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Business Interests and the Shape of the U.S. Welfare State: From the Insurance Company Model to Comprehensive Reform

Published online by Cambridge University Press:  18 February 2019

Christy Ford Chapin
Christy Ford Chapin*
Affiliation:
University of Maryland Baltimore County, Johns Hopkins University
*
E-mail: cchapin@umbc.edu
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Extract

Peter Swenson's excellent article is a welcome correction to the consensus argument so often found in welfare state literature. That interpretation depicts a never-ending, dualistic struggle between capitalists and “the people,” as represented by welfare reformers. Swenson sorts through the evidence surrounding post-1960 health care debates, particularly Medicare, to demonstrate that “business” is not a fixed, homogeneous group that conforms neatly to class-based analysis. He finds significant business backing for federal programming and also shows that where trade associations took conservative, anti-reform stands, they often did so without strong member support.

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Type
Research Article
Information
Studies in American Political Development , Volume 33 , Issue 1 , April 2019 , pp. 4 - 16
Copyright
Copyright © Cambridge University Press 2019 

Peter Swenson's excellent article is a welcome correction to the consensus argument so often found in welfare state literature.Footnote 1 That interpretation depicts a never-ending, dualistic struggle between capitalists and “the people,” as represented by welfare reformers. Swenson sorts through the evidence surrounding post-1960 health care debates, particularly Medicare, to demonstrate that “business” is not a fixed, homogeneous group that conforms neatly to class-based analysis. He finds significant business backing for federal programming and also shows that where trade associations took conservative, anti-reform stands, they often did so without strong member support.Footnote 2

This essay will build on Swenson's article by heeding his call for “economically informed inquiry” into business political engagement. It does so by looking behind business support for the welfare state—which Swenson carefully documents—to further probe the linkages between market conditions and business political objectives. In the process, I will draw out a claim that Swenson makes but lacks the space to fully develop: That class-based examinations, “by grossly overstating business opposition to the welfare state”—ironically—tend to “underestimate” corporate power.Footnote 3 The consensus view fails to account for the important role that business plays not only in passing welfare reform legislation but also in influencing the final design of social programs, which often bolster corporate arrangements.

This comment revolves around the idea that markets make politics. Appropriated from E. E. Schattschneider's paraphrased claim that “policy creates politics,” this analytical concept turns an evaluative eye to how market organization influences political deliberations.Footnote 4 True, markets themselves are shaped by policy, as we will see, for example, with the American Medical Association's (AMA's) leveraging of licensing laws to regulate the health care market.Footnote 5 But for the purposes of this essay, I will investigate, as Swenson bids us to do, how “concrete economic interests” have animated reform debates. While one cannot lose sight of the fact that capitalists have historically been an ideologically varied group, I argue that each business bloc's economic position—as conditioned by factors ranging from regulatory frameworks to competitive trends—was the factor that most decisively determined its political stance. The market environment dictated how business leaders weighed the potential advantages of welfare programming, whether such policies might bring about lower labor costs, competitive stabilization, or new opportunities for government contracting.

Accounts that impose a strict “capitalists versus reformers” template or focus too narrowly on the passage of prominent legislation, cannot explain the institutional structure of welfare programs—how they were designed and how they operate. In the United States, they are sometimes “hidden” or informal and often managed through public–private arrangements that benefit corporate power.Footnote 6 For example, federal mortgage insurance helped rescue banks during the Great Depression. Since then, the program has spurred homeownership while simultaneously aiding real estate and construction interests.Footnote 7 Workers obtain life insurance, pension packages, and exorbitantly priced health coverage because of tax write-offs that benefit both the insurance companies that sell these products and the businesses that provide them for employees.Footnote 8 Even formal or conspicuous welfare programs employ public–private arrangements: Section 8 housing participants often use vouchers to pay landlords, and insurance companies receive government payments to help administer Medicare.Footnote 9

Federal health care programs are emblematic of public–private alliances that accommodate business power. During the 1930s, organized physicians selected a particular economic model to arrange the health care market. This “insurance company model” empowered insurers to finance and eventually, after decades of development, begin managing the delivery of medicine through reimbursement and cost-containment procedures. When Medicare was created, federal policymakers designed the program around the processes, systems, and methods of the insurance company model. They also appointed insurance companies to act as intermediaries between service providers and federal officials. The Patient Protection and Affordable Care Act (ACA) followed this approach and kept insurance companies firmly ensconced at the center of the health care sector.Footnote 10

Although these public–private arrangements inject the U.S. welfare state with a corporatist tinge, the role of business tends to be overlooked or partially obscured in comparison with formally corporatist economies like that of Germany. This point underscores the need to more fully investigate business political activities. Currently, the dominant, class-based view of scholarly interpretation is inadvertently concealing vast corridors of corporate power.

EMBEDDING A CORPORATE MODEL

Understanding how the “insurance company model” has structured the U.S. health care economy elucidates the relationship between the market's framework and government policy. In a period when the AMA was far more powerful than it is today, organized physicians leveraged their dominance over state licensing boards and hospitals to behave as the health care market's primary regulators. Though long hostile toward the idea of third-party financiers entering medicine, AMA leaders reluctantly endorsed insurance during the 1930s as a way to alleviate growing pressure for federal health care reform. At the time, the medical services market hosted an assortment of insurance models, including union welfare funds, consumer cooperatives, and prepaid doctor groups. From among a wide variety of health care financing and delivery templates, AMA leaders decided to permit only one model to operate—the insurance company model. Although inefficient and expensive, AMA heads chose the insurance company model because it offered physicians robust professional protection—that is, at least initially. Professional safeguards included distantly located financiers who lacked authority to monitor or question physicians and fee-for-service reimbursements. Under fee-for-service provisions, insurers compensated doctors, not with salaries or fixed per-capita payments, but for every service or procedure delivered during each patient encounter. Insurers eyed the AMA's health insurance model warily; understandably, they were apprehensive about funding services for which they could not control or regulate the supply.Footnote 11 They, nevertheless, hesitantly entered the field of medical insurance to satisfy business client requests for employee-group coverage and to shield health care from government reform. Physicians and insurers allied to deploy an explicit strategy—one that they continually discussed in meetings, conferences, and publications—to quickly grow insurance coverage in order to prove that federal intervention in medicine was unwarranted. Thus, the very process of constructing the health care market around the insurance company model was done with political objectives in mind.Footnote 12

To understand the significance of the insurance company model, consider alternative designs. Around the turn of the twentieth century, as germ theory breakthroughs propelled medicine into modernity, Americans sought ways to finance increasingly effective and, therefore, valuable medical care. Some people acquired health benefits by belonging to a mutual aid society. Usually a local lodge or an African American or immigrant fraternal order, these societies hosted social gatherings while also providing members with economic security benefits, such as bank loans and life insurance. Some groups offered members access to physician services in exchange for their dues. Hence, a doctor in an area heavily populated with Italians might contract with the Venetian Fraternal Union, while a Jewish physician might contract with a local chapter of the Improved Order of B'nai B'rith. Some black fraternal orders, like the Afro- American Sons and Daughters, were large enough to build their own hospitals.Footnote 13 Labor unions adopted similar arrangements by entering into agreements with local physicians or doctor groups or by creating and managing their own medical groups.Footnote 14 Similarly, businesses established service contracts with area doctors, hospitals, and even dentists to supply their workers with benefits—a useful method for undermining union power and shoring up employee loyalty to the company. Under another organizational template, businesses created industrial medicine programs, hiring physicians as salaried managers to screen applicants and provide onsite care to workers and eventually their dependents as well.Footnote 15 In rural areas, farmers’ associations either established service agreements with local physicians or founded consumer cooperatives, which were doctor groups overseen by patient representatives.Footnote 16 During the 1920s, the Committee on the Costs of Medical Care (CCMC) surveyed a range of health care models. The final report recommended arranging the market around “prepaid” physician groups, which delivered care far more efficiently than the insurance company model ever would.Footnote 17 By the 1930s, hundreds of prepaid doctor groups populated the health care market. In the absence of third-party financiers, physicians acted as their own insurers, collecting set monthly fees from patients in return for care. This format provided incentive for doctors to carefully monitor financial resources. If group physicians oversupplied services, they would needlessly deplete their earnings. However, if they failed to deliver the services necessary for quality care, they also hurt their bottom line, either because their patients became sicker and required more care or because discontented subscribers took their business elsewhere. Prepaid physician groups also improved care by offering patients multispecialty services in one location. Doctor groups usually staffed a variety of specialists—general practitioners, surgeons, obstetricians—to offer patients integrated, holistic care.Footnote 18

The one trait that all of these models shared was that they were opposed by the AMA. In cities and towns throughout the country, AMA members, who dominated state licensing boards, revoked or threatened the licenses of physicians who participated in so-called alternative arrangements. AMA officials also used their influence to have the hospital admitting privileges of those physicians withdrawn. Believing it offered the most professional security, AMA leaders would only endorse the insurance company model.Footnote 19

Health care reformers looked to government funding as a way to establish and develop a more rational, lower-cost model of organizing health care. Reformers included Social Security Administration (SSA) officials, congressional liberals, union heads, and members of activist groups like the Committee for the Nation's Health. Following the CCMC recommendations, many of them favored prepaid physician groups. When Truman proposed federally managed, universal health care coverage, administration officials forwarded a plan to replace the insurance company model with a system of prepaid doctor groups and nonprofit plans.Footnote 20

To impede federal reform, business groups joined with organized physicians and insurers to expand the insurance company model. This coalition helped private health interests derail Truman's plan as well as more moderate reform proposals offered during Eisenhower's tenure. During the immediate postwar period, most business leaders believed that nationalized or even heavily regulated health care would create a precedence that would ripple through the economy, pushing it toward socialism. This notion explains why Truman's adversaries did not confine their remarks to the proposal's impact on health care—the reform, they claimed, would do no less than “destroy democracy”Footnote 21 The AMA played on this conviction by including a (likely apocryphal) Lenin quote in their anti-reform pamphlets: “The Keystone in the arch of the socialized state is Socialized Medicine.”Footnote 22 The U.S. Chamber of Commerce chimed in with a brochure warning citizens that Truman's proposal “was another step toward further state socialism and the totalitarian welfare state prevailing in foreign lands.”Footnote 23 To help avert this envisioned fate, leaders of the National Association of Manufacturers (NAM) and the Chamber of Commerce encouraged members to supply employees with insurance company coverage. By purchasing health insurance for workers, businesses could undermine union power and help defeat government reform the “voluntary way.”Footnote 24 Policymakers facilitated the business community's strategy: Under Eisenhower, they assisted coverage growth by passing legislation that formalized Internal Revenue Service (IRS) provisions granting tax write-offs to businesses that provided employee health insurance.Footnote 25

Organized physicians and insurers went to great lengths to advance the insurance company model—coverage expansion became their primary means of thwarting reform legislation. The Health Insurance Association of America (HIAA)—composed of commercial insurance companies—instructed members to increase their subscriber rolls, enlarge benefits packages, issue more guaranteed renewable policies, and attempt to cover financially risky policyholders, such as the elderly. Nonprofit Blue Cross and Blue Shield plans followed a similar strategy and, along with commercial companies, developed a large individual-purchase market despite the inherent risks of selling such coverage.Footnote 26 At the end of the 1950s, to combat Medicare-type proposals, doctors and insurance companies launched special programs to enroll citizens over the age of 65. To help them support the costs of elderly coverage, commercial insurers successfully lobbied for state antitrust exemptions that allowed them to form multicompany ventures to pool capital and administrative resources.Footnote 27

Coverage expansion only highlighted the insurance company model's cost problems. At the end of the 1940s, when the insurance company model became the prevailing form of health care organization, medical services and insurance premium prices began rising more quickly than any other category of goods. During the 1950s, the press carried exposés of excessive hospital admissions, unnecessary surgeries, and physician bill padding. Business and labor leaders protested large annual increases in their insurance premiums. Nor had the objective of covering the elderly proven attainable: Even though insurance companies combined their resources to provide seniors with bare-bones hospitalization policies, they still lost money on the programs.Footnote 28

How the insurance company model developed in reaction to rising costs created a dynamic between insurers and physicians that would gradually weaken their political partnership. Starting in the 1950s, physicians and insurers began constructing overlapping institutions that, over time, evolved to create a pseudo-corporate structure. Through an incremental process that involved a good deal of conflict between insurers and physicians, insurance companies—in an attempt to contain costs—began creating the means to oversee and manage doctors. Key to this supervisor–worker relationship was a monitoring device in the form of the paperwork that physicians filled out to justify their treatment decisions to insurers. Additionally, at the behest of insurers, hospitals and medical societies established utilization review committees to monitor doctor practices. Insurance companies used the information from these committees to generate standardized treatment blueprints for each patient diagnosis. Armed with these treatment blueprints, hospital review committees began evaluating doctor care to determine if unnecessary services were provided. Insurance companies enacted additional cost containment measures by, for example, requiring physicians to obtain permission before admitting patients to the hospital. As this pseudo-corporate configuration evolved over the course of decades, insurance companies increasingly resembled managers directing workers, in this case, physicians who continually fought back to protect their earnings and autonomy. This contested relationship explains why, after Medicare's passage, insurance companies began to view political reform initiatives as an opportunity to gain additional authority over service providers, all in the name of controlling costs.

THE GRAND COMPROMISE: MEDICARE

A primary force driving Medicare's passage was a consensus among policymakers in both parties that the private sector could not provide the level of health care coverage that the elderly deserved. The legislation also garnered support by offering substantial assistance to the middle class. Even wealthy families would benefit from not having to shoulder the health care costs of one or more elderly relatives. Drilling down into business activities, we find that some industry leaders—such as those who populated the ideologically moderate Committee for Economic Development (CED)—held progressive-leaning beliefs that accommodated a limited welfare state.Footnote 29 But the most decisive element shaping business approaches to Medicare was economic interests. High health care costs destabilized the anti-reform alliance among conservative politicians, physicians, insurers, and businesses. Important swaths of the business and insurance community broke from the AMA, either by refusing to fight the legislative proposal or by backing either Medicare or a Medicare alternative. Business groups reevaluated their position on health care reform because escalating insurance costs threatened profit making in industries that provided retiree health benefits. Insurance companies, meanwhile, had lost money attempting to provide senior citizens with health care coverage. These firms, especially large insurance companies, reconsidered their opposition to government reform with the understanding that Medicare had the potential to boost their profit-making capabilities.

For decades, Republicans and conservative Democrats had cited the private sector to argue that comprehensive health care reform was unnecessary. Once it was clear that high costs prevented insurers from covering enough senior citizens with adequate policy benefits, conservative policymakers looked to government intervention—albeit in a moderated form—to rectify the problem.Footnote 30 After Congressman Aime Forand (D-RI) offered legislation for elderly hospital insurance in 1957, President Eisenhower proposed a program that, although means-tested, would have covered about 75 percent of the aged population with hospital, physician, and nursing home benefits.Footnote 31 As they campaigned for the 1960 election, both presidential candidates, Kennedy and Nixon, threw their support behind federally provided aged insurance.Footnote 32 Following the election, Republicans and conservative Democrats sponsored a number of alternatives to the Kennedy administration's Medicare plan. Senator Jacob Javits (R-NY) joined with congressional colleagues to sponsor several bills, including a proposal for state-run exchanges that would sell insurance to senior citizens, with premium prices scaled to income.Footnote 33

Swenson points out that thirteen Senate Republicans joined a majority of House Republicans to vote in favor of Medicare's passage.Footnote 34 Just as significantly, even among Republicans who voted against the final package, most supported a Medicare alternative.Footnote 35 The chief concern of conservative policymakers was creating a welfare program that resisted expansion. Accordingly, their proposals embraced private-sector products and administration, means testing, and general revenue rather than Social Security financing on the premise that the program should be viewed as government assistance rather than an earned benefit.Footnote 36 Whether the Byrnes bill, Bow bill, or one of the bipartisan Javits proposals, Republican congressional support for Medicare and Medicare-type programs demonstrates the agreement among policymakers that private-sector insurance was too expensive for the elderly to obtain coverage without government assistance.Footnote 37

High health care costs and the conviction that government intervention was necessary to aid the vulnerable elderly population split important portions of the business community from the AMA's ultra-conservative stance against Medicare. Swenson documents substantial member disaffection from the official NAM and Chamber of Commerce line against the legislation.Footnote 38 Some industry groups saw Medicare as a practical solution to ease their rising health care burden. Where companies supplied retirees with insurance, usually in unionized industries, business executives were more inclined to support Medicare.Footnote 39 The business heads who did oppose Medicare worried the program would lay the groundwork for a universal health care system. However, as discussed above, conservative policymakers addressed this concern by proposing Medicare alternatives formulated specifically to frustrate program extensions. So, business leaders who disliked the administration's proposal could throw their support behind a Medicare substitute.

Rising health care costs and market structure animated divergent political positions among insurers. Reflecting this dissension, the HIAA's leadership struck an ambivalent political line that can best be described as weak resistance. Part of the industry cooperated with the AMA to vigorously fight Medicare. This faction viewed Medicare as a momentous step down the road toward a federally managed health care system that would put them out of business. Among these Medicare opponents were ideologically conservative insurers, often from the Midwest or South, who generally represented small and medium-sized firms.Footnote 40 Smaller firms lacked the economies of scale necessary to undertake marketing or administrative roles in federal programs like Medicare. They also tended to resist government growth because the increased operational costs associated with additional regulations and state programming were more difficult for small firms to absorb.Footnote 41

Among other insurance groups, market conditions inspired pro-Medicare views. Executives of large northeastern insurance companies and the leaders of nonprofit plans, particularly Blue Cross, saw Medicare as a way to expand revenues at a time when rising health care costs threatened industry profitability.Footnote 42 Leading commercial insurance companies and Blue Cross plans had assumed the most responsibility for covering senior citizens. Medicare would allow them to dump loss-generating elderly subscribers onto government rolls. Compared to their more conservative peers in the Midwest, executives of the large, wealthy northeastern companies tended to accommodate government programming. Though they did not welcome the prospect of federal intrusion into their business sector, they also believed it unwise to openly combat popular reform programs, fearing that such politicking could invite public or government scrutiny.Footnote 43 Pro-Medicare insurance executives reminded their conservative colleagues that the Social Security program had boosted insurance company profits by establishing a base of benefits that stimulated the sale of their supplemental products.Footnote 44 Similarly, Medicare promised to create new business opportunities in the sale of supplementary coverage to beneficiaries. Indeed, some of the leading firms, such as Equitable, began developing such policies before Medicare legislation even passed.Footnote 45 Fitting Swenson's analysis of ultra-conservative business groups, one northeastern insurance executive, referring to those who combated the legislation, protested that insurers “were not a meeting of the John Birch Society.”Footnote 46 Meanwhile, nonprofit plans angled for a role in administering program benefits. They worked closely with federal policymakers, sharing data and expertise to help design the program around their organizational prerequisites, including separate programs for hospital coverage (Blue Cross, Medicare Part A) and for medical or physician coverage (Blue Shield, Medicare Part B).Footnote 47 As we are concerned with commercial power, it is important to note that, by this point, most Blue Cross and Blue Shield plans behaved similarly to their for-profit competitors; for example, most had abandoned community rating.Footnote 48

The final Medicare program handed private health interests a key victory. Because policymakers tailored Medicare to fit the private market's framework, they ended up legitimizing and further embedding the insurance company model into the health care system. By growing the insurance company model to structure the health care economy, physicians and insurers had narrowed the range of policy options available to federal officials. Reformers had long hoped to eradicate the inefficient, broken model. However, by the 1960s, the private insurance industry was firmly established and market reorganization no longer seemed as feasible as it had during the 1930s and 1940s. Developing Medicare around the insurance company model allowed SSA officials and their congressional allies to create a politically moderate proposal, based on the same arrangements to which patients and citizens had grown accustomed. The approach also permitted government officials to harness the existing capacity and know-how of the insurance industry to manage the program. SSA officials appointed insurance companies to help administer Medicare by acting as intermediaries between the government and service providers. Thus, the government paid insurance companies lucrative administration fees to handle provider communications, process payments, and apply cost containment measures.Footnote 49

TOWARD COMPREHENSIVE REFORM

After Medicare's passage, the market environment—particularly rising health care costs—continued to determine business attitudes toward reform. Within the broader business community, political divisions often developed between large firms seeking to bring down employee benefits costs and small firms fearful of a mandate that would force them to purchase employee insurance.Footnote 50 A rift based on firm size eventually developed within the insurance industry as well. Unlike small and medium-sized insurance companies, the largest insurance companies had the capacity to take part in government programs, either by administering benefits or by selling coverage through government-regulated exchanges. Meanwhile, comprehensive reform proposals presented occasions for insurers and physicians to meet at the legislative bargaining table—through ersatz management-labor negotiations, financiers and service providers wrangled to improve their market standing in relation to one another.

During the late 1960s and through the 1970s, big-business executives expressed lukewarm support for national health insurance (NHI) proposals while small-business leaders generally remained resistant. Underneath expressions of approval was the widespread assumption that some version of NHI was certain to pass. As with Medicare, both parties responded to rising costs and inadequate population coverage by offering legislative proposals; in this case, principal sponsors included Republican President Richard Nixon and the “liberal lion” of Massachusetts, Senator Edward Kennedy. Thus, business leaders had some impetus to express support for NHI in order to help shape the final legislation. More generally, industry representatives were learning to adapt to a larger regulatory and welfare state. Now that business interests had accommodated Medicare, finding political solutions to health care problems appeared more pragmatic.Footnote 51 And those problems were significant: The 1965 Medicare and Medicaid programs generated a massive increase in demand for health services, a demand that the inefficient insurance company model was ill-equipped to handle. National medical expenditures shot up, and the label “crisis” accompanied almost every discussion of health care costs.Footnote 52 At the same time, business leaders were struggling to navigate stagflationary conditions, higher regulatory costs, and increased global competition. Corporate revenues dropped, but employee health insurance costs continued to rise each year, often by double-digit percentages.Footnote 53

NHI proposals with an employer mandate and cost containment features generally appealed to large firms while threatening the profitability of small businesses. In addition to the inherent cost problems caused by the insurance company model, “cost shifting” had increased the price of worker benefits because service providers made up for the uninsureds’ inability to pay by charging insured individuals more. Therefore, an employer mandate that helped create universal coverage, paired with cost control mechanisms, had the potential to reduce expenses for firms that were already providing employee insurance. The possibility of cutting benefits expenditures attracted big-business executives whose companies participated in global markets where they were disadvantaged by higher health care costs than their foreign competitors.Footnote 54 Within the domestic market, the employer mandate favored large companies relative to small and medium-sized firms. A requirement that all businesses purchase worker coverage would raise labor costs for smaller companies and potential large-firm competitors. Only companies with operational economies of scale could easily absorb the costs associated with administering benefits according to federal regulations. Worried about shouldering additional labor costs, small-business leaders, who were represented by the powerful National Federation of Independent Business (NFIB), lobbied against NHI and an employer mandate.Footnote 55

These economic calculations illuminate business political maneuvering around NHI. They explain why New York Governor—and later, Vice President—Nelson Rockefeller (R), an NHI supporter, remained a political darling of the big-business community.Footnote 56 Nixon's NHI proposal—which Swenson describes as “firmly rooted in business economic interests”—sought both an employer mandate and robust cost containment measures.Footnote 57 In 1973, the CED, a centrist business group populated by large-firm executives, released an NHI plan that, like Nixon's blueprint, included an employer mandate and cost control procedures.Footnote 58 The Chamber of Commerce, though made up of mostly small and medium-sized businesses, yielded to the influence of its largest members and endorsed the employer mandate in 1974.Footnote 59 The same year, the large-firm-dominated Business Roundtable established the Washington Business Group on Health to study reform policies.Footnote 60 Despite this flurry of activity, one crucial issue constrained reform enthusiasm among big-business executives—doubts about the ability of policymakers to create a program that actually lowered health care costs.Footnote 61

Deteriorating profits help explain why both commercial and nonprofit insurers worked closely with policymakers to create an NHI bill.Footnote 62 Insurance companies, grappling with the rising costs of medical services, reported significant losses during the 1960s and 1970s.Footnote 63 In 1969, the HIAA released an NHI proposal that sought an employer mandate and Medicaid expansion. Insurance companies of all sizes would likely benefit from the additional business generated by an employer mandate. Meanwhile, as various proposals wound their way through policy circles and congressional hearings, the largest HIAA members, such as Aetna and Equitable, conferred with policymakers about the possibility of assuming administrative roles in an NHI program.Footnote 64 In preparation for administering NHI, the Blue Cross and Blue Shield systems spent tens of millions of dollars developing standardized computer systems and uniform operational guidelines for member plans.Footnote 65 Walter McNerney, president of the Blue Cross and Blue Shield Association (BCBSA), noted in a 1979 interview that he had “been going to Washington fairly regularly” to meet with “White House representatives, HEW [Department of Health, Education, and Welfare] representatives, congressional representatives.” “Suffice it to say,” he stated, “there was a lot of opportunities to be a substantive part of the shape of the legislation that emerged.”Footnote 66

As they negotiated with policymakers over NHI, both HIAA and BCBSA representatives sought cost containment measures that would strengthen the supervisory power of insurers over physicians and hospitals. Now embedded in Medicare's administrative apparatus, insurers looked to federal officials as potential allies—as fellow health care financiers who had a similar stake in reducing costs. Market conditions—that is, rising costs—had emboldened insurance company officials. Formerly more subservient to AMA wishes, they now began pushing back—not too fiercely but nevertheless with some insistence—for more control over how medicine was practiced.Footnote 67 For example, AMA leaders were incensed that Blue Cross and Blue Shield executives supplied policymakers with technical assistance in designing NHI cost containment measures, which included showcasing their systems to monitor physician fee profiles.Footnote 68

The AMA, meanwhile, also endorsed comprehensive health care reform. After the association's crushing Medicare defeat, AMA members replaced conservative spokesmen with ideologically moderate leaders who attempted to accommodate the growing welfare state. The association's House of Delegates approved a “Medicredit” plan that would have granted vouchers to the poor and tax credits to middle- and upper-income people so that they could purchase coverage in the private market. Their proposal, of course, lacked cost containment procedures that would constrict physician autonomy.Footnote 69

Numerous proposals that fragmented political support combined with the nation's flagging economy ultimately defeated NHI. Comprehensive health care reform lay dormant for over a decade under Republican presidencies.

During President Clinton's tenure and his administration's push for health care reform, medical insurance costs and competitive concerns continued to shape business attitudes toward legislative proposals. Firm size and provision of employee benefits were the most significant determinants of business political positions.Footnote 70 Even before Clinton's 1992 election, large individual companies as well as the National Leadership Coalition for Health Care Reform—a group that represented labor groups and leading employers—endorsed legislative action.Footnote 71 For big business, the Clinton plan's employer mandate would level labor costs among their competitors while managed care mechanisms would, they believed, constrain the rapidly rising costs of employee benefits. Nevertheless, many business executives were subsequently convinced to switch their positions through the reverse lobbying of Republicans, who warned that the program would inevitably lead to a single-payer system. Republicans also pledged to politically punish firms that departed from the party line.Footnote 72 Beyond Republicans’ aggressive tactics, big-business leaders had difficulty with the details of the Clinton administration's plan, finding its reforms complex and unwieldy. Nor did they wish to cede control over how employee benefits packages were designed.Footnote 73 Additionally, executives lost their sense of urgency about reform because, at the time, the private market's use of managed care appeared to be bending down the health care cost curve, thereby promising to reduce corporate benefits expenditures.Footnote 74

Swenson reports significant small-business backing for comprehensive health care reform. Small-business leaders were indeed an ideologically varied bunch. I argue, however, that most of that support came from small-business heads looking for government assistance to provide employee insurance or from small-firm leaders who already supplied worker benefits and wanted to equalize labor costs among their competitors. Proposals that significantly raised their operating costs would not have been among their preferences. From the perspective of most small-business owners, the plan that eventually took shape would compel them to purchase expensive benefits according to complicated federal regulations without any financing assistance to make that possible. Therefore, some of the most stringent resistance to the Clinton plan came from groups representing small businesses and companies that did not offer employee health benefits: The NFIB, National American Wholesale Grocers’ Association, and National Retailers Federation.Footnote 75

These trends in how business leaders connected the Clinton proposal to their profit-making abilities and competitive position clarify the changing political stance of the prestige trade associations. The Chamber of Commerce primarily represented small and medium-sized employers. However, approximately two-thirds of chamber members already purchased employee health benefits, and the association's Fortune 500 companies, though in the minority numerically, wielded a good deal of influence. The chamber's leadership, therefore, developed a pragmatic, supportive approach to the Clinton proposal.Footnote 76 Almost all NAM members provided insurance, which explains why, despite the association's long adherence to ultra-conservative politics, the leadership now expressed favorability toward reform.Footnote 77 This initial support waned, however. Republican policymakers, protests from small-business members, and the complexity of the reform eventually swayed the chamber and the NAM to oppose the administration's legislative package.Footnote 78

As had Medicare, the Clinton proposal split the insurance industry according to how the legislation would affect each group's market standing. Large insurance companies favored the legislation's proposal to intensify managed care arrangements. Many of them had already invested significant resources in managed care networks, including health maintenance organizations (HMOs). Through managed care practices that became popular during the 1980s, insurance companies had strengthened provider regulation. Insurers increasingly paid doctors fixed capitation compensation instead of fee-for-service payments, tied treatment blueprints to reimbursements, and subjected physician medical practices to more rigorous utilization review. Insurers saw the Clinton proposal as an opportunity to further enhance their supervisory authority over physicians. Moreover, executives of the largest companies believed that they would profit from the administration's “managed competition” structure, which envisioned subscriber groups purchasing coverage from insurance companies through regulated state exchanges. Accordingly, the industry's leading companies—Cigna, Prudential, Aetna, Travelers, and Metropolitan Life—broke from the HIAA. The HIAA opposed the proposal because small and medium-sized insurance companies lacked the organizational capacity to participate in the proposed managed competition arrangements. These smaller insurance companies stood to either lose business or go out of business altogether.Footnote 79 Similarly, Blue Cross and Blue Shield plans, before the late 1990s, were still part of a relatively fragmented system of small and medium-sized plans, often confined to one state. So even though Blue Cross leaders had long favored comprehensive reform, they now worried about a proposal that appeared poised to minimize their place in the resultant government program.Footnote 80

Insurer attitudes toward the proposal shifted as additional details were revealed. Although the HIAA had previously endorsed an employer mandate, both the association and the large companies that originally favored the Clinton bill soured on that provision. As designed by the Clinton administration, it would have imposed insurance premium price controls.Footnote 81 Indeed, insurance company representation on the Business Roundtable and its spin-off association, the Washington Business Group, helped sway these initially accommodationist associations to favor alternatives to the Clinton plan—proposals that were more advantageous for insurance company profit making.

For its part, the AMA endorsed the Clinton reform efforts, including the employer mandate. However, organized doctors ultimately moderated their support because they feared that the program would empower insurance companies to the detriment of physician professional independence. The Clinton plan would have bolstered managed care trends and appeared likely to eliminate fee-for-service payments altogether. Physicians also worried that proposed premium caps would diminish reimbursements in general.Footnote 82

As the initial backing of businesses, insurance companies, and physicians turned into resistance, the Clinton bill faltered. With the administration's legislation defeated, about a decade and a half would pass before policymakers made another run at comprehensive reform.

Despite the controversy surrounding the ACA, the opposition was not led by big business—at least not initially. Health care continued to weigh down labor costs. Thus, Republicans—in response to the needs of their business allies—had for years been considering ways to rationalize the health care system. Some GOP officials viewed Massachusetts Governor Mitt Romney's 2006 state plan as a model for reform. “Romenycare,” like the subsequent ACA, included an employer mandate, subsidies for low-income individuals to buy coverage through a state-run exchange, and a requirement that individuals purchase insurance.Footnote 83 As Swenson underscores, this push for reform occurred well before Obama's 2008 election. The Business Roundtable, Coalition to Advance Health Care Reform, and Better Health Care Together (BHCT)—all representatives of big corporations—issued proposals and white papers for health care reform in 2007.Footnote 84 Using the conservative rhetoric of “personal responsibility,” large employers favored a mandate for individuals to buy coverage, anticipating that it would reduce cost shifting and help ease their insurance outlays.Footnote 85 Charles E. M. Kolb, President of the CED, which helped found BHCT, explained why comprehensive insurance reform was a priority for industry leaders: “Even beyond its unacceptable human costs, our inefficient and dysfunctional health care system will continue to choke U.S. business competitiveness and impede economic growth.”Footnote 86

Insurance companies and organized physicians were also ready to negotiate with the administration to achieve universal coverage. Their primary concerns were obtaining legislation that protected the existing insurance company model while improving their positions relative to one another—physicians wanted safeguards for professional autonomy, while insurers wanted additional powers to regulate service providers and contain costs.Footnote 87 Commercial insurance companies were now represented by America's Health Insurance Plans (AHIP), created through a 2003 merger among the HIAA and two trade associations representing HMOs. Additionally, the BCBSA had changed its rules so that it now represented both nonprofit and for-profit health insurance plans. AHIP and BCBSA leaders strongly supported the individual mandate to bring in more, ideally young and healthy subscribers. In return, insurers agreed to issue coverage without reference to preexisting conditions and to offer uniformly priced policies regardless of patients’ medical history.Footnote 88

Subsequently, several legislative provisions created unrest within the private health care industry. Insurers and physicians joined together to defeat the administration's “public option,” a proposed government insurance package that would compete against private insurance on state exchanges.Footnote 89 Recognizing that the government-backed policy could be loaded up with generous benefits and priced to undercut competitors, private health interests saw the public option as a grave threat to the health care system's fundamental structure—that is, to existing insurance company arrangements. Adding to their worries about the public option, insurers began to get cold feet over provisions requiring them to keep administrative costs and operational overhead at a set percentage relative to benefits expenses.Footnote 90 They also fretted that a weak individual mandate penalty would deliver them too few healthy customers. Insurers believed they needed a large base of healthy new subscribers to cover the costs of insuring customers with preexisting conditions and to meet the generous policy benefits standards set by government officials.Footnote 91 Meanwhile, fearing that the legislation would harm their individual and small-group underwriting lines, small insurance companies mounted the most resistance to reform.Footnote 92 Thus, even while they negotiated over legislative details to create a bill that would favor their members, AHIP officials secretly compensated the Chamber of Commerce to campaign against the proposal.Footnote 93

Although they lost some battles, insurers won the war—the final ACA legislation, stripped of the public option, maintained the insurance company model. Insurance companies failed to obtain all the provisions for which they lobbied; they were disappointed by the weak penalty that accompanied the individual mandate and by rules constraining administrative costs. Nevertheless, insurance companies would continue to finance private medical services while managing and coordinating both the private and public health care sectors. Corporate power remained at the heart of the U.S. health care system.Footnote 94 This victory, however, injured the broader business community, especially firms that purchased the insurance company model's expensive employee benefits, which drained away valuable resources and undermined their competitive standing.Footnote 95

Since the passage of Medicare, business has increasingly accommodated the welfare state. As government incrementally grew into the health care market, it made good profit-making sense for corporations to trade in their political opposition for support—even if mild support—that would win them a seat at the legislative bargaining table. There, they haggled with government officials and other interest groups, attempting to mold welfare state policy so that it would help them compete more effectively. This narrative demonstrates why scholars should look past the tidy story of reformers battling a uniform set of capitalists to also examine business and economic history. Mapping out an economic sector's institutional scaffolding elucidates the connections between the political stances of various business factions—including support for welfare programming—and how those firms are positioned in the marketplace according to such features as size, competitive concerns, union membership, and labor costs.

This type of analysis also sheds light on the organizational and operational structure of welfare state programs. Policymakers often devised social programming in ways that benefitted corporate interests. In the health care sector, federal officials have favored insurance companies—particularly the largest and wealthiest firms—by granting them lucrative government contracts, delivering them additional customers through mandates, and reinforcing and legitimizing their inefficient market arrangements. What this analysis shows is that traditional class-based analysis, by allowing the complexities of business lobbying to remain hidden, paradoxically, ends up hiding a good deal of corporate political power. With its careful collection of historical evidence and penetrating analysis, Peter Swenson's essay is a superb contribution to the literature—a well-lit guidepost for scholars seeking to uncover these business maneuverings for a fuller understanding of the U.S. welfare state.

References

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19. Chapin, Ensuring America's Health, 20–25, 27–29.

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27. Chapin, Ensuring America's Health, 31–34, 56–59, 91–92, 113–19.

28. Chapin, Ensuring America's Health, 119–21, 154–184; Klein, For All These Rights, 217–18, 242–43; Rothman, David J., “The Public Presentation of Blue Cross, 1935–1965,” Journal of Health Policy, Politics, and Law 16 (Winter 1991): 684–87CrossRefGoogle ScholarPubMed.

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32. Fein, Medical Care, Medical Costs, 60.

33. Chapin, Ensuring America's Health, 206–207, 223–24.

34. Swenson, “Misrepresented Interests,” 15.

35. By 1965, these Republicans supported policies beyond the 1960 Kerr-Mills Act, which directed federal funds to state programs to provide the indigent elderly with medical services.

36. Chapin, Ensuring America's Health, 205–205. Some fiscally conservative policymakers preferred Social Security financing over general revenue funding, believing that correlating federal benefits to payroll taxes would limit program expansion.

37. Chapin, Ensuring America's Health, 225.

38. Swenson, “Misrepresented Interests,” 7, 9–13; Chapin, Ensuring America's Health, 210.

39. Similarly, labor officials—always savvy about the inner workings of the health care market—understood that insuring retirees drained considerable resources away from younger workers. Swenson, “Misrepresented Interests,” 8–9, 12.

40. Derthick, Martha, Policymaking for Social Security (Washington, DC: Brookings Institute Press, 1979), 137–39Google Scholar; Chapin, Ensuring America's Health, 98–99.

41. Chapin, Ensuring America's Health, 217–19; Orville F. Grahame to Eugene Thore, April 13, 1960, Box 20, Orville Francis Grahame Papers, University of Iowa Special Collections, Iowa City, IA (hereinafter Grahame Papers); “Minutes of the Meeting of the ALC-LIAA Joint Committee on Social Security and Health Care,” March 29, 1961, Box 20, Grahame Papers.

42. Founded by hospitals, Blue Cross paid for hospitalization insurance, while Blue Shield plans, largely established through medical societies, covered physician bills. Owing to its association with hospitals, which traditionally relied on charitable and government funding to operate, Blue Cross was relatively progressive compared to the AMA-influenced Blue Shield. As Blue Shield developed, however, it increasingly pulled away from the AMA, behaving much as other insurance companies did regarding political stands in favor of reform and in instituting cost containment measures. See Cunningham and Cunningham, The Blues, and Chapin, Ensuring America's Health, chap. 5.

43. On the relative progressivism of northeastern insurers in comparison to other elements of the industry, see Derthick, Policymaking for Social Security, 139–42; Chapin, Ensuring America's Health, 218–19.

44. Chapin, Ensuring America's Health, 217.

45. Hacker, Divided Welfare State, 83–84; Chapin, Ensuring America's Health, 217–20, 228–29; Reminiscences of Reinhard Hohaus, part I, (July 27, 1965), 133, Social Security Project, Columbia Center of Oral History Collection, Columbia University, New York, NY; John W. Spillane to Orville Grahame, “Hearings Held before the House Ways and Means Committee on H.R. 4222,” August 4, 1961, Box 21, Grahame Papers; Marjorie Hunter, “Showdown Nears on Aged-Care Bill,” New York Times, January 26, 1964; “Insurer Backs Medicare Plan,” Journal of Commerce (May 28, 1962), Box 29, Grahame Papers.

Ivan A. Nestingen, “Speech to Annual Delegates Meeting of Group Health Mutual, Inc.,” March 13, 1965, Box 346, Secretary's Subject Correspondence, 1956–74, Department of Health, Education, and Welfare (HEW), RG 235, National Archives, College Park, MD (hereinafter NARA); Robert Ball, “Staff Paper on the Limitations of Private Health Insurance for the Aged,” October 15, 1963, Box 299, Commissioner's Correspondence, 1939–69, Social Security Administration (SSA), RG 47, NARA; Horace H. Wilson, J. Henry Smith, and Morton D. Miller, “Medicare and Private Benefit Plans,” n.d., Box 10, Harrison Givens Files, RG 2, AXA Equitable Life Insurance Company Archives, New York, NY.

46. Orville F. Grahame to Benjamin B. Kendrick, June 13, 1961, Box 21, Grahame Papers; “Minutes of the Meeting of the ALC-LIAA Joint Committee on Social Security and Health Care,” June 8, 1961, Box 20, Grahame Papers; “Minutes of the Meeting of the ALC-LIAA Joint Committee,” February 16, 1961, Box 20, Grahame Papers.

47. Chapin, Ensuring America's Health, 221–23; Cunningham and Cunningham, The Blues, 141–43; “Blue Cross Participation in Social Security Hospital Insurance,” April 28, 1964, Cohen Papers, Social Security Archives, Baltimore, MD; Walter J. McNerney, interview by Odin W. Anderson, transcript, June 13, 1973, Robert M. Cunningham Jr. Papers, private collection, Gaithersburg, MD (hereinafter, Cunningham Papers); Blue Cross Association Annual Meeting, Chicago, April 20, 1961, Cunningham Papers.

48. The Blues lost their federal tax exemption during the 1980s, and their trade association, the Blue Cross and Blue Shield Association, permitted plan members to convert to for-profit companies during the 1990s.

49. Chapin, Ensuring America's Health, chap. 7; Morgan and Campbell, Delegated Welfare State. In 1992, Don Cohodes, a vice president of the Blue Cross and Blue Shield Association, told an interviewer that his “back-of-the-envelope scribbling” indicated that acting as Medicare intermediaries added approximately $200 million annually to total plan revenues. “That's not chicken feed,” he observed. Don Cohodes, transcript, July 21, 1992, Cunningham Papers.

50. See Martin, Stuck in Neutral, 95–97, for a discussion of how a range of factors—size, profitability, health care expenditures, and unionization—helped determine which businesses were most likely to back health care reform.

51. Mizruchi, Fracturing of the American Corporate Elite, 240–41.

52. Bergthold, Linda, “The Fat Kid on the Seesaw: American Business and Health Care Cost Containment, 1970-1990,” Annual Review of Public Health 12 (1991): 161–64CrossRefGoogle ScholarPubMed; Chapin, Ensuring America's Health, 234–35. See also Bergthold, Linda, Purchasing Power in Health: Business, the State, and Health Care Politics (New Brunswick, NJ: Rutgers University Press, 1990)Google Scholar.

53. Bergthold, “Fat Kid on the Seesaw,” 159–61.

54. Bergthold, “Fat Kid on the Seesaw,” 163–64; Peter Kihss, “Business Leaders Focus on Health,” New York Times, November 9, 1969; William Greider, “New Health Insurance Plan Urged,” Washington Post, April 12, 1973; Edward M. Kenney, “Braking Medical Inflation through National Health,” The Sun, August 6, 1978.

This analysis fits with Peter Swenson's and Scott Greer's contention that rising health care costs in the private sector condition business interests to be more favorable toward reform. Swenson, Peter and Greer, Scott, “Foul Weather Friends: Big Business and Health Care Reform in the 1990s in Historical Perspective,” Journal of Health Policy, Politics, & Law 27 (August 2002): 605–38CrossRefGoogle ScholarPubMed.

55. “2 Groups Oppose Federal Insurance on Health as Costly,” New York Times, October 27, 1971; Art Pine, “Cost of Health Plan Raises Fears of Harm to Business,” The Sun, April 8, 1971.

56. Waterhouse, Benjamin C., Lobbying America: The Politics of Business from Nixon to NAFTA (Princeton, NJ: Princeton University Press, 2014), 25Google Scholar; Eve Edstrom, “Compulsory Health Plan Urged by Rockefeller,” Washington Post, April 25, 1968; Nancy Hicks, “Health Coverage Urged by Public,” New York Times, December 18, 1975.

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58. Mizruchi, Fracturing of the American Corporate Elite, 172–73, 242; Greider, “New Health Insurance Plan Urged”; Harold M. Schmeck, “Business Panel Presents Health Plan,” New York Times, April 12, 1973.

59. “U.S. Chamber to Offer Own Insurance Plan,” Washington Post, January 26, 1974.

60. Mizruchi, Fracturing of the American Corporate Elite, 243.

61. Stuart Auerbach, “New Health Program Called Too Expensive,” Washington Post, February 4, 1976; Starr, Social Transformation of American Medicine, 404; “Study Sees 40% Rise in Health-Care Costs by 1980 Even without National Program,” Wall Street Journal, October 18, 1976; Richard D. Lyons, “Despite Broad Coverage of Nixon's New Health Insurance Plans, Critics Say It Has Serious Flaws,” New York Times, February 8, 1974.

62. The 1970 Kennedy-Griffiths legislation was the only major proposal that sought to remove insurance companies from the health care system. Nonetheless, Blue Cross and Blue Shield leaders worked with the bill's sponsors to create an administrative role for insurers. Starr, Social Transformation of American Medicine, 394, 404.

63. Chapin, Ensuring America's Health, 235; Cunningham and Cunningham, The Blues, 193–95.

64. Chapin, Ensuring America's Health, 238–39; “Republican Task Force on National Health Care Hears HIA Spokesman,” National Underwriter 76 (March 11, 1972): 14Google Scholar; “Health Care Delivery in the 1970's,” Transactions of Society of Actuaries 22 (January 1970): D55–308Google Scholar; Victor Cohn, “Insurance Firms Offer Counterplan to Nixon's National Health Proposal,” Washington Post, March 17, 1971.

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66. Interview with Walter J. McNerney, 71–72, Cunningham Collection for quotes.

67. Chapin, Ensuring America's Health, 235–36, 241–42.

68. “Report of the President,” Annual Business Meeting of Blue Shield Plans (1976), 18–19, Cunningham Collection; Interview with Harold Pearce, June 11, 1973, transcript, 10–14, Cunningham Collection.

69. Chapin, Ensuring America's Health, 239; Campion, Frank D., The AMA and U.S. Health Policy since 1940 (Chicago: Chicago Review Press, 1984), 306–11, 316–19, 322–24Google Scholar.

70. See Martin, Stuck in Neutral, chaps. 3 and 5, for how business employment of policy experts, associational patterns, and past policy positions also shaped attitudes toward the Clinton health care proposal.

71. Martin, Stuck in Neutral, chap. 3; Milt Freudenheim, “Calling for a Bigger U.S. Health Role,” New York Times, May 30, 1989; Frank Swoboda, “Major Firms, Unions Join in National Health Insurance Push,” Washington Post, March 14, 1990; Robert Pear, “Business and Labor Call for Health Tax,” New York Times, November 13, 1991.

72. Martin, Stuck in Neutral, 186–87; Morone, James A., Litman, Theodor J., Robins, Leonard S., Health Politics and Policy, 4th ed., (Clifton Park, NY: Delmar Cengage Learning, 2008), 299Google Scholar; John Judis, “Abandoned Surgery: Business and the Failure of Health Reform,” The American Prospect (Spring 1995), http://prospect.org/article/abandoned-surgery-business-and-failure-health-reform.

73. Robin Toner, Adam Clymer, and Robert Pear, “The Health Care Debate: What Went Wrong?” New York Times, August 29, 1994.

74. Swenson and Greer, “Foul Weather Friends.” Employers initial enthusiasm for managed care reversed once health care costs started to rise again during the mid-1990s.

75. Martin, Stuck in Neutral, 178–81; Judis, “Abandoned Surgery”; Toner et al., “The Health Care Debate.”

76. Judis, “Abandoned Surgery”; Martin, Stuck in Neutral, 60.

77. By the late 1980s, 99 percent of NAM members provided employee health insurance. Morone et al., Health Politics and Policy, 299.

78. Morone et al., Health Politics and Policy, 299; Martin, Stuck in Neutral, 176–77.

79. Weil, T. P., “President Clinton's managed competition proposal,” Journal of the National Medical Association 85 (April 1993): 257–63Google ScholarPubMed; Skocpol, Theda, Boomerang: Health Care Reform and the Turn against the Government (New York: W.W. Norton, 1996), 134–139Google Scholar; Cunningham and Cunningham, The Blues, 250; William Neikirk, “Insurers Weigh Profit, Health Critics Fear Clinton Plan May Give Big Firms Too Much Power,” Chicago Tribune, December 5, 1993; Sara Nichols, “Clinton Plan Rewards Big Insurers,” New York Times, November 7, 1993; Milt Freudenheim, “Insurance Companies Expect Battle over Health Care to Shift to the States,” New York Times, October 23, 1994.

80. John J. Fialka, “Washington Battle for Health Reform Showed Possible Erosion of Blue Cross-Blue Shield Clout,” Wall Street Journal, Mary 6, 1993; Greg Steinmetz, “Number of Blue Cross Insurance Plans May Shrink under Health-Care Reform,” Wall Street Journal, June 29, 1993; Peter Kerr, “Insurers Fear They'd Be the Big Loser in a World of Managed Health Care,” New York Times, October 1, 1993.

81. Kerr, “Insurers Fear They'd Be the Big Loser”; Judis, “Abandoned Surgery.”

82. Paul Starr, “What Happened to Health Care Reform?” The American Prospect (Winter 1995), http://prospect.org/article/what-happened-health-care-reform; Neikirk, “Insurers Weigh Profit”; Dana Priest and Michael Weisskopf, “AMA Split on Clinton Health Plan,” Washington Post, December 6, 1993.

83. Rick Ungar, “Newt Gingrich Long-Time Supporter of Health Insurance Mandates,” Forbes, May 13, 2001, https://www.forbes.com/sites/rickungar/2011/05/13/newt-gingrich-long-time-supporter-of-health-insurance-mandates/#4db323e52153; Jonathan Easley, “Romney Describes Healthcare Mandate as Conservative Principle,” The Hill, December 28, 2011, http://thehill.com/video/campaign/201489-romney-says-universal-healthcare-is-a-conservative-principle.

84. Roundtable, Business, Health Care Costs in America: A Call to Action for Covering the Uninsured (Washington, DC: Business Roundtable, June 2007)Google Scholar; Jonathan Cohn, “What's the One Thing Big Business and the Left Have in Common?” New York Times Magazine, April 1, 2007; Jordan Rau, “Universal Healthcare Gains Unlikely Backer,” Los Angeles Times, May 7, 2007; Mark Trumbull, “Burdened by Healthcare Costs, US Businesses Seek a Shift,” Christian Science Monitor, February 13, 2007; Daniel Costello and Abigail Goldman, “Healthcare Reform Calls Get Louder,” Los Angeles Times, February 8, 2007.

85. Business Roundtable, Health Care Costs in America.

86. Kolb quotation in “Six Major Corporations Join Better Health Care Together,” Health & Wellness at Walmart.com, https://corporate.walmart.com/_news_/news-archive/2007/05/08/six-major-corporations-join-better-health-care-together-governors-rendell-schwarzenegger-cite-importance-of-the-coalitions-efforts-at-summit. See also “CED Releases Quality, Affordable Health Care for All: Beyond the Employer-Based Health-Insurance System,” CED Forum (Winter 2008): 1–2.

87. The AMA also registered concerns about the Independent Payment Advisory Board and sought a permanent fix to Medicare fees, which, though scheduled to automatically drop, had in past years been repeatedly raised by Congress. Starr, Paul, Remedy and Reaction: The Peculiar American Struggle over Health Care Reform (New Haven, CT: Yale University Press, 2011), 114, 203, 206Google Scholar; Chapin, Ensuring America's Health, 244; Dan Eggen, “Familiar Players in Health Bill Lobbying,” Washington Post, July 6, 2009; Tom Hamburger and Kim Geiger, “Insurers Poised for a Healthy ‘Bonanza,’” Chicago Tribune, August 24, 2009; Robert Pear, “Insurers Seek Presence at Health Care Sessions,” New York Times, December 17, 2008; Noam Levey, “Obama Health Care Overhaul Gets Boost,” Baltimore Sun, May 11, 2009; Kim Geiger and Tom Hamburger, “Doctors Go for Obama's Reform,” Los Angeles Times, September 15, 2009.

88. “Health Policy Brief: Individual Mandate,” January 13, 2010, Health Affairs accessed at https://www.healthaffairs.org/do/10.1377/hpb20100113.974560/full/; Tom Hamburger and Kim Geiger, “Healthcare Insurers Get Upper Hand,” Los Angeles Times, August 24, 2009; Robert Pear, “Insurers Offer to Soften a Key Rate-Setting Policy,” New York Times, March 25, 2009; Dan Eggen, “Health-Care Firms Have Supported Lawmakers Debating Reform,” Washington Post, July 21, 2009, http://www.washingtonpost.com/wpdyn/content/article/2009/07/20/AR2009072003363.html?sid=ST2009072003679.

89. Eggen, “Familiar Players in Health Bill Lobbying”; Hamburger and Geiger, “Healthcare Insurers Get Upper Hand; Pear, “Insurers Seek Presence at Health Care Sessions.”

90. This proportion is referred to as the medical loss ratio (MLR). America's Health Insurance Plans, AHIP Statement on MLR (Washington DC: AHIP, November 23, 2010). Brill, Steven, America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System (New York: Random House, 2015), 119–22Google Scholar.

91. Brill, America's Bitter Pill, 107–109, 143, 186–87.

92. Avery Johnson and Janet Adamy, “U.S. News: Signs of a Split Emerge in Insurance Industry,” Wall Street Journal, October 15, 2009; Hamburger and Geiger, “Healthcare Insurers Get Upper Hand.” Some large Blue Cross companies, such as WellPoint, that had invested heavily in the individual and small-group market, also saw the reform legislation as a threat. Reed Abelson, “A Scrappy Insurer Wrestles with Reform,” New York Times, May 16, 2010.

93. Starr, Remedy and Reaction, 218–19; Swenson, “Misrepresented Interests,” 22; Rick Ungar, “Busted! Health Insurers Secretly Spent Huge to Defeat Health Care Reform While Pretending to Support Obamacare,” Forbes.com (June 25, 2012), https://www.forbes.com/sites/rickungar/2012/06/25/busted-health-insurers-secretly-spent-huge-to-defeat-health-care-reform-while-pretending-to-support-obamacare/#62da89164248

94. Chapin, Ensuring America's Health, chap. 8; Steven Brill, America's Bitter Pill.

95. Note that the 1974 Employee Retirement Income Security Act (ERISA) allowed large employers to self-insure their employee groups and thereby skirt state regulations that might, for example, require certain expensive policy benefits like drug and alcohol treatment. Even with self-insurance, however, these employee groups were run on the same insurance company model, with the same financing relationship between service providers and third-party financiers. Indeed, many insurance companies established third-party administration firms to offer administrative services to large self-insured employee groups.