federal officials in the Welfare Administration at the Department of Health, Education, and Welfare. They wanted to ensure that welfare children, which were the largest group of welfare recipients, had access health care. They created the Child Health and Medical Assistance Act to be included in the 1965 administration's legislative program. Cohen (1964c). stated that the intent was to "... make the Kerr-Mills MAA program (Medical Assistance to the Aged Program) apply across the board on an non-discriminatory base to the other three federally-aided programs." This means that Federal grants for welfare children should be just as generous as those for the elderly who are medically indigent.
Mills decided in March 1965 to combine the Byrnes and administration approaches to health insurance. He also suggested that the package include a Kerr-Mills program similar to the Administration's Child Health and Medical Assistance Act. He was able to include elements of the Eldercare proposal, which had been pushed earlier by the AMA in the creation of Medicaid. As a way to provide medical care for the elderly, the AMA wanted Kerr-Mills to be expanded. Although the administration agreed to this request, they considered Eldercare to be a complement rather than a replacement for Medicare. Medicaid was included in the 1965 law as an addition, but it would be a major part of the future of health care financing.
National Health Insurance and Medical Infrastructure
The Federal Government was involved in health care finance in two primary ways. Since universal health care was a key social policy goal in the 20th century, reformers have been interested in what Derickson (2006) calls the supply-side solution for the problem of medical care access. The solution focused on ensuring that there were enough doctors and hospitals to care for patients. The Federal Government began investing in medical infrastructure in the 40s. The Federal Government made significant investments in what could be described as the medical infrastructure. These included grants to the States for building hospitals in a program known as the Hill-Burton Program, which was established in 1946 and expanded several times thereafter. Subsidies for medical research and education. These Federal grants were not subject to national health insurance. Instead, they attracted little opposition from the Congress, as the increasing congressional appropriations for National Institutes of Health during the forties, fifties and sixties indicated ( Strickland; 1972). Melvin Laird (Republican from Wisconsin) captured the appeal Federal support for medical researchers in the statement that "Medical Research is the best type of insurance" ( Fox 1986). They were supported by both Medicare opponents and proponents as a consensus item in healthcare policy. Cohen stated in 1961 that he had great respect for and admiration for the ideals of the medical profession. He supported legislation to encourage medical education, scholarship, and research ( Cohen 1961).
The Johnson administration was also interested in a program to reduce the risk of stroke, heart disease and cancer. Over a period of six years, the administration proposed spending $1.2 billion to create 32 university-based medical centers that would include treatment and diagnostic centers for these diseases. Administration also supported institutional support for medical schools with the goal of increasing the availability of dentists and doctors for private practice. They also proposed $15 million to renovate and construct medical libraries ( Cohen, 1964e). Each of these proposals was incorporated into the Medicare Act during the same session.
Conclusion
This article is a historical piece that examines the evolution of national insurance between 1900 and 1965. This article demonstrates that modern phenomena such as the State's management of health insurance finance programs, the consumer's choice about which type of health plan they choose, and the collaborative efforts between the private and public sectors to provide vital services all have roots in the lengthy debate surrounding the 1965 passage of Medicare. Over their 40-year histories, specific acts such as Mills' decision combining Republican and Democratic approaches in health insurance have influenced the development of Medicare or Medicaid. The programs have also been affected by the long-term transformation of health insurance that took place between the progressive era to the great society. These programs, whose anniversaries are celebrated, have been shaped by a complex process that combines continuity and change.
