Parting at the Crossroads

The Development of Health Insurance in Canada and the United States,

1940- 1965 Antonia Maioni

Aims and Objectives of Article

• Explain why Canada and the United States embarked upon two divergent paths and developed different forms of health insurance

• Contribute to a theoretical debate by examining how the demand for health reform was conditioned by the political institutions shaping party systems

Research Methodology

• Comparative historical analysis– examining historical evidence for causal regularities

and evaluating different explanatory factors

• Most similar cases– Canada and the US share many common economic,

political and social attributes that influence WS expansion.

Theoretical approach

• Actor-centered Institutionalism

– Political institutions (def: rules of the game) shaping party systems and state actors are the main determinant of policy

– Institutions increase or decrease opportunities to influence policy (A. Rico)

• (Neo- institutionalism)– Formal institutions condition the role of political

parties in the policy process since parties serve as an intermediary function between state and society

Determinants of NHI reformCanada vs. USA

Dependant Variables: Health Policy Reform• Canada

– Universal system of government financed health care system

• USA– Duel-targeted system of Medicare and

Medicaid targeting the elderly and the poor

Determinants of NHI reformIndependent Variables

Variables Canada USA

CONTEXT.

Social values, culture

Culture: Public support NHI

Liberal

Yes

Liberal

Yes

INSTITUTIONS (RULES)

1. Executive dominance

2. Federalism

3. Party discipline

Weak

Strong

Yes

Weak

Weak

No

ACTORS (PLAYERS)

1. State authorities

2. Pro-WS Pol. Parties

Weak

Access to government.

Weak

No access

PAST POLICY

1. Past WS policies in HC (a cause of state auton. & capacity)

Underdeveloped Underdeveloped

A. Rico

Institutional influence on Third party formation -shaping divergent NHI reform

Institutions → third party formation→ NHI reform ↓no third party → limited health care reform

Canada - Institutional rules increased opportunities for formation of a social

democratic third party. - Strong party discipline helped formation of a “leftist” party with ability

to influence, balance and press federal government and pose electoral threat. Elaboration of policy alternatives

- Strong federalism. Decentralized, provincial independence of health policy

Outcome Third party functioned as autonomous political force and

guaranteed efficacy in NHI reform

Institutional influence on Third party formation (cont.)

USA -Institutional constraints of third party formation

-Weak party discipline. NHI proponents to have only a compromising effect within the wider coalitions of the divided

Democratic party . Democratic party→ internal coalitions with fragments of left and right Absorption of political left and labor movements. Third parties channeled through regional blocks

within the major parties

-IG advantage of veto points (?)

- Weak federalism. Radical, state level third parties limited by stronger role of federal government in the area of social policy. Health policy deviates from other policy in the US

Outcome Third party→ limited as an independent political force because of complex rules

of committee system and control by two major parties

Actors (Players)

• Canada– Pro WS Political Party

access to government. – Access succeeded

despite multiple veto points

– Provincial success →Universal NHI to national prominence

• Providing Alternatives

• Political agenda

• Political Pressure

• Voter discontent

• USA– Pro WS Political Parties no

access to government• Access failed due to

multiple veto points in the system

– Few instances of social democratic state or local governments →No demonstration effects possible

Empirical evidence• Canada 1940-1050ies→ Deviant case→ no policy initiative/legacy

on health care prior to 1940 – Third party formation, Co-operative Commonwealth Federation, CCF

(labor org. and elements of socialist left) →Proposes universal health insurance in the provinces

– Public opinion polls: 75% of Canadians supported NHI– Voters: CCF equal in popularity to Liberals and Conservatives→ CCF

slightly suffered from antisocialist rhetoric– CCF party ruling led to implementation of federal health grants in the

provinces– CCF expansion to national level– Due to public opinion and success of CCF the Liberal government was

under pressure to act and reduced the alternatives presented by the medical lobby and other state actors

– Precedence set by provinces led to national consensus of staging of health benefits, beginning with hospital insurance, in order to avoid direct confrontation with organized medicine→ cause federal government to pass federal-provincial hospital insurance act

Empirical evidence (cont.)

• Canada 1960ies– All ten provinces and two territories had introduced hospital insurance

programs eligible for federal funds– CCF government in provinces provided initiative combined private fee-

for service delivery with public administration and financing– “Socialized medicine” rhetoric by political opponent and strike by

medical doctors proved unsuccessful and led to loss of prestige of the medical lobby on the national political agenda

– New Democratic Party: Alliance of CCF and Canadian labor movement formed in 1961

– NHI on national political agenda and weak IGs influence– 1966: Passage of NHI bill

– In sum: Universal health insurance →institutionalized through process of experimentation, provincial innovations and extended through federal involvement

Empirical Evidence USA• 1930ies: Federal government moved into social policies area, proposals for

health and social reform, and established precedents for future reforms (policy legacy). Public support for social security→ limited legislative action

• 1940ies: Truman→ NHI became a primary domestic policy objective– Labor organizations lobbies for NHI→ constrains of forming of labor party and

rejected idea of independent political action→ integrated within broad Democratic party with internal splitting. “The conservative coalition” within the party blocked Truman social reform.

– Rhetoric of “socialized medicine” and cold war linked pro-health reform to dangers of communism posed by political opponents and medical loby (AMA) made the Democratic party vulnerable

– Medical lobby captured public opinion from NHI to voluntary insurance alternatives→ successful in limiting the scope of national health reform

• In sum: Democratic party deeply divided over the issue and committes individual state actors (senior officials) were unable to bring projects of NHI to terms

Empirical Evidence (cont.)• USA

– Modifying health reform: The targeting approach→ Democratic party builds noncontroversial alternative to NHI

– Build on The Social Security Act precedents for age-based cleavages and reinforcing idea of deserving social groups (Note: Absent in Canadian debate→ universal)

– Labor movements adopted the idea that voluntary health insurance could cover the average American worker

– Rhetoric of “socialized medicine” and conservative strength in the committee system defeated the Forand bill in 1960 defeated limited hospital insurance for Social Security recipients

– In the Democratic party the “right to adequate medical care” was a prominent feature after Kennedy's nomination→ pressured to launch an alternative in the Republican administration→ supported “Medicare for the Aged Act (MMA)” which limited federal aid to the medically indigent through a means test

– In sum: MMA showed the effectiveness of legislative compromise in a measure designed to raise pubic support by targeting a vulnerable group

Empirical Evidence USA (cont.)

• Medicare and the Politics of Compromise– President Johnson highlighted health reform in “Great

Society initiative” and voters responded to the message→ Faced constitutional constraints and challenges from alternative proposals

– Medicare faced a divided Congress with extensive hearings and compromises until passed in 1965

– In sum: Health reform is possible in the US, but face constraints. President Johnson (democrat) effort to simulate party discipline→ critical point for policy change. However, no matter how popular or limited in scope the proposed health legislation→ subjected to compromise and change

Conclusion

• Canada and USA parted at the crossroads of NHI due to institutional configurations and how they shape partisan politics, despite public support

• Institutionalized consensus (autonomy of state) in Canada on NHI→ reduced IGs influence

• The compromising nature of US institutional and party system and limits of the Medicare and Medicaid of the 60ies limits further reform→ Political hassles with powerful IGs

Criticism and discussion Evidence of Causal Mechanisms?

Veto-points→ Multiple veto points exist within the Canadian and the US federal system. – Veto-points is as main cause of constraints of third party formation in

the US, but the interpretation lack a thorough explanation of causal mechanism

– Can veto-points explain the success of third party in the Canada through a “positive” block of majority (liberal and conservative) policy options?

• -Third party performance: success of strategies and leadership of the political left in Canada is not debated as a determinant of policy change vs. institutionalism

Criticism (cont.)

• Maioni excludes the notion of cultural variations within the liberal, antistatist states (institutionalism) → PO: not differentiate concepts→ voter discontent, opinion polls vs. context

• PO→ USA: individualism, preference for limited government vs. market. Canada: Collectivism→ alternative ways to estimate culture not discussed

• Originality of article→ Maioni explains the critical point of federalism concerning US health care→ deviant case→ no federalism in US health politics as commonly assumed