In the years leading up to his passing at age 100 on December 29th, Jimmy Carter’s presidency underwent a reevaluation, with recent studies highlighting his previously overlooked achievements in areas such as foreign policy, environmental protection, and racial equality. While these assessments acknowledge his shortcomings, they also emphasize the long-lasting impact of his presidency on the United States and the world.
However, this reassessment has largely omitted Carter’s contributions to health care policy, likely due to the challenges he faced in this area during his time in office. Carter encountered significant opposition from Congress regarding his health care initiatives, with his lukewarm endorsement of a limited national health insurance plan prompting Senator Ted Kennedy to challenge him from the left in the 1980 Democratic presidential primary.
Despite the setbacks, Carter’s approach to health care warrants a closer examination. He stood out among modern presidents for his efforts to address the rising costs of American health care, even if it meant going against the health care industry and some of his own supporters. His proposals ultimately influenced the policy direction that culminated in the Affordable Care Act of 2010.
Carter’s willingness to confront the daunting task of controlling health care expenses provides a valuable lesson for addressing the persistent flaws in the health care system today. When Carter assumed office, health care spending was soaring, doubling from $74 billion in 1970 to $152 billion by January 1977. The portion of national expenditures dedicated to health care had also increased from 6.9% to 8.1% of the GDP during this period.
A significant factor contributing to this surge was the introduction of Medicare in 1965, which offered generous reimbursement rates for hospitals. These favorable terms not only drove up costs directly but also enabled hospitals to amass capital reserves and borrow from the bond market, fueling a cycle of escalating expenses driven by facility upgrades and technological advancements.
Carter initially avoided the issue of health care policy during the 1976 Democratic primary but was compelled to address it due to rising prices and mounting pressure from the progressive wing of the party advocating for national health insurance. Following his victory in the Florida primary, Carter was pushed by the United Automobile Workers (UAW) union to endorse national health insurance as a condition for their crucial endorsement. Despite not fully embracing Kennedy’s comprehensive single-payer Health Security Bill, Carter outlined a phased program that combined private and public insurance components in his proposal.
To control costs, Carter linked hospital and physician fees. He also connected his program to welfare reductions in some unspecified way. The union supported his proposal to maintain influence if Carter won the nomination and election in 1976. As president-elect, Carter prioritized concerns about the federal budget deficit and rising inflation over his campaign promise on health insurance. He and his team focused on hospital costs instead, believing that a national health insurance program was unaffordable if hospital costs were not controlled.
By April 1977, the Carter team had drafted an innovative hospital cost containment proposal. It aimed to cap total hospital revenue growth, limit average revenue per admission, and restrict total annual hospital capital expenditures. This proposal aimed to curb unchecked hospital expansion and rising costs, similar to Kennedy’s “Health Security Bill.” However, the hospital industry aggressively lobbied against the bill, leading to its rejection by Congress multiple times between 1977 and 1979.
Despite pressure from Kennedy to announce a national health insurance plan before the 1978 midterm elections, Carter delayed release due to lack of support from moderate and conservative Democrats. Eventually, in June 1979, Carter unveiled a plan for universal coverage called “Healthcare,” which combined public and private insurance to cover catastrophic medical costs. The plan proposed federalizing Medicaid with Medicare into a new federal program to ensure consistent coverage for low-income Americans. Healthcare offered full coverage for the poor with a $1250 deductible for higher-income recipients.
The bill required employers to provide private insurance, starting with catastrophic coverage above a $2500 deductible. It also imposed limits on hospital spending and introduced controls on physician fees. The administration proposed expanding coverage gradually, depending on economic conditions.
Senator Kennedy was unsatisfied with the basic benefits offered, as he doubted Congress would consistently enhance coverage. However, President Carter’s approach influenced him, leading Kennedy to develop a plan with both public and private components. His proposal included an employer mandate, insurance companies managing public aspects, and an annual health budget for cost management.
Though neither bill progressed in Congress, Carter’s efforts highlighted the escalating cost issues in healthcare. His proposal aimed to establish a more efficient and equitable system, emphasizing the importance of cost control for achieving universal coverage. Carter’s initiatives reshaped the healthcare debate for Democrats, paving the way for a blend of public and private insurance in future legislation.
While Carter’s focus on cost containment remains relevant, subsequent administrations have not tackled the full scope of healthcare expenses. President Biden’s actions on drug prices and hospital mergers have had limited impact, with substantial costs from hospitals and clinical services remaining unregulated. With healthcare costs still a pressing concern in 2023, Carter’s emphasis on cost control appears more prescient than ever, prompting reflection on current leaders’ willingness to address these challenges.