Health Care Ate America

Joanna Andreasson

In 1960, six years before the start of Medicare and Medicaid, America spent about $27 billion on health care. That figure represented just under 5 percent of an economy that was about $543 billion in total. By 2016, combined public and private spending on health care had reached more than $3.3 trillion, or nearly 18 percent of the total economy, with almost half the bill paid by government. Now, thanks to factors such as increased drug prices and an aging population, official projections have health care spending increasing indefinitely.

In the five decades after the passage of America's two largest health care entitlements, that sector has become a maw, eating everything in its path. Health spending has reshaped the nation's job market, its household finances, and its public budgeting. Between January 2007 and November 2017, nearly a third of all jobs created in the United States were health care jobs. On average, American households spend 22 percent of their income on health care, up from 10 percent in the '70s. Large employers spend an average of more than $14,000 per employee on health insurance and the like each year. Medicaid, which is jointly administered and financed by state and federal governments, is one of the largest line items in every state budget. Health care entitlements are the biggest drivers of the long-term federal debt and a fixture of America's most consequential public policy debates.

Medicare and Medicaid were themselves outgrowths of the failed single-payer campaigns of the 1940s and 1950s. Nearly every decade since they came into being has been marked by battles over health care policy and politics. In the 1970s, Sen. Ted Kennedy proposed a single-payer plan that was scuttled after the newly created Congressional Budget Office estimated it would cost far more than Kennedy's staff had said. In the 1980s, Ronald Reagan presided over a series of changes to Medicare's payment system in an effort to tamp down on costs. In the 1990s, one of Bill Clinton's first major initiatives was a failed attempt to pass a disruptive universal coverage law. A decade later, George W. Bush would oversee the passage of Medicare's prescription drug benefit, his administration's most visible and priciest domestic policy achievement.

Barack Obama's presidency was defined in large part by the effort to pass and implement the Affordable Care Act, the health care law that would become known as Obamacare. Even with Democratic majorities in both the House and the Senate, drafting and voting on the legislation consumed the first year of his presidency. Once passed, it was beset by legal and practical challenges.

Over the course of Obama's two terms, Republicans swept the House and voted on dozens of symbolic repeal bills, promising to replace the law at the first opportunity. For almost a decade, eliminating Obamacare was the GOP's biggest domestic policy priority.

The opportunity arrived after the 2016 election, which resulted in Republicans controlling both chambers of Congress as well as the White House. But just as the effort to pass Obamacare dragged on longer than anticipated, so did the GOP's repeal push. In the end, it failed by a slim margin, with holdout lawmakers worried that no suitable replacement had been drawn up. President Donald Trump and congressional Republicans settled for tweaking the law at the margins—stopping payment of insurer subsidies that were never authorized by Congress, zeroing out the individual mandate penalty, slashing funds set aside to promote new online marketplaces, and pushing to add work requirements to the law's Medicaid expansion.

Democrats, meanwhile, spent the better part of 2018 campaigning on health care issues—from the preservation of Obamacare's pre-existing conditions regulation to the further expansion of Medicaid. Nearly all of the party's rising stars have endorsed a single-payer option, and Republicans have begun to respond, somewhat nonsensically, by defending traditional Medicare—a program that socializes the financing of health care—from what they have called the threat of socialism. Even Obama, who as president rejected a single-payer option, said in a September 2018 speech that Medicare for all was a "good, new" idea.

It is neither, but its return to the forefront of America's public policy debates is perhaps inevitable given the increasingly expensive and expansive role of health care in American life. Since the federal government's first major forays into health care financing in the 1960s, that sector has consumed the economy, the workforce, and both household and government budgets. It's no surprise that it has overtaken American politics as well.