IIn recent years, a major new study has attempted to reinstate President Jimmy Carter, who died on December 29 at the age of 100. Research highlights a variety of underappreciated achievements, from foreign policy to environmental protection to racial justice. These accounts still acknowledge Mr. Carter’s failures, but balance them with a longer-term perspective on how his presidency changed the United States and the world.
However, this positive reappraisal has not extended to health policy. This is not surprising given how devastating the fight over health care was for Carter during his presidency. Congress rejected his major health policy initiatives, and his reluctant support for a more limited national health insurance system pushed Sen. Ted Kennedy (D-Mass.) from the left in the 1980 Democratic presidential primary. This provided an opportunity for the incumbent Carter to take on the challenge.
But Mr. Carter’s medical records deserve a more nuanced assessment. More than any modern president, he challenged not only his own allies but also the health care industry in trying to address the high cost of health care in the United States. And his health care proposals ultimately propelled the party toward the policy strategy that produced the landmark Affordable Care Act in 2010.
Mr. Carter’s commitment to the politically risky challenge of containing health care costs provides a template for the leadership and focus needed to address persistent flaws in our health care system in 2024.
Carter took office at a time when health care costs are skyrocketing. Between 1970 and January 1977, total national health spending more than doubled, from $74 billion to $152 billion. Health spending as a share of gross domestic product rose from 6.9% to 8.1%.
Much of this increase is due to the enactment of Medicare in 1965, which had a generous reimbursement system for hospitals. These schemes not only increase direct costs but, importantly, create new sources of revenue that allow hospitals to both build capital reserves and enter the bond market to take on debt. It also made it possible to generate. Hospitals used this access to capital to build new facilities, renovate older ones, and add sophisticated new equipment. This created a cost spiral as hospitals competed on equipment and technology rather than affordability.
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Carter tried to avoid the issue of health care policy in the 1976 Democratic primary, but rising prices and continued interest in national health care among the left wing of the Democratic Party made that impossible. After Carter’s victory in the Florida primary in March 1976, the United Auto Workers (UAW) required Carter to support national health insurance as a condition of receiving its key endorsement. As an outsider from Georgia, Mr. Carter needed the union’s support. So after extending negotiations, he agreed to meet the UAW’s demands in an April 1976 speech.
But even then, Mr. Carter continued to support President Kennedy’s “Medicare Act,” which was completed without cost-sharing and without the role of private insurance companies, even though all of his major rivals for the Democratic nomination supported the bill. He refrained from supporting a bill that would provide a single-payer public health coverage. Instead, it outlined the general principles of a phased program. Mr. Carter envisioned relying on private insurance as well as public insurance, and his plan included checking both hospital and physician fees to control costs. Carter also tied his program to welfare cuts in unspecified ways.
This proposal was enough to secure support, as the unions wanted to maintain their influence even if Mr. Carter won. Carter went on to win the nomination and election in 1976.
As the president-elect and his team weighed their priorities, concerns about the federal deficit and rising inflation took precedence over campaign promises on health care. They decided to focus on hospital costs instead. as 1 Carter advisor In hindsight, “we can’t even begin to talk about introducing a national health insurance program if hospital costs are paid into the federal treasury without limit.”
Kennedy and other supporters of the national health program deferred to the new president, but they were unhappy with it. They agreed on the need to control costs, but believed the two goals could be pursued simultaneously.
By April 1977, the Carter team had drafted an innovative two-part hospital cost containment proposal. Part 1 limited total hospital revenue growth to 9% per year by capping average revenue per admission, with limited exceptions. Part 2 of the Carter bill made a bold proposal to cap total annual capital expenditures for hospitals at $2.5 billion nationwide. This reduced spending on new facilities and was key to slowing the hospital sector’s rapid growth.
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These two policies had the potential to be as transformative as Kennedy’s Health Care Act because of the way they challenged unchecked hospital expansion and rising costs.
This proposal sparked a brutal war.
The hospital industry organized an aggressive local lobby against the bill while implementing much-touted “voluntary initiatives” to contain costs. Anne WexlerCarter’s special assistant for public affairs explained that every local hospital’s board of directors includes “the president of the bank, the president of every community organization, the leadership of every religious organization in town, etc.” did. The hospital’s powerful allies meant Mr Carter lost public opinion “before we really got going”.
Congress repeatedly rejected Carter’s proposals from 1977 to 1979, dealing with what he believed would be a decisive blow to domestic policy.
Meanwhile, a frustrated Kennedy pressured the president to announce a national health insurance plan before the 1978 midterm elections. However, President Carter recognized that President Kennedy did not have the support of moderate and conservative Democrats in Congress and asked him to postpone announcing a concrete plan until the following year. Kennedy reluctantly agreed, but at the Democratic midterm convention in December of the same year, he harshly criticized Carter’s inaction.
Finally, in June 1979, Carter announced plans for the first phase of a program to achieve universal health care. Relies on both public and private insurance to cover “catastrophic” medical costs, proposes to combine Medicaid with Medicare and federalize it into a new federal program known as “health care” did. This would eliminate the disparities among states that have made Medicaid an inconsistent and unequal means of providing coverage to low-income Americans.
Health care was fully borne by the poor, while there was a $1,250 ($5,151 in 2023 dollars) deduction for high-income earners. In addition, the Carter Plan maintained employer-provided private insurance and required employers to provide employees with at least catastrophic coverage for expenses exceeding the $2,500 deductible. On the cost control front, the bill limited hospital capital expenditures and added a new system of physician compensation management.
The administration maintained that more comprehensive coverage could be added if economic conditions allowed.
Kennedy understood that he could not rely on Congress to periodically expand coverage and balked at stingy benefits. Still, Carter’s vision influenced him. Kennedy’s own proposals began to include public and private elements, such as employer obligations and a requirement that insurance companies provide marketing and administrative services for the public component of the plan. It also included an annual national health budget to contain costs.
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Neither bill made any substantial progress in Congress, and Kennedy’s dissatisfaction inspired his decision to challenge Carter for the Democratic nomination in 1980.
Despite the political damage caused by Carter’s two medical defeats, he accomplished two major things. First, he recognized the proliferation of cost control problems in the U.S. health care system. If his proposal passes, it would lay the groundwork for a more cost-effective and equal system. He understood that such containment of hospital costs was a prerequisite for achieving universal health coverage.
Second, Mr. Carter changed the terms of the health care debate for Democrats. There will no longer be a push for universal health care provided by the federal government, as Kennedy proposed in the early 1970s. Instead, Bill Clinton (unsuccessfully) and ultimately Barack Obama, with his signature bill in 2010, both built on Carter’s legacy to provide a combination of public and private health insurance. was adopted. Whether this change was a positive one is debatable, but it was an important step towards the current system.
Another element of Mr. Carter’s health care policy, the critical but politically dangerous problem of high costs, remains largely unaddressed. President Biden’s Inflation Control Act took important steps to control prescription drug costs, but they only account for 9% of health care spending. Similarly, under the Biden administration, the Federal Trade Commission has increased its oversight of horizontal and vertical hospital mergers, but the effect has been limited because the industry is already undergoing significant consolidation. Most of it is after the fact. Unlike Mr. Carter, Mr. Biden has not pursued direct regulation of costs generated by hospitals, doctors, and clinical services, even though they account for 51% of health care spending.
Carter was proven right about health care, as cost issues continue to plague Americans in 2023. Although he could not bend Congress to his will, his hospital spending caps could have prevented many of the challenges we continue to face. The question is whether today’s political leaders have the courage to follow his lead.
Gaian McKee is Presidential Research Professor at the University of Virginia’s Miller Center for Public Affairs. he is the author of Hospital City, Medical Nation: Race, Capital, and American Health Care Costs, Published by University of Pennsylvania Press.
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