washingtonpost.com
Kennedy Saw Health-Care Reform Fail in the '70s

By Steven Pearlstein
Friday, August 28, 2009

Asked about his greatest regret as a legislator, Ted Kennedy would usually cite his refusal to cut a deal with Richard Nixon on health care.

It was back in 1971 and President Nixon was concerned that he would once again have to face a Kennedy in the next year's election -- in this case a Kennedy with a proposal to extend health care to all Americans. Feeling the need to offer an alternative, Nixon asked Congress to require for the first time that all companies provide a health plan for their employees, with federal subsidies for low-income workers. Nixon was particularly intrigued by a new idea called health maintenance organizations, which held the promise of providing high-quality care at lower prices by relying on salaried physicians to manage and coordinate patient care.

At first, Kennedy rejected Nixon's proposal as nothing more than a bonanza for the insurance industry that would create a two-class system of health care in America. But after Nixon won reelection, Kennedy began a series of secret negotiations with the White House that almost led to a public agreement. In the end, Nixon backed out after receiving pressure from small-business owners and the American Medical Association. And Kennedy himself decided to back off after receiving heavy pressure from labor leaders, who urged him to hold out for a single-payer system once Democrats recaptured the White House in the wake of the Watergate scandal.

Thirty-five year later, the single-payer dream of Democratic liberals still remains politically out of reach. But it should tell you how far the country has moved to the right that the various proposals put forward by a Democratic president and Congress bear an eerie resemblance to the deal cooked up between Kennedy and Nixon, while Nixon's political heirs vilify it as nothing less than a socialist plot.

The simple lesson from this story -- and certainly the one Kennedy himself drew -- is that when it comes to historic breakthroughs in social policy, make the best deal you can get, leaving it to subsequent generations to perfect. That's what happened with Medicare and Medicaid, and there is no reason to think it wouldn't happen again with universal coverage and reform of the health insurance market.

Although you'd hardly know it from all the shouting of recent weeks, there is a deal to be had here if only Democrats would be willing to take it. This is not a deal, mind you, designed to win the support of Republican leaders in Congress -- at this point they're determined to derail any health reform plan. Rather, it is the deal necessary to win broad support from an American public wary of federal deficits, anxious about losing the health care it already has and fearful of radical change.

So what would this deal look like? Something like this:

-- Universal coverage. Finally, a requirement that every American purchase a minimum, a basic health insurance plan.

-- Insurance exchanges. Each state or region will set up government-supervised insurance exchanges through which private insurers can offer policies to the uninsured, the self-employed and small businesses. Coverage standards will be set nationally, and participating companies must agree to take all customers, regardless of pre-existing conditions, at rates that vary only slightly by age.

-- Options. Among the options would be lower-cost, high-deductible plans long pushed by Republicans. Another: nonprofit insurance "cooperatives" set up by participating hospitals and physicians groups offering an alternative to traditional fee-for-service medicine.

-- Low-income subsidies. Households with incomes up to 300 percent of the poverty line would be able to buy the average-priced basic plan through the exchanges for no more than 15 percent of pre-tax income, with the balance paid for by the government.

-- Employer mandate. All businesses would be required to pay for at least half of the cost of a basic insurance policy for all workers and their immediate family, or pay the government a progressive tax on payrolls over $250,000, exempting the smallest businesses. While distasteful to Republicans, the mandate would level the competitive playing field among firms that now offer health insurance and those that don't, while generating revenue to pay for premium subsidies.

-- Tax on extravagant health plans. A tax of 25 percent would be imposed on health plans with an actuarial value of $10,000 for individuals and $20,000 for families, indexed to inflation. While distasteful to unions, the measure is designed to raise revenue for subsidies, make patients more cost-conscious and help force down insurance premiums.

-- Malpractice reform. A federal cap on punitive damage awards in cases where physicians adhere to evidence-based medicine. It's useful in lowering malpractice premiums and reducing defensive medicine and crucial in winning political support from doctors and Republicans.

-- Cost containment. Every two years, a panel of independent health experts would propose a package of structural reforms and reimbursement rates to keep spending growth of Medicare and Medicaid in line with growth in national income. The entire package would be subject to an up-or-down vote by both houses of Congress and veto by the president.

-- Rationing. The bill will provide funding for stepped-up research into the relative effectiveness of different treatments, along with the promise that the results would not be used as the basis for denying coverage.

It will take several more months before all the details are hammered out.

But once the posturing and brinksmanship have played out and members of Congress are confronted with a final up-or-down vote, this will be the deal that not only ensures the support of wavering moderate Democrats but wins the vote of a sizeable number of Republicans who will come to realize that it's better for their careers to be on the right side of history than on the good side of the Republican leadership.

And while there will be plenty of liberal Democrats who will be fuming about all the compromises forced upon them, somewhere from above will come a familiar voice with that distinctly Boston accent, whispering, "The dream will never die. Take the deal. "

Steven Pearlstein can be reached at pearlsteins@washpost.com.

View all comments that have been posted about this article.

© 2009 The Washington Post Company