Throughline - Health Insurance in America

Episode Date: February 27, 2025

Millions of Americans depend on their jobs for health insurance. But that's not the case in many other wealthy countries. How did the U.S. end up with a system that's so expensive, yet leaves so many people vulnerable? On this episode, how a temporary solution created an everlasting problem. This episode originally ran in 2020 as The Everlasting Problem.To access bonus episodes and listen to Throughline sponsor-free, subscribe to Throughline+ via Apple Podcasts or at plus.npr.org/throughline.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This message comes from This Is History. Discover the incredible true story of Mansa Musa, who many claim was the wealthiest ruler in history. Immerse yourself in the epic six-part series, Empire of Gold. Listen now, wherever you get your podcasts. Imagine for a moment, it's the mid-1800s. We're walking down a long, dimly lit corridor of a hospital in the U.S. Rows of beds line the walls of a large open room.

We step over a small puddle of water, probably from that leak in the ceiling. And a few patients lie coughing, in tattered clothes. For most Americans, this is the last place they'll want to come if they get sick. A hospital was a place where poor people went to die. Hospitals were, they were not high-tech places by any means. We didn't really know very much of the things that we know today about how disease happens, how to keep infection from spreading, how to treat people surgically. We didn't have the kind of knowledge we have today. At the time, doctors are still giving patients mercury, a toxic substance,

to treat things like constipation or syphilis and bloodletting to help balance the body. People are treated in their own homes either by someone they know or a local doctor, but they almost never step foot in a hospital, even for surgeries. At this point, pretty much no one has indoor plumbing, phones or cars. The average life expectancy is around 40. And more than 30% of children don't make it

to their fifth birthday. The average American spends almost nothing on healthcare every year. And the idea of health insurance or health care debt doesn't even exist yet. But change is happening across society. And before long, health care in the US will look radically different. Health care billing is complicated. Sticker prices of hundreds of medicines went up.

Some health care is unexpected and it's expensive. Widespread consumer anger over denied claims and the high costs of care. Most Americans have had at one time or another frustration and helplessness with the healthcare industry. Well, we have found the thing that can bring our divided country together and it seems to be hating big healthcare. You're listening to Throughline from NPR. Where we go back in time. To understand the present. Hey, I'm Ramtin Arab-Louis. And I'm Rand Abdel Fattah.

And on this episode, the cost of our health. As the Trump administration shakes up the federal government, there's an open question about what all the changes might mean for the rising costs of health care. Health care spending makes up almost 20% of the U.S. economy. The United States has the most expensive health care system in the world. And it's one of the wealthiest countries without a universal health care system. That type of system would cover everyone. Instead, a majority of Americans depend on their jobs for health insurance.

In this episode, we're going back to the moment we chose this path, when the U.S. faced some key decisions about health care and how to pay for it, and came up with a temporary solution that created an everlasting problem. Hi, this is Liz from France and you're listening to ThruLine on NPR. Thank you. There is a lot happening right now in the world of economics. You may have heard about the president's desire for a sovereign wealth fund. If your country is small, well governed and has a surplus, it is probably a good idea. We are not any of those.

We're here to cover federal buyouts, the cost of deportation, and so much more. Tune in to NPR's The Indicator from Planet Money. Public media counts on your support to ensure that the reporting and programs you depend on thrive. Make a recurring donation today to get special access to more than 20 NPR podcasts, perks like sponsor-free listening, bonus episodes, early access, and more. So start supporting what you love today at plus.npr.org. Bella DiPaolo is glad if you're happily married, but she is perfectly happy being single. I would love to have someone who took care of my car or someone who cleaned up the dishes after dinner. But then I'd want them to leave.

From yourself to your dog to your spouse are significant others. That's on the TED Radio Hour from NPR. Radio Hour from NPR. Part One. Cogs in the Wheel. It had begun in the late 18th century. The change. Slowly at first, or so it seemed. A train here and there, taking people somewhere new. Then it sped up.

More machines, more factories, more people leaving farms for cities. And by the early 1900s, it was an undeniable reality. The U.S. was changed. Its agrarian spirit had faded and industry was king. In this brave new world, industrial workers weren't their own bosses. In fact, workers weren't all that different from the factory conveyor belts they patrolled. They were sort of cogs in a wheel.

And unlike on the farm, where if they got sick or hurt, other family members could just pick up the slack and keep the work going and the family fed, in a factory, it wasn't that simple. When you have people working in factories, they're not substitutable for one another within the family. Once the breadwinner is injured, the whole family is going to suffer. You need to develop...

This is Sherry Gleed. She's Dean of the Robert F. Wagner Graduate School of Public Service at New York University. The main cost that people faced if they became ill was that they would no longer be earning income to support themselves or their families. So the financial consequence of sickness was not the cost of paying your medical bills, because mostly you avoided those, but really the cost of continuing to put food on the table when you were sick. By the 1910s, a potential solution was being floated. You might think of

it as sickness insurance, a kind of disability insurance, providing people who were injured on the job with financial support. And by 1915, these sickness funds covered around 8 million workers. And the United States is not in any way unique here. The same kinds of developments are happening in other countries. The first country to introduce compulsory health insurance, that is health insurance, the cost of which was required to be paid by both workers and employers. That country was Germany in 1883. 1883. These were plans that covered both what we would call paid sick leave and medical bills. And by the time Americans were starting to think about this in the early 1900s, Germany

was already starting to mandate employer-based coverage to many more employees beyond industrial workers. The labor movement was much weaker in the United States. There wasn't a strong socialist party. The two major parties in the United States, unlike the major parties in Europe, were not looking for ways to co-opt the appeal of socialists. And so they didn't have the motivation to introduce the kind of wide-ranging social insurance programs that Germany introduced. By the way, this is Paul Starr.

I'm a professor of sociology and public affairs at Princeton University. So at this point, it wasn't that the US was necessarily behind the curve, but whatsoever I see or hear, I will keep you down and there on." Meanwhile, a sort of revolution in medicine was underway in the U.S. Doctors were becoming more professionalized with more rigorous curriculum and tougher licensing criteria. The thought changes from this being a guild of kind of independent practitioners

to medicine having this more exalted status based in science. There's actually progress in health care in the 1920s, and hospitals start opening that are not killing people, and people begin to use them. The young doctor joins a hospital staff. Here he is brought face to face with the realities of medicine and of life. Life at this time was changing for many Americans, modernizing. Cars, radios, and telephones were becoming more common. Women could vote.

And the average lifespan in the US was about 54 years, almost a decade longer than it had been in 1900. Instead of hospitals just being places where poor people go, they become a place that higher income people go, particularly for childbirth, and medical care expenses start to go up for people. And pretty quickly. The hospitals confronted a financial problem.

Many of their patients couldn't pay when the bills were due. And the hospitals are like, wait a minute, this is not going to work for us. We had better come up with some way to make sure that people have money when they come to the hospital. Why not establish a program to get people to prepay for their hospital care? It will be run by the health care providers. So there's no government intervention or anything to worry about here. And that was the beginning of Blue Cross and the beginning of private insurance. Private medical insurance started in the U.S. with Blue Cross, which would become Blue Cross Blue Shield.

Up to this point, if someone went to the hospital, they either paid out of pocket or, if they couldn't pay, charitable organizations often stepped in to cover the costs. But as treatment got more expensive, that was becoming less realistic. For Blue Cross, the biggest challenge was actually figuring out how to sell it. Because people who know that they're going to need to go to the hospital, they're more likely to buy the product than the people who don't expect to use the hospital. And then the insurance product is going to crash. And they realize that it's a lot cheaper and easier to sell it to employer groups than it is to go door to door and sell it to individuals.

So they rolled out their prototype in Dallas, Texas, offering insurance plans to teachers through their schools. And it's such a success that it spreads all over the country. But it was still available to very few people relative to the general population. And these original plans were limited. They did not at that point have in mind health insurance as a way for rigorously paying ordinary medical bills. Doctors visits weren't covered at all. The American Medical Association was against third-party payments.

The doctors didn't want anybody butting into their domain. The American Medical Association was and is the largest association of physicians in the country. To get their point across, they made this 1930s film called Men of Medicine. Our first need is to join in a nationwide effort against those causes of disease and death for which we have scientific weapons of unquestioned power. The American Medical Association was very well organized in those days. It was the single most powerful group in the whole

healthcare arena. And they were nervous about this new thing, health insurance. Doctors at this point, they're basically small businessmen, and they have the politics of small businessmen. They're conservative. Doctors saw any threat to their autonomy as a threat to their bottom line, which could jeopardize their business and their profits. But a few years in, they decided to try their own hand at the private health insurance market, in part because they figured it was better for action and action now.

Nationalized health insurance. The withered leaves of industrial enterprise lie on every side. Farmers find no market for their produce and the savings of many years and thousands of families are gone. When he entered office in 1933, President Franklin D. Roosevelt was facing the worst economic crisis in American history. Only a foolish optimist can deny the dark realities of the moment. Widespread poverty, massive unemployment, hunger, and how to pay for health care. This new idea that, my goodness, people are now beginning to actually face significant

costs for medical treatment, not only for illness. He knew he needed to act fast to address all these problems. So... Roosevelt put together a team of people, a team of experts to put together what's now the Social Security Program and Social Security Act. This is Jim Marrone. He's a political science professor at Brown University

and co-author of the book, The Heart of Power. It would have social security, unemployment compensation, aid to families with dependent children, later known as welfare. The whole package of things that we now think of as the welfare state were put together between 34 and 35, and national health insurance is very much part of it. But physicians in the United States went nuts.

But physicians in the United States went nuts. They just didn't want to hear about the government taking over. The American Medical Association publicly denounced Roosevelt's health insurance plan. There was a great deal of trust in doctors at that point, and people were very deferential to doctors' judgments. And so the opposition of the American Medical Association would have been very costly to Roosevelt and might have blocked Social Security from passage. Roosevelt, who was getting advice from a very famous physician who kept telling him,

Franklin, this is not going to work. Eventually, Roosevelt caved to the pressure and removed health insurance from the bill to make sure that the rest of his social welfare plans went through. You know, it was probably a rational political choice that Franklin Roosevelt made. The government have made plans, under which it will be possible to carry on the work of the nation. — The days of stress and strain that may be a hit. — America goes to war to save the homes and ideals of free men from Axis domination. Before the U.S. entered World War II at the end of 1941, only about 4% of the U.S. population had health insurance.

Everyone else either paid out of pocket, relied on charity to help cover costs, or just avoided hospitals altogether. As more and more men went off to war, the country faced a labor shortage. Factories needed workers fast to build ships, tanks, and weapons. And economists worried that if businesses kept raising salaries to compete for workers, inflation would soon spiral out of control. We are learning to ration materials. And we must now learn to ration manpower.

The administration puts wage and price controls on the economy. So what that means is that industries can't raise their prices, but also workers can't raise their wages. And this is a period of growing unionization in the United States. So on the one hand, unions who'd agreed not to strike during the war weren't able to do anything about these freezes. And on the other, here are these employers who want to attract workers to their firms, but they can't raise wages, which would be the normal way you would do it. And so what do they do? They decide to start offering people benefits that won't violate the wage

and price control rules, but that will be attractive and get people to come to their to their workplaces. And they hit upon this relatively unknown thing called health insurance. They said, come to work with us and we'll pay your health insurance. Employers got workers, workers got health insurance, and unions got a new bargaining chip. Sounds like a win-win-win. But this raised some questions at the Internal Revenue Service. What's the IRS gonna do about health insurance?

Ultimately, the IRS decided not to tax this new employee-sponsored health insurance, making it a lot cheaper for employers. And you'll want to hold on to that idea. It becomes really important later. So we start to see the broadening of this initial Blue Cross effort, right, which was really instigated by hospitals.

So during World War II, really completely without anybody planning it, the United States got the roots of a private insurance system. Many people argue that the exclusion of employer contributions to health insurance from wage price controls during World War II was the cause of the development of employer-sponsored insurance. I don't agree with that.

Okay, so without getting too in the weeds here, basically, Paul's argument is that the real cause of our employer-based insurance system was not what the government did to control parts of the economy, but what it didn't do. Because without government intervention, employers were in the best position of any non-governmental organization to spread the cost of insurance and to manage it administratively. Plus, hospital health care was getting so much better that it was becoming essential to people's lives in a way that it hadn't before. The key was the development of the sulfa drugs and penicillin, which made surgery effective. That actually was transformative for all kinds of health care.

It suddenly made it important for people to have health insurance. Employer-sponsored health insurance was improvised as a solution to a temporary problem, wage price controls. But it wasn't a foregone conclusion that the U.S. would continue down that road. Each hour in every 24 is filled with a steady drone of allied aircraft dominating the sky. They have ruined the chances of escape for the Axis. The Nazis and fascists have their backs against a very insecure wall. The last great battle in Africa is coming out of 1943, 1944. It's now clear the United States is going to win World War Two.

Roosevelt, who is about to hit his fourth term, is looking for another crusade to run. — While Roosevelt was winning the war, his health was failing, and he was determined to leave the country as prosperous and peaceful as he could before taking his final breaths. So he reached out to a trusted advisor, Samuel Rosenman. He had asked Samuel Rosenman to prepare a speech. He said, Sam, write me a plan.

About national health insurance. Only about 10% of the U.S. population had health insurance when the war began. And it was becoming clear as the war was winding down that this system didn't work for everyone. If you were poor, black, elderly, unemployed, working in a small business or on a farm, you were almost definitely uninsured. Roosevelt didn't care about the plan. What he cared about was a path to win the plan. He told Sam that. Just get together a plan and then tell me how to win it.

From his beloved second home at Warm Springs, Georgia, the body of Franklin Delano Roosevelt moves on the first stages of its journey to his final resting place. Roosevelt dies in April of 1945, just before the end of World War II. And this guy no one had ever heard of before, Harry Truman, who barely even met Roosevelt, they just put him on the ticket. He's a senator from Missouri, seems to be a moderate. He takes over and he says to the press the first time he meets them, boys, if you ever prayed for anyone, pray for me now. Jim Marrone says that Truman in his third week in office called up Sam Rosenman and asked to see the plan that

Rosenman had written for Roosevelt just before he died. And to everyone's shock, Truman grasps this plan as his great mission in life. This comes from the grave from the great man. as his great mission in life. This comes from the grave, from the great man. And Truman makes it this thing of his career. Coming up, Truman wages a battle for universal health insurance. Hi, my name is Jonathan and I'm from Dallas, Texas and you're listening to Through Line from NPR. I have been listening to this show nonstop

for the last 12 hours and it is amazing. Thank you so much. On the embedded podcast. No, no. It's called denying a speech from a speech. It's misinformation. Like so many Americans, my dad has gotten swept up in conspiracy theories.

These are not conspiracy theories. These are reality. I spent the year following him down the rabbit hole, trying to get him back. Listen to alternate realities on the embedded podcast from NPR. All episodes available now. James Baldwin was an activist, an orator, a style icon. But on NPR's Book of the Day, we'll dissect the thing he was most known for, his writing. That last clause kind of reads like a horror story, right?

There's something deeply, deeply ominous about the way that that opening paragraph closes. Celebrate Black History Month with us as we examine some of his best works on NPR's Book of the Day podcast. It's Oscar season and we watched the nominated movies so you don't have to. We are making some bold predictions for Hollywood's biggest night and we may help you win your Oscar's pool. Listen to the pop culture happy hour podcast from NPR.

It's 1945. World War II has just ended. And Harry Truman, who's made universal health insurance a key part of his presidency, has been in office for just four months. And on the other side of the Atlantic, health care is also on the minds of governments across Europe. The thing is, in the aftermath of World War II, Western Europe and the U.S. looked very, very different. Well, Western Europeans had experienced the war directly, and many of their cities were

in wreckage. And so they are incredibly poor. They're still rationing food for the years after World War II. 20 million unfortunate children of Europe are waiting and hoping for a life that has brighter things to offer than unending hunger and sadness. Contrast the United States, we were an economic colossus. Unlike anything else in the 20th century, no country in the 20th century

has ever been as economically dominant as the United States was coming out of World War II. With the economy in shambles, European countries needed to provide people with social services so they could survive. Shelter, clothing, a hot meal, and health care. So it wasn't until really after the Second World War that you see the big spread of universal health insurance systems across Europe.

Every country's health care system looked a little different. But there were two basic models of universal health care that emerged. One in Germany, based on payroll deductions and government control of rates. And one in Great Britain, the National Health Service. This new health service will be organized on a national scale as a public responsibility. The cost of the service will be met from rates, taxes, and national insurance.

And so everyone will pay for it. And everyone will benefit from it. The United States also faced a choice during the late 1940s when President Truman proposed national health insurance. But the United States went the opposite direction from Great Britain and from other European countries. It does my heart good to see the green fields of this nation once more.

They are a wonderful sight. So Harry Truman succeeded Franklin Roosevelt on Roosevelt's death. And then he faced a very difficult 1948 election campaign. He was being challenged from the left by the progressive party that nominated Henry Wallace, who had been, earlier had been vice president under Roosevelt. And Truman also was facing a challenge from the Southern Democrats, from the Dixiecrats. So the Democratic Party was very much in danger of splitting in 1948, which would have allowed, possibly allowed, the Republican candidate Thomas Dewey

to win the presidential race. 50 different reporters all made predictions about who would win, and all 50 chose Thomas Dewey of New York. With control of the Senate of vital question, both candidates will visit the states with the closest Senate races. So Truman needed something to rally the Democratic troops.

And national health insurance became one of his rallying cries. Truman got on his train when whistle-stopping through. A 16-day coast-to-coast tour lies ahead as the Truman Special pulls out of Washington. He wasn't very good at speeches, but his staff discovered that just give him a couple of talking points, he could really bang them out. Then he dashes to San Francisco. Here in two more major addresses. And many of them were about national health insurance, that and helping out labor. Truman recognized something important. Health care was advancing fast, allowing people to live longer and healthier.

The average life expectancy was now 68 years. It was no longer rational for people to avoid hospitals because the care was just too essential. Problem was, many people were struggling to pay for that health care. In the post-war economy, the middle class was growing. And whereas poor people could get help paying for their health care from charity programs, and wealthy people could pay out of pocket, the middle class was largely left out. So national health insurance was their way in. I'm not asking you just to vote for me.

Vote for yourselves. Vote for your firm. Vote for the standard of living that you won under a Democratic administration. Get out there on election day and vote for your future. Why, the Dewey Warren ticket anticipated an early victory. In polling places, the people ran up a record-breaking vote for the man who was to run the country for another four years. When Truman amazingly won, and he won by a lot, he actually won by 4% of the vote, despite the fact that he was so far behind, he promised this will be the turn for national health insurance.

And everybody thinks this is going to be a national health insurance moment. But Truman's vision of universal health insurance faced an uphill battle when it came time to pass actual legislation. There was opposition from American industries who were thriving, and from unions who, remember, could use health insurance as a bargaining chip with employers. The U.S. is a very rich country at this point. Unions are powerful, and private health insurance begins to grow very rapidly. And the opposition says, we don't need universal health insurance because private health insurance

is already expanding so rapidly. Through employers, people are getting their coverage so quickly. So this problem is going to take care of itself. The government doesn't need to step in. And Congress was stacked against Truman too. He faced opposition from Republicans who were fed up with the FDR New Deal era of big government. And... Southern Democrats, segregationists, really pissed at Truman because he's pushing civil rights along with health care.

One of the main groups who would benefit from universal health insurance were African Americans. The Southern Democrats told Truman in no uncertain terms that they would not finance his plan. They're not even going to hold hearings. This thing isn't going through. The head of the Senate Finance Committee says this thing is going to get a hearing over my dead body. So Truman's staff got to work stripping all the finance provisions out of the health bill. That means it doesn't have to go before Senate Finance.

It could go through a more friendly committee. And even though he knew getting it passed was a long shot, the next time Truman went to Congress, he was going to push for this revised bill anyway. A last-ditch effort to make universal health insurance a reality. In recognizing a communist, physical appearance counts for nothing. If he openly declares himself to be a communist, we take his word for it. Meanwhile, the world was changing yet again. If a person consistently reads and advocates the views expressed in a communist publication,

he may be a communist. If you went back and read the newspapers from this era, oh, national health insurance hit the headlines every now and then. But what was in the headlines day after day after day? The Red Scare. If a person does all these things over a period of time, he must be a communist. This gave Truman's opponents even more ammunition. The opponents said that national health insurance was a communist idea, a pink idea, a Soviet plot. And at that time, that kind of opposition was deadly.

That idea was pushed hard by the American Medical Association, who was involved all along in the fight to take down the bill. The AMA was determined to defeat it and the idea of universal health insurance once and for all. The AMA, the American Medical Association, they're not going to leave it to chance. So they have a huge campaign. The campaign, unprecedented in scope, was designed and run by a political consulting firm called Campaigns Inc. It was run by a husband and wife team based first in San Francisco and then Chicago.

They're credited with creating the playbook for political lobbying and negative advertising in politics. They inundated Congress with letters, with advertisements, all kinds of very clever things. And what they started to say was the private way is the American way. Socialism and national health insurance are basically the same thing. It was just attack after attack after attack on Truman. He got a bunch of letters, one from a congressman from West Virginia named Key. And Key says, here's a letter from a constituent.

And he says, why should we pay for big healthy men to get national health insurance when they should get a job? And Truman would write blistering letters back, saying, this guy ought to learn that the horse and buggy era is over, that it's a modern economy, that lots of people fall in the cracks.

We have to take care of everyone. We take care of everyone because that's who we are. And he practically screamed at people who challenged that premise. He just thought they were living in the 19th century. who challenged that premise. He just thought they were living in the 19th century. And then the AMA turned up the heat. It got other organizations on board,

other healthcare groups, various employer groups. It recruited just an overwhelming army of support. And meanwhile, the AMA ran these advertisements that had a 19th century picture by a painter named Luke Fildes of a doctor sitting all night. It was obvious the sun was rising in front of a girl, while the mother and the father weep in the background. And the caption is, Keep politics out of this picture. Very effective advertising. But Truman's team wasn't gonna just take punches.

They fought back against the AMA's campaign. At least they tried to. They took out full-page ads that said, the president has told us his bill is not socialism. Talking about letting the other side define the terms of the debate. Even Eleanor Roosevelt weighed in. She wrote, Health is not a thing based on partisan politics,

and public health should not be regarded, either by officials in Washington or by doctors, as a political football. The American Medical Association, for reasons best known to its own leaders, but which sometimes seem somewhat selfish to the layman, has decided to oppose most of these plans. I am only a layman, and I don't imagine that this bill is the last word or the best health program that will ever be developed. But it is a step in the right direction. And we seem to forget that democracy functions by taking one step at a time.

As more people become convinced of the value of something, it becomes more universally accepted. The majority will decide in the long run. These efforts were no match for the AMA's advertising blitz. In total, Campaigns Inc. distributed over 100 million pieces of literature attacking Truman's plan. And by the time his revised bill got back to Congress, the writing was on the wall.

Truman got shellacked. He just completely got defeated. You know, he had run a great campaign, but he had no idea how to get a law through Congress. Congress itself was hostile. It just wasn't going to pass this thing. It didn't even have financing. So even if it passed, it wasn't going to go anywhere because what's a national health insurance bill without any financing provisions?

But his people fought. They fought so hard and they just got so badly beaten. He never got over it, by the way. He spent the rest of his life lamenting that he got licked in this, his most important fight. Coming up, health insurance in America reaches the point of no return. Hi, this is Carter Clarkson from Health and Community. Thanks for the show. It's tremendously good. I've learned a huge amount of things and you're listening to True Lie from NPR.

What's good, y'all? This is Gene Dembe, I'm one of the co-hosts of NPR's Code Switch. This month we got a special three-part series for you. We're diving into America's favorite sport. That's football, of course. From pee-wees to the pros, we're exploring what the game tells us about race, labor, and power in the United States. Part 3.

The Trap. Eisenhower answers America. The Democrats have made mistakes, but aren't their intentions good? Well, if the driver of your school bus runs into a truck, hits a lamppost, drives into a ditch, you don't say his intentions are good, you get a new bus driver. I for president, I for president, I for president, I for president. You like Ike, I like Ike, everybody likes Ike. In 1953, Dwight D. Eisenhower was sworn in as the country's 34th president. Eisenhower takes the oath. Reserve, protect, and defend the Constitution of the United States.

So help you God. So help me God. The Eisenhower administration comes in, the only Republican administration between 1932 and 1968, long stretch of Democrats. And this Republican interruption swooped in with a plan to distinguish itself, a plan that came to be called dynamic conservatism or modern republicanism, bringing reforms to everything from foreign relations to the economy to health care. Eisenhower knows that if they don't do private, government is going to act, eventually.

As he himself said, Americans will have health insurance, and it's our choice whether it be private or public. And Eisenhower made his choice very clear. Private. From the broadcast room of the White House in Washington, D.C., we present President Dwight D. Eisenhower. Ladies and gentlemen, the President of the United States. After about a year in office, Eisenhower went on national television to explain his plan for health care in America, one rooted in a private system, and he made it clear that his vision was nothing like Truman's. I hope that none of us confuse social progress with socialism. The program for voluntary health insurance is one further step in achieving this objective in the American way.

It is the logical alternative to socialized medicine. Keep in mind, all of this was going down during the Red Scare. So Eisenhower couched his health insurance agenda in the language of anti-socialism. You have to recognize this as a great fight over national health insurance, a great fight over keeping health insurance private, and also a great moment of terror, really a completely unreasonable terror over communism. So, the Republicans looked for ways to preserve this private system, one that was growing but still vulnerable. And they realized exactly what they needed to do

to stabilize it. Eisenhower goes to Congress and he says, you know this thing we did during World War II? Well, the IRS is now thinking to tax it. Remember, in the 1940s, after FDR instituted wage and price controls and employers started offering health insurance to workers, the IRS decided to make private health insurance tax-free. But by the 1950s, after a decade of growth in the industry, the IRS was like, wait a minute, we made this tax free?

What were we thinking? So the IRS and the courts both started to chip away at the tax-exempt status. And the Eisenhower administration says, no, we are going to lock this into place. And the reason they locked it into place is to stop national health interests. They knew Truman had blown it and Truman couldn't get it through, but they also knew we were basically in a democratic era and they knew that at some point the Democrats would try again. And so they tried to some point the Democrats would try again. And so they tried to cut them off at the pass. So the Eisenhower administration, they came sashaying into Congress.

It's really hysterical if you read the congressional record. And they said, we want to make this permanent, no taxes for employer-based health insurance. Congress went for it. And with that, it was decided once and for all. Employer contributions to health insurance would be tax-free. And Jim Marrone says this moment in the 1950s was even more significant than what happened during World War II, because it made a temporary thing permanent. So that's the moment, not when it happened casually during World War II, but when the Eisenhower people went to a reasonably conservative Congress

dominated by a coalition of Southern Democrats and Northern Republicans, and with the full acquiescence of the Northern Democrats, all of whom thought, yeah, it's a pretty good thing, and that was the moment Eisenhower locks the employer-based system into place. This tax incentive clearly played a major role in strengthening employer-based insurance, but it wasn't solely responsible for the country moving in this direction. It was the force of the AMA, it was the power of the labor unions, and it was more than

that. Embracing private insurance was in line with a larger cultural shift that was taking place, one that was led by the Republican Party in an effort to woo Americans back in a post-FDR world. They can't fight against the economy. It's the best economy in the history of America and the best economy in the world by far. And they can't fight against Social Security. It's too popular.

So they create this idea, which kind of sticks in the 1950s, that Americans are the people of the private sector. As long as we keep the foundation of our business system strong, we shall be able to maintain and improve the way of life our forefathers conceived and established. A way of life which gave everyone who came to this country the chance to progress according to his ability and enterprise. If you're a white male, in the 1950s it sounds right. Like, yeah, yeah, I provide for my own family.

And on this foundation of freedoms, continue to build a better life for themselves and their fellow man in the world of tomorrow. If you were an African American, perhaps a hero coming back from World War II, that story would sound stupid? Like a lie? Crazy? Yes, it would. So notice that when people repeat this familiar story, they're repeating the great white

male story of the 1950s. Whether you bought into it or not, the message was clear. The pathway to success was through the private sector. A private sector powered by jobs. Jobs that were not only the pathway to your salary, but to your health insurance. An Eisenhower's health plan made sure that jobs were the primary way you received insurance. Well, certain jobs. Good jobs. Not at the low end of the labor force, okay? Not for, like, agricultural workers. Not for, you know, restaurants and the service industry.

They didn't get the benefit of this. Elderly retired people were also left out. Enter JFK. He's elected president in 1960. And then his father has a stroke. And he can't believe it. In a speech not long after, Kennedy, half joking, said it was a good thing his father was richer than the president so he could afford his health care. And that joke touched on something deeper, a question that haunted him.

What do ordinary people do? And Medicare went from, I don't really care about this, it's too complicated, I don't understand it, to an obsession with John F. Kennedy. He just had to have it. Well, he gets assassinated before he gets anywhere, and Lyndon Johnson picks it up. Johnson wants to pass everything that was on Kennedy's plate. And in March of 1965, Medicare passed. And he says, I'm flying out to Independence, Missouri, so I can sign this with Harry Truman there. And his staff says, no, no, no, no, no, no, no, that'll get the whole socialized medicine thing

going all over again. And he said, I don't care. The Harry S. Truman Library at Independence, Missouri is a scene of an historic event. President and Mrs. Johnson and Vice President Humphrey arrive for ceremonies that will make the Medicare bill a part of social security coverage. And there's Johnson, and as he signs,

he's got his pen in his hand, and he turns to Truman, and he says, only you can understand my feelings as I signed this bill. Medicare would become law on July 1st 1966 and for Mr. Truman an historic souvenir from the president. And then he hands Truman Medicare card number one. For Mr. Truman the passage of Medicare is a dream come true. Receiving Medicare card number one may have been a dream come true for Truman, but it wasn't his dream come true. Not his full one anyway. This wasn't a historic signing of a unified universal program.

This was piecemeal, just another piece of the puzzle that we're left with today. This is what happens when things unfold in sequence. And the failure to enact health insurance earlier led to the development of private employer-based insurance, and then private employer-based insurance led reformers to focus on the people who were not being covered by employers. So we have Medicare, and we have Medicaid, and we have the Children's Health Insurance Plan, and we kept trying to fill in all the gaps. But then it turns out, even with all these efforts to fill in the gaps, there's still millions of people who fall into the void and don't have any protection.

And because it's this one huge puzzle that everyone is trying to fit into, naturally, it's puzzling. And Paul Starr says, the only thing worse than the confusion is the cost. The United States has by far the most expensive healthcare system in the world. So, you know, I think if we had gone down a different path, if we had enacted a system of national health insurance, we would be spending quite a bit less on healthcare than we do today.

We've built a whole set of institutions that doesn't want this to happen. Not only private health insurance, but hospitals that get very high payments from private health insurance, they're not eager to have that go away. High-priced specialists, they don't want this to go away. So we've sort of entrenched a bunch of interests

who are opposed to this. I think it could have turned out differently. It didn't have to be the way it is. There were these moments in the past that were inflection points, that were turning points, where it could have gone in a different way. That is the basic structure of the past, this set of paths taken and paths not taken. We kind of wound up where we did because at various moments we came close to where other countries wound up, but just didn't make it over the threshold.

So although I might wish, you know, that there could be some sudden measure that would totally transform things, I don't expect that. What we've actually seen historically is that every time a really big proposal comes up, it gets defeated. Maybe I'm underestimating the demand for change. Maybe something bigger is possible. the demand for change.

Maybe something bigger is possible. We could make different choices now. That's it for this week's show. I'm Rand Abdel Fattah. I'm Ramtin Adabluy, and you've been listening to Through Line from NPR. This episode was produced by me and me and Jamie York, Lawrence Wu, Lane Kaplan-Levinson, Julie Kane, Victoria Whitley-Berry. Fact checking for this episode was done by Kevin Voeckel. Thanks also to Camille Smiley and Anya Grundman. Our music was composed by Ramtin and his band, Drop Electric,

which includes... Naveed Marvi. Sho Fujiwara. Anya Mizani. If you have an idea or you like something on the show, please write us at throughline at npr.org. Thanks for listening.