Historical Research: A Century of Healthcare Battles

A pivotal moment in the health care debate came when the president went before Congress and said this: “Millions of our citizens do not now have a full measure of opportunity to achieve and enjoy good health. Millions do not now have protection or security against the economic effects of sickness. The time has arrived for action to help them attain that opportunity and that protection.”

The time was November 19, 1945, and the president was Harry S. Truman. He was unveiling a health care reform proposal that included, as its controversial centerpiece, a national health insurance plan to be run by the federal government. The idea was that people could choose to get their health insurance from the government instead of through a private insurer. The plan was an early version of what would be known, in the political parlance of 2009, as a “public option.”

The health care contretemps currently playing out in the halls of Congress is the latest episode in a lengthy political conflict that stretches back even decades before Truman’s unsuccessful proposal. It’s a conflict over contrasting visions of the structure of the health care sector of the U.S. economy, generally pitting proponents of a sharply expanded government role against opponents who seek more market-oriented approaches to providing health care.

The stakes involved are vast, with far-reaching implications for the financial well-being of investors as well as the physical well-being of patients. Health care stocks have demonstrated acute sensitivity to the prospects of sweeping restructurings of the sector by government. This was the case both in the early 1990s, during the clash over the Clinton administration proposal spearheaded by then-First Lady Hillary Clinton, and in the recent legislative maneuvering over what has come to be known as Obamacare.

Moreover, health care currently accounts for some 15 percent of gross domestic product, and the strength or weakness of such a sizable slice of the economy will affect the overall investment outlook. In particular, health care has demonstrated a profound capacity to affect government finances, increasingly so since the advent of Medicare in the 1960s. Thus, the prospective effects of current reform efforts on government spending, and on taxes and deficits, will be a major shaper of the investment climate.

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