Today is the deadline for open enrollment under the Affordable Care Act (ACA), and despite numerous political compromises, some serious technical glitches and existential opposition, the ACA is Barack Obama’s signature Presidential triumph of historic import.
It squares the United States’ exceptional history of social progress with humankind’s sociocultural evolution.
The ACA is based on scientific fact rather than fantasy, because it’s based on the inexorable power of mathematical statistics. By mandating insurance to the broadest possible pool of insured, the ACA makes American health insurance fair and affordable.
As abolitionist Elizur Wright, and “Father of Life Insurance” noted, “While nothing is more uncertain than the duration of a simple life, nothing is more certain than the average duration of a thousand lives.” Group statistical concepts apply equally to health insurance as they do to life insurance.
After a trip to London where Wright witnessed the abuse of insurance companies selling non-redeemable “junk” policies wrote, “I should not like to have a policy on my life in the hands of a man with the slightest pecuniary motive to wish me dead… I soon found there was a reasonable act of Parliament against the issue of a policy in the absence of insurable interest on the part of the policyholder in the life of the insured, but no law whatever against the continuance of one, after all insurable interest had ceased; on the contrary, a judge-made law allowing it. I resolved, if I ever returned to America, it should be otherwise here, if my voice could avail.”
With evangelical zeal combined with mathematical prowess from 1858 to 1866 as State Commissioner of Insurance for Massachusetts, he spearheaded insurance reform whereby companies could not abuse their inexorable power through untold profiteering, nor could they sell policies insurance companies did not have sufficient reserves to pay out. He sought balance in the system.
Wright’s campaign for insurance reform and stability came 100 years after the nation’s oldest life insurance company, the Presbyterian Ministers’ Fund, which was founded in 1759, and 150 years prior to the AIG debacle that threatened the world’s economy. (AIG sold inadequately funded insurance policies known as “credit default swaps” without sufficient actuarial reserves to pay out what was due, should the policies come due.)
Commissioner Wright saw the munificent good insurance could do, but was strongly opposed by insurance companies, as he was notable for his advocacy of regulation. The “Wright Bill” for insurance reform aspired to fairness and stability, but was as famous for its intense complication littered with multiple technical mathematical terms. It was barely passed by a fiercely opposed industry, an unenthusiastic governor and wary legislature – much like the complicated ACA’s passage in 2012.
It was signed into law on April 10, 1861 and two days later, shots were fired on Fort Sumter. With distraction from the Civil War, would-be opponents were otherwise preoccupied in other affairs. However with the Commissioner Wright’s bill stipulating regulation, insurance companies once again became credible institutions rather than dens of gambling and hucksterism. Henry B. Hyde, the first true insurance salesman, invoked the goodwill of clergymen such as Henry Ward Beecher to promote insurance from the pulpit as benevolent institutions.
With kindness came popularity and commerce, and insurance companies grew into leviathans of American capitalism, as mirrored by their high-rise architecture in American cities. Chicago’s Home Insurance Building in 1883 was the world’s first steel frame tall building; a skyscraper. The entrance to the New York Life Building with its pyramidal gilded roof at 51 Madison Avenue in New York City has an entrance on the Broadway side framed by a pair of 15-ton polished granite monolithic pillars over 27-feet high, and between them above the door in bronze lettering it reads, “The pillars give the entrance the appearance of an ancient temple – and a temple it is – a Temple of Humanity.”
By the end of the 19th century, state insurance policies were coming to the forefront in advanced social reform. In Germany, Chancellor Otto von Bismarck instituted broad social legislation with the Sickness Insurance Law of 1883, the Accident Insurance Law of 1884, and the Old Age and Disability Insurance Law of 1889. The root change was from individual liability of employers to a state fund for insurance.
State mandates combined with statistics as the prime instruments of social reform. They crossed the Atlantic in the ensuing years, and by 1914, the President of the American Statistical Association (ASA) in Boston, S.N.D. North wrote for the Carnegie Endowment for International Peace 75th Anniversary of the American Statistical Association.
“The life of man upon the globe has been divided into various periods, which differ according to the point of view of the historian. The simplest division establishes three epochs: ancient, medieval and modern. Another division of the centuries since the Middle Ages is possible, and more satisfactory for the purposes of this paper. Let us divide them into two periods, the non-statistical and the statistical; one the period of superstition, the other the period of ascertained facts expressed in numerical terms. The terms are essentially synonymous with those which divide modern history into the non-scientific or theological period, and the positive or scientific period.”
“The science of statistics is the chief instrumentality through which the progress of civilization is now measured, and by which its development hereafter will be largely controlled.”
In 1935, the ASA’s membership actively participated in formulating the New Deal both technically and intellectually. It published papers such as, European Experiences and New Deal Statistics, highlighting the virtue of authoritative state policy with European examples such as the Austrian Statistical Yearbook.
Throughout the 20th Century, whereby Life Insurance was closely regulated thanks to the efforts of Wright, the etiology of the health insurance industry become much like that of the life insurance industry of the early 19th century where “junk” policies were ubiquitous on the market and health insurance was not universal. Highly regarded non-profit insurance organizations, such as the Blue Cross Blue Shield Association and Kaiser-Permanente were increasingly alarmed by the disparity of their quality plans to the free-market scrap policies littering the healthcare marketplace.
And despite the multiple postwar political efforts toward national health care of Walter Reuther, President of the United Auto Workers (UAW), President Bill Clinton and even President Richard Nixon, reform remained a chimera.
In 1989, Stuart Butler of the Heritage Foundation, proposed a health care proposal that addressed the varied problems of insurance companies insuring only the healthy and denying insurance to those who needed it the most, the unhealthy.
In his paper, Assuring Affordable Health Care for All Americans, Butler posited that “all citizens should be guaranteed universal access to affordable health care.” Then by relying on the solid science of statistics, he resolved to solve the problem of providing universal healthcare and assure affordability, saying a “mandate [is needed of] all households to obtain adequate insurance” and to “provide help to those who cannot afford protection” through subsidies and tax credits.
Butler sought a balance between social policy and private obligation.
He opined, “A mandate on individuals recognizes this implicit contract. Society does feel a moral obligation to insure that its citizen do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself.”
Butler’s plan called for an individual mandate, requiring persons to have insurance or pay a penalty, and Massachusetts implemented a healthcare plan in that spirit. The Affordable Care Today (ACT) Coalition lobbied the Massachusetts Governor and Legislature to reform healthcare, and the Blue Cross Blue Shield Foundation sponsored a study, “Roadmap to Coverage,” showing how to expand coverage to everyone in Massachusetts. And an individual mandate would drastically bring down overall medical costs in another way, as emergency rooms were being misused for non-emergency medical care.
Senator Edward Kennedy (D-MA) brokered many difficult compromises between the Republican Governor and the Democratic State Legislature. In April of 2006, Governor Mitt Romney signed the health legislation, but vetoed eight sections of the legislation. The legislature promptly overrode six of the eight gubernatorial vetoes, and by mid-June 2006 overrode the remaining two. The result has been a triumph for affordable, equitable and sane social policy. It is the blueprint for President Barack Obama’s ACA and it is a continuance of social progress as profound as Franklin Delano Roosevelt’s Social Security Medicare and the New Deal.