Stanley Jones Oral History (03/2007)

Why don’t we start at the very beginning? Tell me when you first met Edward Kennedy.

I came down to his office for an interview in probably late 1969, for the second position on his House subcommittee staff. He was going to take over the chairmanship of the subcommittee the next year, with the new Congress, and he’d hired Lee Goldman. Lee knew me and called me out of the blue and asked me if I’d be interested. Actually Kennedy called me.

Himself?

Much to the consternation of my secretary, who—I ran this regulations and studies group. She covers the receiver and says, It’s Senator Kennedy. And I said, Ha, ha, ha. And she says, No, it really is. So I got on the phone, and he asked if I’d come down. He’d already made up his mind—I don’t know how—so it was a matter of convincing me it was what I should do, and he did a great job. Mark Schneider ran into the room to do something, and he ran out and he said, Now, see that guy? He’s going to be critical to getting a voluntary draft passed in this country. And I’m working with him. You could do something like that if you were here.

That’ll do it.

Yes. [laughter]

When you came in, at that point, had he already settled on doing health?

Health, yes.

And national health insurance, at that point, was his chief issue?

Clearly it was his chief issue. And he’d settled on health because he’d gone for the chairmanship of this Health Subcommittee, and all of that was settled. He knew what resources he could hire and everything, and I was number two. Phil [Caper] was number three. He felt he needed someone who was politically savvy about the health field, someone who knew the programs and how they were put together, and he needed a physician.

That’s an interesting division, but it makes sense.

So he had already made those decisions.

And how long had Lee been with him at that point?

When I interviewed, I’m sure it wasn’t more than two or three weeks.

Oh, so you all came in at the same time.

We all came in at the same time. Phil was maybe—I can’t remember. He was later. Probably had something that prevented him from breaking away as quickly, but I believe he was a couple months later. Maybe not, because he was there on these big hearings we did, these field hearings.

Well, who had staffed Kennedy on healthcare prior to that?

I believe it was Carey Parker, and Mark Schneider did migrants, I know, and he might have staffed him on some other things. But it was one of those things where one staffer has six items in his portfolio.

As Carey always has.

As Carey always has, yes. But Carey was always around when these discussions were going on about organizing it. So my guess is, it was Carey.

Do you know how he came to settle on national health insurance as his chief priority?

I have no idea, except I can guess a few things that you could explore. One is that the unions had put health insurance way up on their priority list, and this was five years after the passage of Medicare. The idea all along, for the unions and for the coalition that had been pulled together with the Committee for National Health Insurance, was to move on to the whole population for Medicare. Medicare was just a start. They were just taking the next logical step, so I’m sure Kennedy looked at that and said, This is my constituency, and this is where it’s going, and we have a shot. It had to be a constituency thing with him, although I don’t know that his brothers had been into the—don’t know this was a Kennedy thing in particular, but the unions certainly were.

Well, this is coming in the wake of all the major efforts in civil rights in the 1960s, in which there was a cross-group coalition unified on civil rights. 

Right.

Was there anything similar to that with healthcare at this point? Was there a real consensus that national health insurance was possible, or was it just Labor at this point?

No, it was viewed by all the major interests as there’s likely to be a national health insurance bill. I mean, they were so convinced that over the first year, when those hearings were going on, they all put together their own national health insurance proposals. There was an American Hospital Association proposal; there was an AMA [American Medical Association] proposal; there was a Health Insurance Association of America proposal. That’s the kind of thing they only do under great duress, because basically they didn’t want anything to happen. So they retreated to step two, which is, If something has to happen, then let it be mine. So they were convinced something was coming.

Why did they feel that it was coming?

It was, I think, in terms of polls and people’s opinions, it was really desired. Beyond that, I don’t know. I know we were playing the unions and the polls in the churches. If you looked at the Committee for National Health Insurance and who was on it, that represents the coalition.

Who all was on it?

I was hoping you would look around. I’m trying to remember [laughs]. The unions were the major actors, and then there was a brain trust, like Ig [Isidore] Falk, who had been in the Social Security Administration. I can’t remember if he was the Secretary, or I don’t know what they called them then, Director of Social Security. He was the chairman of the Committee for National Health Insurance. Churches were represented; synagogues were represented; all of the unions were there. I mean, there was a wide representation of the unions, and they sent their top people, like Mel Glasser from the UAW [United Auto Workers] and Bert Seidman from the AFL-CIO [American Federation of Labor and Congress of Industrial Organizations]. And Rashi [Fein], he was part of this academic brain trust. The unions, by far, were the most powerful, and Ig was, by far, the guiding light intellectually. He was a great man. I mean, he was like Bob Ball is now regarded.

What was driving it? This was prior to the era when the health costs started spiraling out of control. Was this simply the logical follow-on to Medicare, or was it more than that?

There was a coverage issue of people left out then, and it’s gotten worse since then. But the group that was doing this viewed it as, We know what the coverage issue, the eligibility issue is, and we took care of one big population, the elderly. And then [Wilbur] Mills had masterminded, including Medicaid in that Medicare/Medicaid package, to bring in something for the poor, but it’s really a pretty minimal program in terms of who qualifies. It was then and it’s always been. And the unions supported that, but what they wanted was the workers who were at the lower end of the income spectrum into the deal. 

Health insurance wasn’t as widespread among companies then as it is now. It’s gotten better as they’ve rated smaller and smaller companies and found they could insure them, but now we’re losing people for another set of reasons. In any case, the same problems we have now basically. And the prices were going up, and unfortunately, Medicare’s costs had gone up so fast. That was the biggest problem we had, because you say, You’re going to make this Medicare for everybody? My gosh, the country won’t be able to afford it. Look what’s happening.

Between ’65 and ’69, it had spiraled so much that people were cognizant of what the cost—

Oh, yes, it was so terrible. And the reason, in part, is that, as usual, the advocates had done an optimistic projection of the costs that there would be once it passed. And then once it passed, if you look back at the history of the country, the hospitals, the doctors, got a huge windfall from Medicare, and that converted into higher costs.

Were they aware of the windfall that they had gotten by that point? Did that become apparent quite quickly?

Oh, yes. The elderly were a real problem in the country before ’65. It was a real losing proposition for healthcare providers. A lot of strategists since have said, Gee, we shouldn’t have done the elderly first; we should have done children first. Children are a lot less expensive.

They are.

The elderly is like taking your old car into a mechanic and saying, Is there anything wrong?

Kids are mostly preventive care.

Yes.

Some diseases but not chronic care like the elderly.

When I went into Russell Long’s office with their staff to work on anything, they would all raise this national health insurance thing and say, You can’t possibly be serious about this, Stan. Do you realize what’s happening on Medicare? Look at the costs. And they were, of course, overseeing the Medicare program and watching its skyrocketing costs.

Had Russell Long supported Medicare’s enactment in ’65, or had he been an opponent?

My guess is, he ended up voting for it, but I can’t imagine it was with great enthusiasm, because his staffers—incidentally, one in particular would be an interesting interview, and he’s in Boston, Jim Mongan. I think he’s president of Mass General Hospital. He’s a physician, and he was there when I was working on this. And his boss, Jay Constantine, was the staff director. But Jim would give you a lot more thoughtful, balanced recollection of it. You’d pay such a terrible price talking to Jay [laughs].

But he would be worth interviewing on the—

If you could get to him, yes. He’s around. I know he was representing the American Nurses Association for a while.

What was Kennedy’s political calculation about the likelihood of getting this passed? What did he think was going to need to be done to get this through?—before we get to substance on this.

I don’t ever remember meetings where that was talked about in the global sense. I have an instinct that the global conversations were more about, This is a really live, important issue to our constituencies. It will give you something that you can really get your teeth into. Big issue, work on it a long time. It has a good chance of producing really good stuff, and it will put you in a great spot to run for President.

How much of that do you think factored into it?

It’s not more than most politicians, but Is this the right spot for me to build my career in politics? is always a big consideration, and this one was just perfect. All the right constituencies that support him and that he needs on his side were interested in this and would appeal to it. 

When we came on board in 1970, we immediately had these field hearings. I was on the staff two weeks when we went to New York, and then I was there three days and got sent to West Virginia to set up the field hearing and the visits in West Virginia. I had no idea what I was doing. Anyway, if you look at where they went, they all went to Democratic states where Bobby Kennedy had made serious inroads. It was almost like going back and reinvigorating the Kennedy movement and alliances. So I’m sure that was part of this. The Presidential run, after all, was only a few years later.

Right. It was only two years later.

And there’s just no question, people were anticipating, at some point—everybody said it: When’s he going to run? So I’m sure that was a piece of it. He knew he needed the unions on this, and he was always a coalition builder. He knew he needed more than the dyed-in-the-wool Democrats. He needed others, and he was always after us to find ways to get others involved in this. So he did serious work with the medical schools and the teaching hospitals. And in part, it was, I think, to build his credibility as a person they could deal with and who had the country’s best interests at heart in an overall healthcare. So that they could say, The guy’s basically on our wavelength but may disagree with this— and he always did— about the details and may push us, but I think he did all that work to plow the ground and count them into the coalition.

Did they see him that way?

Some did, some didn’t. There were some who just were nuts against it. There were some—my dearest friend died about four months ago, Monty [Merlin] DuVal. He was the Assistant Secretary for Health. He was a physician, and he founded the University of Arizona Medical School. A really highly respected, accomplished man. He liked testifying and coming up and working with Kennedy and with the Kennedy staff because, he said, they were so smart, reasonable, and they really had the best interests at heart of these institutions, even though he was always banging on them. But he at least was in the door. He was within bargaining reach, I think, for most of those folks.

What about with the AMA?

I don’t know there was ever—at least I never saw a chance there. I might be missing something in the scan. That’s a good one to ask Lee Goldman, if you can get him to talk candidly. Their very first contact with me as staff was just so down and dirty and political, and it never got better, though they gave me a crate of oranges every Christmas [laughs].

An orange a day keeps the doctor away?

Something like that.

Well, what about the AHA [American Hospital Association]? Were things any better with the American Hospital Association?

I think they were better, and they were better with the Blue Cross/Blue Shield system—worse with the Health Insurance Association of America. They probably went a little more sour with the Blue Cross system after we—on these field hearings, Blue Cross had a person at every hearing that we held out across the country, and so did the HIAA [Health Insurance Association of America]. Kennedy would listen to someone’s testimony and he’d say, What insurance company was that? You say it was Blue Cross? Well, we’ve got the guy right here. Where are you? I know you’re out there? And one of us would point him out, and he’d stand up. He’d say, Hey, after we’re finished here, I want you to talk to this lady and tell me how we can solve this. [laughs] But even at that, they didn’t drift into the he’s Satan attitude. 

Where I heard that the most, after a year or two, was from the Association of Medical Colleges, not so much from the Academic Health Centers, the health centers that include the medical college but only in the way a university includes it. It was really just a separate organization. The AMA never saw anything to be gained in this, but they had their own bill. As Bill Fullerton observed when we were working on the Kennedy-Mills bill, he said, The problem with all these guys— and he and Wilbur Mills had better relationships with them than we did. They talked to them.

Why?

They’re the tax committee.

Well, yes.

The Ways and Means Committee. And there was very little idealism in Mills. He could deal in a more down-and-dirty way, I think, than they saw Kennedy as being able to deal. But he didn’t deal on these things. Those organizations ended up shooting down the Kennedy-Mills proposal too. But nevertheless, Bill observed one day, We talk to all of these guys, and their priorities are, ‘We don’t want anything. We don’t want any legislation. If you have to have some legislation, the only one we’ll take is ours, and we won’t compromise.’ So they were really a tough bunch to try to corral. 

And in the end, not just all those organizations, but the unions wouldn’t support the Kennedy-Mills bill, and they at least needed the unions. I mean, you could make a good case that the unions killed that bill, and in particular the big unions, because their coverage was already so good, it was hard to improve on it with a national program. Plus, the more cynical, politically oriented observers—and heaven forbid that I should be around those—say that this was a huge issue for the unions, a huge bargaining issue that gave them a raison that nothing else did. Wages and healthcare were the things they bargained for, and if it were all taken out of their hands—and they didn’t even get that much better coverage for having it taken out of their hands and moved into Government—was this really a good deal for the union institution?

So they basically would lose 50 percent of what they had as leverage to negotiate with.

Their role, really, they bargain over wages, and then there’s other things.

And working conditions.

Vacations, working conditions. But then healthcare was so huge. If they lost that, it’s like losing a huge account. I always thought—not with a guy like Mel Glasser or Bert Seidman, who had such a strong streak of idealism in him, but with the savvy political leadership at the unions—I’ve always thought, that’s got to have counted into the picture. Plus the big ones didn’t get that much more out of it. The UAW had such good coverage that it was hard to improve on it.

Well, why did they go for it in the first place then? If they were the impetus, there’s a 100 percent, hundred-and-eighty-degree shift.

There are a lot of folks who would say that they really never did want it, except as a political issue, that ultimately it was doomed. Because when they got there and they couldn’t get much more, they realized they were losing more. But they needed to be working on it, and it looked like they were on the verge of getting it. That’s the really central—

But maybe that’s very accurate. Did anybody have that sense at the time that there was a cynical subtext, sub rosa of text for what the unions were working on, why they were on this issue?

Oh, yes. Everybody, the Hill, everybody sees all the cynical subtexts that are possible from everybody that’s out there, right down to, Well, his sister works there, or, His wife is employed, or, His sweetheart works there.

So how did that affect this feeling that somehow this was going to happen?

It didn’t. There was an aura. They maintained the role, the act, the process, really well. If you get down to it, millions of people would have been helped by this, and a lot of them union members of the then less-powerful unions—service employees and so forth. They were to be helped. So the international union movement would look at this and say, This is going to help a lot of people. But as usual, the money and the power was in the big unions, from big companies. It’s a whole different scene now. The politics have shifted so much.

Right. Were you seeing, at the time, splits within the unions over the issue, or differences in level of commitment?

There were splits over how to compromise or what would be acceptable and how the thing was structured—not even splits, disagreements. I never saw any indication of, or any argument about, Maybe we shouldn’t be pushing this at all, or, Maybe this isn’t the right thing for us to give away.

But when they backed away, did anybody foresee that they were going to back away?

Yes, when they backed away from Kennedy-Mills. And that was it. That finished it. They said it was because there was still a role for insurance companies in that bill. The insurance companies, in the Kennedy-Mills bill, did what they do under Medicare: they’re contractors and they process it. Plus, there were deductibles and co-insurance in the bill. They wanted nothing in that area. The reason they were there is it’s so costly not to have them. Deductibles really mean everybody is contributing that much toward the cost of their healthcare. Anyway, that was what the unions said were the problems. And their threat was that if Kennedy went ahead with this, they would say he was a sellout all over the country, and it would be in all of their newspapers, and they did. 

But they didn’t say—and I sat in the meeting. I mean, I sat when Andy Biemiller—and I can’t remember who came. It was Andy Biemiller for the AFL-CIO. It wasn’t Leonard Woodcock from the UAW. I can’t remember who he sent. It may have been somebody plus Mel Glasser, but it wasn’t Leonard Woodcock. And there were representatives of the other unions. Most of the talk was between Kennedy and Biemiller, and basically they said, No, they won’t compromise on any of this. Kennedy said, This is the best deal we’re ever going to get. And they said, No. After the election, we’re going to have a veto-proof Congress. And if so, with more of our people in here, we’re going to send something to the President that’s tougher than this, and if he doesn’t sign it, the Congress will override the veto. 

Most of the meeting revolved around that issue, where Kennedy was saying, Okay, I can tell you who’s on the Finance Committee. Tell me which ones you’re going to defeat in the upcoming elections, and he ticked them off. Finally, when it was clear that they were going nowhere, he lost patience and said, This is ridiculous. This is going to be the same people that you have now who are pulling the strings. And here we’ve got the Ways and Means Committee, with Mills, may be ready to report something, send it to the House. And the President is in such a weakened condition, we may just make him sign this. And they just said no. 

As to what their motives were, I mean, we were speculating on them within two hours of leaving the office, but not with Kennedy. He may have talked that kind of talk to Paul Kirk. I’m sure you’ve gotten on to Paul Kirk and Jim King and Dick Drayne and Carey, on the inside, and I don’t know who—

Jim King. What was his role at the time?

I only saw Jim in his role as advance man and political organizer, but his name came up all the time. Paul would say, Well, let me double check. I’ll call a few people, and I’ll call Jim. Paul Kirk is a guy of such high integrity and truthfulness. They were handling those. I don’t know what they concluded about the unions. 

Our job was, from a health perspective, What does this mean from the unions, and why would they be doing this? And we speculated among ourselves about, Maybe they really don’t want this very much. They were like all the other interest groups: We only will take it our way, 100 percent. If we had gotten the bill that the Committee for National Health Insurance submitted, in its pristine form, they would have gotten more, even the UAW. But nobody gets a bill in its pristine form. That was the unbelievable side. And these are smart people. This is Andy Biemiller and all these guys who worked around Washington all their life. They know better than that.

And the unions all know that you never get your pristine bill.

That’s it. So what’s going on here?

It’s a political compromise.

And there may have been other things, and they may have been talking to Kennedy and the Democratic leadership about other things like, We need this for the campaign, maybe, or maybe, We need this issue for the Presidential campaign. We don’t want to put this through now and undercut the Democrats. Maybe. I never heard that said.

But it wasn’t a real issue in the campaign, was it? I don’t recall it being a huge issue.

No, I don’t think it became—

The first time I got to vote.

Oh, is that right?

It was a big deal.

With that failure, the wind so went out of the balloon of the issue.

Was there really an expectation that [George] McGovern could win?

Well, I’m really not the right person to ask that. I never thought there was, but I wasn’t—Paul would be the guy to ask what was going on, because he would have been talking directly to Kennedy and to the Democratic leadership. He’s the same Paul Kirk that went on to be head of the Democratic Party, and he had all of those contacts, and everybody respects him. So I’m sure he was getting advice from those folks.

But all the calculations at the time were that, look, Kennedy-Mills is really the best you’re going to get. If you don’t do this and make the compromises, the likelihood after the election just is not as good.

Not as good.

Because if he were to win, he’s no longer as weak. And now we all know that that’s not what happened.

Although there’s maybe two things. First, just a one-line story: Kennedy and Mills, that they could come together, that the two of them could be on the same bill, was such news.

How did that happen?

Bill Fullerton and I one night were walking to the subway. Probably it was seven o’clock. We were in front of the Library of Congress, heading toward Union Station from the House side, because we had spent the afternoon in the basement at the Dirksen Building working on the bill. This figure is coming the other way on the sidewalk, and we finally got close enough that just as we realized who it was, he recognized us. It was Wilbur Cohen, who is the Secretary of HHS, what was then HEW. As soon as he saw us, his first words were, Oh, my God, you two together. This is going to be something. Tell me what’s in it. [laughs] So it had that quality, when it got introduced, of hey, this really rattles all the cages and throws all of the cards up in the air. How’s this one going to settle out? So there really was a chance there.

At the point when you saw him and he said that, had there already been an agreement to work together?

Oh, yes. We were working out the bill itself, but nobody knew about it.

Why did Kennedy go to Mills in the first place? And what made him think that he could get Mills on it?

That’s a good question.

Or did they come to you?

No, Mills, they would never have done that.

I can’t imagine it, but I thought I would raise it as a possibility, just in the offhand.

They just weren’t outrageous enough to think of it. That was Lee Goldman’s idea, and I recall when he had it, sitting at breakfast one morning drinking coffee. He and I would go to coffee. Seldom did anybody else join us, but he would use me as a sounding board. So what you’re hearing is the sounding-board side of this. He would go over issues. He’d say, Well, what’s going on in health manpower? and we would talk about the legislation and who was where and so on. We got onto health insurance, and he’s talking about what we’re doing and who’s where, and, This thing isn’t moving, but gee, this is a political year. Mills has declared for President. I’ve still got a Mills for President sticker.

I had forgotten that.

Yes. Mills wanted to be President—this is the point before all that Fanne Foxe disaster with—

Right, I was going to say.

This is where, when Mills declared for President, a lot of people might say, I just can’t see him doing that. But if he wants it, God help us, he’s going to go after it. So Mills had declared, but nobody thought it was possible, and Lee said, You know what? There are only two ways to get legislation like this before the Congress. One’s through Mills’ committee and the other is through Long’s committee, and Long’s not going to do it. Mills wants something: he wants to be President. I’ll bet he’d settle for Vice President, and I’ll bet if Kennedy started courting him on this, he wouldn’t shut the door, because who knows? 

And then Lee started calling around. Wilbur Cohen was chairing hearings by the Democratic National Committee for their platform committee on what should be in the platform around the country. You know how these things go on. And there was one coming up somewhere. If it wasn’t in Arkansas, it was somewhere nearby, and they invited Mills. Lee called Cohen. Wilbur Cohen was chairing it and he said, You know what you need to do? You need to get Mills to commit himself to doing something like this when he goes to Washington, doing something about this healthcare thing. And why not work with Ted Kennedy? You know Kennedy would work with him. 

Cohen served all these soft pitches to Mills at this hearing. Mills was feeling so good about being able to hit them out of the park and say all the right things and make political points. And he raised this thing about Kennedy, and Mills said, I’d do that. I’d be glad to do that. I’m sure we could work something out. And then by the time the news media picked up some pieces of it, Kennedy called Mills with a sort of script saying, Mr. Chairman, I hear you got us in to do a project here. So Mills had the view that he had had some initiative in it, and in fact it was—

The seed had been planted.

The seed had been planted. And then Kennedy went to see him.

But it came about in a way that allowed Mills to think that it was his idea.

Yes. At least he wasn’t pushed.

Oh, that is clever.

This is politics. So, Mills then called Bill Fullerton and said, Bill, I’ve talked to Senator Kennedy. We’re going to do something together. And Bill called me and said, What have you guys been up to? [laughs] He said, We had better get together. I went over and we talked and he said, The chairman really seems to want to do this, Stan. I don’t understand it. He was running, see? That’s the old maxim up there: you start to run for President, everything is up in the air.

Everything is up in the air, yes.

So we started. Bill and I just fiddled at first, saying, Well, I could divide this into chunks. What are the chunks that Mills would be most interested in? What are the chunks that Kennedy would be most interested in? What about—do you think—well, boy, he’s never done anything like that before. Well, what do you think about—? So Bill would go back to Mills with some ideas, and mostly what Bill was doing was testing whether his chairman was really serious about this.

Right.

And he would call back each time, absolutely dumbfounded about how serious Mills was, and say, You’d better come back. We’ve got to get something going here. And I remember, finally I walked in and Bill was standing in front of the blackboard, and he threw me a piece of chalk and said, Well, here it is. There are five basic pieces in our national health insurance proposal: who’s going to be eligible? What are the benefits? How are we going pay for it? How are we going to pay the doctors and hospitals? And I can’t remember what the fifth one was. It will come to me. And he said, Let’s see what we can do about this. We just started in. And he said, Mills understands Medicare.

Well, he would have to as the chairman of Ways and Means.

That’s right. So let’s make it interpretable from a Medicare standpoint, because then he’ll understand what we’re doing.

So you didn’t start with Kennedy’s earlier bill?

No, except that his earlier bill—

Had been out there.

And it was close to Medicare. I mean, they would say it wasn’t, and people who were close to it would say, Big differences, but if you’re Wilbur Mills, you’d look at it and say, Well, that’s close to Medicare. So it wasn’t hard.

Well, then let’s back up to when Kennedy picked this up as an issue. How did he define what the substance should look like? What were the principles that he used to say, This is what I think national health insurance should look like?

See, he inherited something. The Committee for National Insurance had filed their first proposal in 1969. It wasn’t complete and it wasn’t polished, but it was a proposal. We filed, in Kennedy’s first year as chairman of the Health Subcommittee, the polished-up version, dubbed S.3, and every year thereafter called the—

Yes, I think it had an earlier bill number than that.

—Health Security Act. And I think the 1969 bill number was different. I don’t think it was S.3.

Yes, it was Health Security Act, with a different number in 1970.

Well, it could be we filed it—

Filed early.

Maybe we got the S.3—

And then S.3, the bill number, comes about on a subsequent reintroduction. My sense was that there were some slight differences in it.

Between the one in ’70 and, say, the one in ’72, there would have only been slight differences. Between the first one they conceived—and maybe they didn’t even file it in 1969—and the one that was filed in ’70, it was a matter of filling out, fleshing out, making it clearer.

Kennedy took that as a starting point. He took what the Committee for National Health Insurance came up with and started there. So the ideas were not original unto him. There was some consensus that this is what it ought to look like.

They said, It’s got to be universal, everybody in the country, universal. It has to be comprehensive, covers everything without deductibles and co-insurance.

Oh, no deductibles or co-insurance?

No deductibles or co-insurance. What are the others?

And did Medicare have deductibles and co-insurance at this point?

Yes, they did.

So why the conclusion that if you’re going to make it universal, you would give—

It’s going to be better. We’re going to improve on that.

Was it your sense that that was a negotiating point, or that that was really the goal, This is what we think should be done?

Well, that’s where you start looking for cynical reasons, because it wasn’t talked about as though it were a negotiating point. And later on, when Kennedy came in with deductibles and co-insurance and a role for insurance companies, I mean, those were the biggest differences between Kennedy-Mills and the original Health Security Act, those three things. They said that was a sellout.

But there is a difference between bringing in the insurance companies—which is a major change from a universal, single payer, Federal Government—and retreating on co-insurance and deductibles, when in fact Medicare, from the inception, had had co-insurance and deductibles.

But Medicare also has the insurance companies. And they have them in the same role we wanted in the Kennedy-Mills bill, which is as contractors. They weren’t going to be selling coverage in the marketplace. They were there as contractors, like intermediaries under the Medicare program. So all it took to blow the unions off the bill were those three changes. 

Now, there were some other things they didn't like, but honestly it was as if they were details compared to those three. High quality was the third one of their big issues. And that’s important because that’s where all Kennedy’s interests in how the care was going to be organized and delivered got into the discussion. We weren’t going to pay for anything except really well-organized, good care, or we were going to do things to bring it about. There was another one that just went by me that had to do with how the taxes were to be paid. I guess it was to be a Social Security tax. It was the idea of being a graduated payment. You only pay what you can afford. It’s graduated by what you can pay. There was a fifth but—Lord, I wrote so many speeches, they ought to just fall out of my head.

So you started—I just need to get the evolution straight because it’s such a complicated tale.

And I may not have the nuances right either.

Well, we’ve got lots of memories to probe here.

And they sort of slip around.

It makes sense that you would have started with something that was better than Medicare.

Right.

Medicare was to be the starting point. You start with the elderly. There was the whole older-Americans crisis in America—our elderly are not taken care of. So you deal with the elderly first, and you put Medicare in place. Then comes a period where you say, Okay, if there’s a sense that the consensus may be there that we need to so something, let’s do something better. So you come in and you do something universal, comprehensive, no deductibles or co-insurance, which betters Medicare. No role for insurance companies, which betters Medicare. Quality is a different issue. Payment is a—

We were going to do it for the same amount we spend now, but we were going to do it by putting everything in a budget. I mean, it was a little more sophisticated than it sounds, but for example, the physicians’ portion of this budget was going to be divided up, and physicians’ organizations would get their mark, or their allotment, to budget. It’s a little like what they do in Canada, where they say, Okay, you guys set the fees, or, You guys figure out how to make this cover it. There were some pretty sophisticated ideas in there about how to pull that out and motivate the physicians’ organizations to get themselves together and take this on.

Which would have been an improvement on Medicare.

Yes, it would have been, oh yes.

But from the physicians’ standpoint, the likelihood would have meant that even if they could have had a better shot of controlling what their share was, that wouldn’t necessarily trickle down into what their actual reimbursement rates were.

Right, and there was a budget; there was a cap. Here’s how much the Federal Government’s going to put into this program next year, rather than Medicare has no such thing. And the physicians knew that, although the physicians, there were a lot of people who weren’t paying, and the hospitals had a lot of bad debt, and they could see all that disappearing. But you want it to come out of the same budget. 

There was a lot more preventive care, and the coverages made a lot more sense than Medicare coverages do. They really did. I mean, if you got a group of clinicians together and said, What would you be most worried about paying for? you wouldn’t come up with a Medicare benefits package. This package was—that reminds me now, there were several public health experts and a famous pediatrician on that Committee for National Health Insurance. Oh, what a wonderful guy. He’s been dead 15, 20 years now. Anyway, clinically they really tried to make it more sensible so that it facilitated better medical care for a reasonable investment of your money in medical care. So there were improvements; there really were.

The hospitals saw this as being better for them because they saw the potential for all of the money that was going into the uninsured—

All the bills would be paid.

—disappearing, whereas there was less incentive for the physicians.

Well, and the physicians, to the extent they had bad debts, wouldn’t have to worry about that to the extent that it really bothered them that some patients they couldn’t follow through on and couldn’t find a referral on, and that would get rid of that problem. But they knew, whatever is in that black box—and my guess is that 99 percent of the lobbyists, the people who were working on this and explaining it to their people around the country, didn’t understand how that budgeting process would work, but they had heard the budget thing—and their assumption—

After I left the Hill, I went to the Institute of Medicine for three years to get some of the political burnish off of me. Then we started our consulting firm for a couple of years, and then I got hired by Blue Cross to run their Washington operation that needed reorganizing. We had done a job, telling them how we thought they should reorganize it, and then they talked me into coming there for three years. 

I had no idea how strong this feeling was that everybody had—the Blues had it; the doctors had it; the hospitals had it—which was, You can’t do business with the Government. They pass something like this, they’re going to take back every dollar that you try to make. They’re lousy business partners. And look what they’re doing already in Medicare: they whittle away at this, and they nibble away at that, and as soon as you think you’ve found a way to treat somebody and make a little money from the fee they pay, they reduce the fee. And they say, Believe you me, that budget’s going up at such a slow rate that it’s going to starve us to death. So there’s a huge distrust, and that’s probably the biggest single factor, not the details. But it’s the Government we’re going to deal with, and they don’t want to do business with the Government. I wish that weren’t true. And like I say, it was one of my educations.

But there is a political truth to that.

That’s right.

That whatever you start out with is likely going to be whittled away, because generally things decrease, not increase.

Yes, and there’s this bias that if you’re making money off of a Government program, that’s not right.

Right. And making money off of individual people, that’s okay.

That’s okay. So they all said, Don’t put the Government in here. We’d rather not have anything. If we have to have something, it’s got to be our plan.

Our plan using health insurance companies?

The health insurance companies had a plan; the hospitals had a plan; the doctors had a plan. They didn’t agree on how to do it, but they agreed that they’d rather have nothing. So their first lobbying position was, Do nothing. And if you beat past that, they had a plan that they could at least hold up in public and say, We’re being constructive. Some of them were pretty good. The Hospital Association plan had some interesting—Ameriplan it was called. It had some pretty interesting things in it. The Health Insurance Association plan had some things that later got picked up in the [William J.] Clinton bill. They didn’t know that they were picking this up. I mean, it went through several transformations. So it was a fertile period in terms of thinking of ways to do this.

So the earliest efforts were, Let’s improve upon Medicare.

Actually they didn’t even think of it in those terms. They thought Medicare was flawed and they had compromised too much. That’s the thing. It’s hard to put yourself back in this frame, but they saw it as, Oh, but Medicare was just the first piece, and we compromised on some things there we shouldn’t have.

Including everybody being covered by just starting with the elderly.

Yes, and it might have been smarter strategically to start with something else first, because the cost of the elderly is so high, it’s got everybody scared. They looked at the proposal as predating Medicare, that Medicare was the first step and incarnation, we made some mistakes on that. We learned from those, and we’re going to do it better. That’s where they were.

Okay, so fix the Medicare flaws.

And there were, of course, a whole string of fixes each year to the Medicare program. They were fighting those battles too, proposing to change this, proposing that, arguing about—and from the Finance Committee’s side—and I don’t know the Ways and Means Committee as well because I wasn’t inside it when this part was going on—but the Finance Committee was just being killed by the price, the costs, and they were looking for ways to cut the costs. The unions and the Committee for National Health Insurance wanted to find ways to sweep the rest of the elderly—anybody who isn’t covered needs to get under Medicare. So they were picking up all of the pieces that weren’t in it. They were trying to get deductibles and co-insurance down, and increasing the benefits, getting preventive services in it. It was a movement. They looked at themselves as a movement.

So this, then, was a logical progression.

Yes, it was a logical progression. In a way, you could say that it was all the harder for them to accept a compromise like Kennedy-Mills because they had been so disappointed in having to accept it in Medicare. Do you know what I mean? If you put on that mindset, We’ve already been beat down once. Now you want us to give up on everybody. And they made arguments that are pretty powerful, like, You had deductibles and co-insurance for guys making $20,000 a year? You don’t think that deductible is going to keep him from taking his kids in for the care they need? Give me a break. We’ve got to get him in there. So it wasn’t fantasy. I mean, it was built, at least, on what they thought was good clinical practice, and good for the country, and good public health practices, and so forth. The problem was, it ran into the cost thing on the Hill, as everything does, and they couldn’t take the compromise. They really couldn’t.

Well, where was the [Richard] Nixon administration on this? How serious were they about wanting to do something?

Lee’s feeling—and I say that because I had no ability to assess this; I mean, I could read about it in the newspapers, but I couldn’t assess it—Lee’s feeling was that they’re going to be in such trouble going up to the election and immediately after the election, that they desperately need something to make friends of the American public.

Was his calculation based on Vietnam? I mean, at this point, was this right before Watergate had happened?

What would this have been? No, the—

Before the break-in? Watergate was what, April, spring of ’72?

Watergate starts—the word was out there rumbling around, and the papers were sniffing at this, as I recall it, so that part of it was the administration is in trouble. Nixon’s in trouble, and he’s probably asked the departments and people close to him, We’ve got to find some stuff that makes us look good and offsets all this publicity. We’ve got to find things to do. Lee was counting on that to carry it through the White House, and Mills’ ambitions to carry it through the Ways and Means Committee. We didn’t have an answer to Russell Long. He’ll remember the timing of all this and everything.

Was he counting on a Democratic win? Or was he counting on, if you look at ’72, regardless of the win, he wanted to get it through before then because he felt that the President was already in trouble, looking for things to do—hit him while he’s down—little realizing how much farther he was going to go?

Yes, probably all of that. Either way, I can just see him thinking about scenario A and scenario B. But from where we sat—we, meaning the staff; and I think this is true of Kennedy too, although he’d have to let you quote him on something like this—we had concluded that the Committee for National Health Insurance was just really going for pie in the sky. They weren’t in touch with how hard this was going to be. 

I was the guy who went to their meetings—Lee went once in a while—and I really couldn’t make an impact in the direction of what I would call realism. You almost felt like taking candy from a baby, because I’d go in there and I’d say, But guys, this, this, this, and this. And these guys, who were really smart, able pediatricians, are out there working in the field saying, But you can’t do it that way. If you want kids to be healthy and you want the country—and where do you want to put our money? We ought to be putting it in this and this and this. And you’d listen to it and you’d say, Well, he’s right about that. 

And then you’d go through each of these things, and they’d have thoughtful reasons that it’s that way. Then you stress the political situation, and insist politicians are saying, But we’ve got to get these costs down. Well, but the costs aren’t going to be high, because we’ve got this system, they’d say. And you say, But people aren’t believing that we’ll stick with it because it’s the Government. We couldn’t get them to move. So we needed something like an end run. We needed some way to get through this. We needed an opportunity, and that’s what the Kennedy-Mills thing was; it was an opportunity.

Okay, so why didn’t it work?

I think I might have mentioned at that meeting—I can’t remember—that we had gotten to the point where Mills said—we had the bill pretty much a draft.

Now, at this point, you had a draft bill that you’d already retreated on. It remained universal, right?

Right.

It remained comprehensive.

Right. We thought we had those, although the comprehensive part, they probably didn’t want deductibles and co-insurance on any of the preventive services or whatever. There may have been things like that that they also objected to. If you sat Rashi down and said, What were the problems with Kennedy-Mills? and he could think back, he’d probably list some more details.

Okay, but at that point, were there co-insurance and deductibles on things other than preventive?

Oh, yes, there were, because we just had no choice.

That was the retreat. Now, was that in there because Mills wanted it, or political reality?

It was political reality, and I can’t remember whether—

Did it come from the Nixon administration?

Oh no, not yet.

So this is your assessment, and probably at the same time with Mills, as to what was going to be able to get through, and it was going to take—

Well, it was their assessment. Remember, this is funny season, as they call our Presidential—

It is funny season already.

So Mills is looking at it, and Kennedy is looking at it with one eye on the getting it through and the other eye on the politics of the campaign and so forth. So we had an agreement that was good for the campaigns. And how serious an assessment Mills did of its political viability, I just don’t know. I’m not even sure Bill Fullerton would know, but it would be fun to ask him that. But Mills never would have talked to Bill. Our dynamic with Kennedy, our staff, was so different than he with his staff. I mean, Kennedy and I went to the meetings together, and Mills went by himself.

He went unstaffed?

He went unstaffed. So he’d sit across the table, at the head of the table, and Kennedy and I would sit, and he would invariably throw us with some approach or idea that we hadn’t thought of and I had not briefed Kennedy on. Like, one day he got tired of talking about the details—and not that he’d talk much; this was the last five or ten minutes of an hour-long meeting—and said, Why don’t you just take all the stuff in the bill that has to do with how we pay doctors and hospitals and how we organize them and what gets covered and what’s better not to cover and so forth, and I’ll take care of the part of how we keep costs down and raise the money for it. How about that, Ted?

Wait. Run that one by me again.

He called it the organization-and-delivery part. So he says, Senator, you take the organization and delivery part, and I’ll take the financing part. I hadn’t spliced the bill out in my head that way and neither had Kennedy. So Kennedy looks at me, and I, knowing how vague those terms were, said, I think that would work, Senator.

Yes, right.

And Mills just thought that was fine.

But that was his bailiwick. His bailiwick was, how do you get through money bills?

Exactly. And that’s what he wanted to do.

How did he get through tax bills?

So he was tired of this—doctors, and dealing with doctors and hospitals, and organization, and HMOs [Health Maintenance Organization], and all that stuff.

Because actually those are traditional authorizing committees’ things, which Ways and Means is, but those aren’t taxes.

That’s right.

Those are, how do you implement these things? Not, how do you pay for it?

That’s where he was, and he was looking for a vague division because he didn’t want to haggle through all of this, you could tell. In fact, having said that—we’d meet for an hour. Ten to fifteen minutes would be on the substance of the thing, and the other time would be on, Well, do you think we could get so-and-so to support it? I hear he’s got a problem at home, and so on, and, He’s running, and the unions are—or the AMA— They were incredible, both of them. They knew everybody’s political situation. So that’s where the strategizing was going on.

They stratigized on the politicking, and both of them knew—

How to play their chips. And, in fact, Mills loved that word.

I’m sure he did. That’s what Ways and Means is all about.

But we had maybe five, I guess, meetings. They all blur together. I’d get back to the office, and within five minutes the phone would ring, and it would be Bill Fullerton saying, What happened? [laughs] And I’d tell him as faithfully and carefully as I could what Mills had said, knowing any other course would have been a disaster. And he knew Mills’s jargon. Oh, I know just what he means. Oh, yes, I know what he means. Well, I’m going to see him later today, and I’m sure he’ll give me more details, and he did. But in the meantime, we may have already gotten together and started doing something. I told Kennedy this, and he couldn’t believe it. He just couldn’t believe.

I mean, that’s antithetical to how Kennedy operates.

And Mills, he just lived that role. 

The godfather of taxes.

He’s a smart man.

In many ways, some not.

Anyway, the thing collapsed. And where did the pressure on money come from? Kennedy was really painfully aware of these cost numbers. I probably told this story. One year, when we were resubmitting the bill—and I can’t remember which submission this was—it had crossed the hundred mark. I can’t believe it was $100 million. It must have been $100 billion back then.

No.

It wasn’t? Maybe it wasn’t.

I don’t think so, because I think the initial costing of the first bill in ’70 was something like $3 billion, $3 million. I mean, it was, like, a ridiculous number.

See where they were going to use all the money.

I mean, I remember looking at the number thinking—

Well, bear in mind, it was a long time ago.

Yes, I know. A million here, a million there, and pretty soon you’re up to real money. And now it’s a billion here, a billion there, you’re up to real money.

Plus the healthcare system, the costs had been going up double digits for so many years. It’s been 36 years. Double-digit inflation annually for 36 years, you can easily go from $100 million to $100 billion.

But there was initially a very—

A very low number.

It might have been a billion, but I remember looking at the numbers going, This is remarkably low, and the stuff I was reading said—and this was really low compared to how Medicare costs had already gone up—that it was a real underestimation.

Kennedy was sensitive about that. I remember one year when we were getting ready to resubmit the bill, we’re out at his house, and Rashi was there, and I can’t remember who else. There were three or four people. And I was leading this, Here’s what we’ve done, here’s the way it looks, and here’s what it comes to. The number, we’d breached 100. Whether it was a million, a billion, or a trillion, I don’t know, but we breached 100. Kennedy said, What? And I repeated it; it was 103.7 or something. He said, Stan, I can’t say 103.7. I just can’t say it.

Psychologically those are huge.

He said, I don’t care what you do. You just find some way to take it apart. I never want to hear that number out of your mouth again. And I said okay. So he was painfully aware of it, which means he was getting people like Long on the floor saying, Ted, do you realize how much this is going to cost or how much Medicare is going up? Are you really serious about this? He was feeling that heat from somewhere. So he was feeling it. I am sure Mills was feeling it; since Medicare, they were looking at those numbers every year too. I can’t remember, it probably was Bill coming in saying, I just don’t think we’re going to get the chairman to go for this unless we can whomp three-quarters of the costs out, and the only way I know to do that is deductibles and co-insurance. And that’s true. That’s where all the money—

So it was Mills who insisted on the deductible?

It could have been, but Kennedy understood. I’m not blaming it on Mills.

No, I understand that.

And the insurance industry—you can’t just dismantle an entire industry and say the Government’s taking over their work. Can’t we just contract with them? They’ve got all those computers out there. They process millions of claims. They’re already doing it for Medicare. Can’t we do that here too?

So they would have objected because they saw themselves being cut out?

Yes. They would have said, This is one of the few times—

Even for the processing?

—in American history that the Government has just taken over an entire industry and put thousands of people out of business and unemployment. I’ll bet you there were very few unionized people in the health insurance industry.

Really? What makes you think that? So let me go back to Nixon. If the calculation at the time was, there’s a weakened White House; Mills is running; we’ve worked out a deal where we’re giving Mills something; if you get it through Ways and Means, it then becomes an issue of forcing Nixon to sign it.

Forcing it through the Senate.

And the issue from my standpoint is, all right, how are you going to get it through the Senate? But let’s skip Finance right now because it didn’t get that far.

We didn’t even get it through the House, yes. We didn’t even get it through the Ways and Means Committee. The only feedback I have on that is—and I’m a little fuzzy on what came first, second, and third here—but Bill calling me and saying, You’ve just got to hear this. Let’s go out and have lunch, or whatever. He said they had had this markup session coming on the bill, and Mills had been doing his homework, which meant he was talking to everybody. 

Bill said he had been expecting to meet the chairman in the hearing room, and he had all this stuff put together for fallback positions and compromises and how we could handle this—this whole notebook. Bill was really organized, with the tabs on the notebook. Kennedy’s way was to say, Did you hear that? And you said yes, and he said, Did you know that was coming? I’d say yes, and he’d put his hand back, and in his hand you’d put the papers, and he would look them over. He didn’t want a notebook. You had to be right there thinking right along with his thinking and putting it in his hand. Mills was obviously a lot more private and a quiet, to-himself kind of person anyway. 

Bill said, I had all this stuff ready, and I went in the men’s room and there’s the chairman. I walk up to him—and we have adjoining urinals—and I said, ‘I’m all ready, Mr. Chairman. I’ve got all this stuff. It’s up there in the hearing room.’ And he said, ‘Ah Bill, I need to tell you, I’m not even going to bring it up.’ I said, ‘What do you mean?’ He said, ‘I’ve done everything I could do, Bill. I have talked to everybody, and I can’t get the votes, and I know I can’t get the votes, and there’s no point in bringing it up.’ And that’s the way Mills operated. He handled it all out of the room, and if he couldn’t get what he wanted, it would never get brought up.

Well, but that’s political reality. Things don’t come up if you don’t have the votes.

Not everybody does that kind of homework. Not all chairmen do that kind of homework. They leave a lot of it to be argued out and fought out in the room. Bill walked back to the office and sat there five minutes and called me and said, Stan, it’s dead. I said, What do you mean it’s dead? He said, This is what the chairman just told me, and I said, My gosh. Well, surely we could—did you tell him, did you tell him to— He said, Stan, there’s no sense in me arguing with him. He knows what he’s doing when it comes to this kind of thing so much better than I do. So if he says it’s dead, it’s dead. We couldn’t even get him the unions, see?

But before we get to the unions, where did Nixon fit into this? Did that come after this was—

I think, as I’m recalling this, that came after that washout, because we were trying to get some life back in it with the administration. Now, I might be wrong about that.

I’ll ask Stuart Altman next week.

It could be what Mills said already included the administration’s input. That unfurled; the administration involvement unfurled. And it’s really curious, just about the way the Mills thing unfurled, because Stuart and I were together on a panel out in New Mexico. I can’t remember the panel or what we were doing, but it was one of those things that sounds so wonderful when you say yes to it. Then you end up getting squeezed, so you fly in an hour early, and you rush out and you do it, and you rush back an hour afterwards, and you don’t even remember where you’ve been. 

The only thing I remember is, Stuart and I had a great time arguing with each other. He surprised me with some of the things he said, and I guess I must have surprised him with some of the things I said that we were working for and on and so forth. We ended up—I can’t remember if deliberately or not—taking the standard tour that they made available of this mountain, this big, tall mountain outside of—

Sandia Mountain.

That’s what it is. So we decided, That sounds like fun, and we had enough time.

Up the cable car.

That’s what it was. And we had time, so we went up there, and we started talking. He said, You said you were really surprised. I said, Well, yes, I was surprised at what you said. He said, Well, do you think it would ever be possible to such-and-such and such-and-such, and one thing led to another. We sat beside each other on the plane and ended up with pads out, saying suppose this and suppose that. And then when we got to the end, we were both, I think, incredulous and joking about how it must have been the high altitude, but he would take it back and show it to Cap [Caspar] Weinberger. I went back to the office. I don’t think I even said anything to Kennedy, and probably not to Lee, because I thought, sure, this was two staff people with a shortage of oxygen.

Excess of zeal and a shortage of oxygen.

Stuart called me and said—I got about ten minutes into it—and he said, Well, if you could make it come out to so-and-so, in terms of the budget impact, or somewhere around so-and-so, we might be able to go for it. We might get the President to think about this. He was just incredulous, as was I. Then I talked to Lee Goldman, and I can remember Lee going, with his cigar, Aha, I told ya! Because his view was that the President had put the word out to all his secretaries, We need proposals, guys. All those headlines, all the press attention, we need something to feed the wolves out there. So I called Bill Fullerton, who was—I think he’d already gotten a call. I think he had already gotten a call and knew about it too. The idea was, Well, let’s get together and just start, and who knows where it will go? 

And then we came up with the church idea. We had, I don’t know, three or four meetings over there. As usual, Bill came from Mills’ staff, I came from Kennedy’s staff, and there would be three to six people from the administration there, all from HHS. The highest ranking was Ted Cooper, who was Assistant Secretary or Deputy Assistant Secretary. I can’t remember. And Frank Samuel was, I think, the legislative guy, and Stuart.

What was Stuart’s position at this time?

He was head of the Office of Planning and Evaluation. I can’t remember who else, but there were one or two others who came and went. We just brainstormed and floated ideas. It got—you get so good at this; your skills get refined when you’re up there. You know when you aren’t going to be able to strike a deal.

Yes, you know.

I could tell, just by the chemistry in the room, that they couldn’t stretch and we couldn’t stretch far enough to make it. See, now this is starting to come back. I remember saying, Guys, the unions are already pillorying Kennedy for putting deductibles and co-insurance in the damn bill. Now you want to do X, Y, and Z. And they realized too that Kennedy is not going to be able to stretch far enough to do business with him. In the meantime, I already knew Mills could go there. I mean, Mills really was interested in the financing and not much else. 

The time came for me to do a two-week vacation, and I had this vacation down at the beach. I knew we weren’t going anywhere with this. I called Bill when I got back to the office after the last meeting and said, Bill, I’m going on vacation next week. He said, I don’t blame you. They continued meeting, as I knew they would, and they came up with a proposal. I can’t, for the life of me, remember whether that proposal got turned into legislation and given a number and so forth, or whether it was—when I got back, and I remember when I was on vacation, I remember hearing all this awful stuff. The Nixon stuff was really in the fire then, and we were watching and turning—

This was in the summer?

This was in the summer, but in August.

Yes, things had started to heat up.

Yes, and we were looking at the TV to keep up with the disaster. When I got back, I called Bill and I said, Okay, what did you guys work out? He laughed and said, Well, here’s what we’re going to try. But I can’t remember now whether that was the bill that Mills actually tried to convene a markup on or whether it was an earlier Kennedy-Mills bill that he tried to convene the markup on. It could well be, he could have had the markup, with Kennedy-Mills being the written agenda but this new set of agreements being the package they were going to proceed on. So I don’t know what the legislative history or the copies of bills would—Kennedy couldn’t go that far.

I don’t have enough detail in my timeline.

It gave a much bigger role to the health insurance companies, and I believe it mandated coverage from employers.

Well, now, that’s another issue.

That doesn’t sound right, though, for the administration.

It doesn’t.

But they had to do something, and that, at that point, looked like a more conservative thing to do.

Well, it would be.

Then to put it all through the treasury. It was really curious. Frank Samuel, Stuart Altman, and Bill and I and the other folks who were in and out of that had the best professional time and got to enjoy each others’ professional works so much. Just that we knew we couldn’t bring our principals, as we call them, because of their constituencies. We couldn’t bring them close enough. If the unions had let Kennedy go there—and Kennedy, of course, reviewed all this. I wouldn’t have dreamt of going on vacation without going and saying, Here’s where it stands. And I’m sure it was his words, My God, I’ve already done this, this, and they’re ready to crucify me out there. But if they had let him, that would have been a different thing.

Why did he—he wasn’t running. So ’72 he wasn’t running.

For the Senate, you mean.

It wasn’t a Senate election year for him. He wasn’t running for President.

He really was. I mean, they—

Well, I know he really was. Was it a calculation on his part that he could not afford to alienate the unions by going beyond where they were willing to go at this point, where he’d sacrifice their support, ultimately, for President?

The latter one you’d have to get somebody closer to the—

Right.

I mean, I saw him at that meeting tell Biemiller and those other union guys, Well, you’re just going to have to call me a traitor if that’s what you think, and usher them out the door, and he went ahead with Kennedy-Mills. So he’d already thrown down the gauntlet with the unions and said, You’re being unreasonable. You can’t change the Senate. This is the best chance we have. I’m going for it. Now, partly what I’m sure he was doing was reading the will of, as he saw it, the union members, the rank and file, and the guy on the street out there and saying, They’re going to thank me for this regardless of what you do. 

I think I might have mentioned that he went to his round of union speeches shortly after that, the convention speeches, when everybody has these—he went to Atlantic City, and Paul Kirk said that they went into this big auditorium and Kennedy wouldn’t come in backstage. He likes to walk in the back of the auditorium and go right through the crowd. Paul said, So the guy up there says, ‘Has Senator Kennedy arrived?’ The doors open from the back and he walks in, and Paul said all these union leaders up there were glaring at him like they wished he’d melt, that they were going to kill him with their anger. As soon as he walked in the door, a couple thousand delegates were on their feet screaming and cheering and chanting. He walked up on the stage, walked up to the lectern, and gave his talk with them yelling and cheering the whole time. And then when he was finished, he left. So there was a question of whether the union leadership could really speak for the unions and carry the votes of—

But this is a critical question, and we will ask him himself, but if he’d already thrown down the gauntlet with Labor by going ahead, over their opposition, on Kennedy-Mills, which had given away, from a union standpoint, deductibles and co-insurance and had brought in the insurance companies, why, then, was he not willing to go further?

I can’t remember if it was over the mandating issue, if that’s what bothered him the most. I don’t even remember talking to the unions about this. I think there was no point in talking to them about it at this point. I mean, if they were going to reject it for what we had already done, this was so much worse. The only reason I’m hesitating about saying it’s mandating is that later on, he put in that mandating bill, which the UAW funded the development of.

Times change.

I remember it being—I guess this is what a politician does, is sense, well, how far can I go? How far can I push these guys in their own best interests and trust they’ll figure that out and I’ll still carry the day? Versus, where do I cross to the point where I don’t have any support from them? The truth is, without them he had no leverage. That’s why I couldn’t drag those folks in the church basement around to doing more of what we wanted. We knew we didn’t have the unions already. Are you with me?

Yes, and this is why I go back to that initial question: was there a coalition like there was in the civil rights movement that would have allowed you to say, If we lose Labor, do we have enough else out there?

Rank and file.

Okay, let’s distinguish between rank and file and leadership, because you’re raising a really important question about that convention. Maybe the unions weren’t in sync with their rank and file. And ultimately, who votes? Rank and file. But who gives money? Leadership. But were there others that Kennedy could have carried with him that could have been powerful enough to have backed what he wanted to do, absent Labor? And maybe it was a calculation. Well, I can’t speak for him, so I don’t know. Was there somebody else out there, or was that really the heart of it?

I think, to move Mills and the administration. You have chips to play in that game, that three-way game. It would have had to be a major money party. It would have had to have been Labor.

He didn’t have the money.

Or he just didn’t have the leverage. If it were a very popular, broad based—and around the table, the church lobbies were there, which—church lobbyists are so blasted soft headed.

Yes, Sorry, but I don’t have any money.

They don’t have any money, yes, and the leadership doesn’t speak for their congregations, among other problems. No money, no votes. They’re soft headed. 

I used to tell church people who would tell me they had just come back from Washington, and it was so great. They had 16 churches represented. They went in to see Senator So-and-so, and they talked to him, and they’re sure he heard them. And I said, Let me guess. He got a photographer and took his picture with all of you and said he’d send you a picture so you can put it all in your newsletters, right? He said, How did you know? 

Because pictures are cheap.

That was your payoff right there. That’s what you get.

Pictures are cheap.

And they happen to help on both sides, my picture being out there in your publication looking friendly to your leader. Anyway, there wasn’t any other power base. All our physicians were these guys who were the idealist physicians who all the other physicians respect and think are wonderful, but they aren’t players in the power games. So it took the unions.

So the money was basically aligned on the other side, hardly surprising, because the physicians and the hospitals had the money, and the insurance companies had the money.

And Kennedy had leverage with Mills when it came to the political aspirations but not with the administration, so when it came down to getting something, that’s the only leverage. Once the unions were out, that’s it. I remember Bill just was—he’s very professional, but he just was amazed. He says, Even the unions visited the chairman and said they are against this bill; they’re opposed to this bill; they’re actively lobbying against it in the House. There are good politicians and there are cynical politicians.

Do you think Weinberger wanted to see a bill? Did he want to see this enacted? Did you have any sense about that?

I bet he was trying to please the boss. I think he did. He wanted something to take to the White House as an opportunity, and probably did. I mean, I’m sure that the outlines of that proposal got all the way to the top—not understood, but the question was asked, Who’s going to like us and who’s going to hate us for this? and, Would this really work?

Because Nixon had a bill. Nixon had a National Health Partnership bill, so somebody on the administration end—okay, Nixon had, as early as ’71, he had a [reading from papers] National Health Insurance Partnership Act of 1971 that would require employers to provide private insurance for employees and their families and would provide federal family health insurance for low-income families. The plan will be financed through employee/employer premiums, with employers paying 75 percent of the cost.

See, that shows you how hot an issue this was.

A $100 deductible and 25 percent co-insurance. Cost to the federal taxpayers will be approximately $3 billion.

$3 billion.

And Kennedy called this, ‘Poorhouse medicine, a marriage of convenience with the AMA.’ His plan would have cost an estimated— this was Kennedy’s plan in ’71— would have cost an estimated $60 billion. Okay, there’s where you get from sixty to a hundred.

Yes, that’s where I was.

Would have no deductible or co-insurance, abolish Medicare and virtually eliminate the private-health-insurance industry. That’s our research associate’s summary of it.

That’s probably pretty good, and that’s probably Stu Altman’s work.

But this goes back to ’71, so this is actually a concern in the Nixon administration.

This predates our Kennedy-Mills effort, right.

It predates your stuff, yes.

So that was already there, and Stuart was probably out there describing on that panel what they were proposing, and I was out there talking about what we were proposing, knowing what was going on with Kennedy-Mills, and probably said something about, Well, deductibles and co-insurance, maybe you could talk about something there. There was some overlap, but that’s probably what the Mills and administration compromise involved with mandating it.

I mean, in essence, when you look at this, this is much of what comes out under the Clinton plan.

Oh, yes, right.

I mean, now simply mandating that it be provided is where it’s at.

It’s so hard to keep track of what’s Republican and what’s Democrat in this, as the cutting edge has moved because of changes in the healthcare system.

Well, that’s right, and that’s why in tracking this, before we have these lengthy discussions with Kennedy, we’ve got to be clear in our own minds about what happened, why it happened, so that we can ask him the critical questions that only he can answer.

Because he’ll recall some things, but his memory won’t be as good as mine on this kind of thing. He’ll recall some other things, however, where I don’t even know about, but you can’t look to him to clarify that kind of—

No, but we can ask him about the political calculations, which is what we really need.

Exactly, and a good one for him is, What was going through your mind when you told Andy Biemiller and that union crowd that you were going to go ahead with Kennedy-Mills? That’s a good one. What were the political stakes? Because I gather they said they were going to really call you names all over the country if you did this, and they subsequently lobbied in the House against consideration of the bill. What was going through your mind? You can recall to him, The veto-proof Congress was their pitch. I gather you asked him to say what Finance Committee Members you were going to get defeated and who would take their place. 

I don’t know. I know what he showed. What he showed was really a sense that they’re being unreasonable, and he’s not going to put up with this jerking him around. What may have been happening—and this is with the benefit of a lot of hindsight—this may be him realizing that they were never going to compromise on this issue, that it wasn’t an issue you could legislate. Do you know what I mean?

Oh, yes. I mean, ultimately the final question about national health insurance is: can it be legislated in the way that Medicare was legislated?

And back then it was different. Now, frankly I think it’s near impossible. Back then, there was a chance, but I think the unions—

Well, let’s skip way ahead and illustrate the perils of legislating something, and that’s catastrophic healthcare. Congress legislated, Okay, if all we can do right now is to prevent people from going under by providing them with coverage at every end and prevent that with catastrophic healthcare, we’re at least doing something good. And look at what the public response was to that. I’ll never forget that one.

Well, that was Long’s proposal at the time, in the early ’70s, which was a catastrophic. We called it catastrophic only.

He had a catastrophic only proposal then?

Yes he did. There are no new ideas in the last ten years.

You’re right. At least in foreign policy we have some new ideas, but not in health.

That’s one of our problems right now, that nobody is working at new ideas. I keep writing foundations. But Long wanted catastrophic, and the reason it was called catastrophic only is that the unions in this movement, who were trying to get more, saw it as selling out, as selling short. We can get more than that for our chips. What they’re really doing is offering us a sop. But Kennedy, at some level of his political consciousness, decided, These guys are never going to let me legislate something for them, never going to let me compromise something. It’s not a real legislative issue. Maybe he decided, This is a rhetorical issue, a PR [public relations] issue, a get elected President of the union issue—which had to have been an awful realization, because he put an enormous amount of effort into this. Kennedy is very pragmatic. He wants to do something.

Think of how the political landscape had changed in being able to get through Medicare in ’65 for the elderly and not being able to get through what would seem to be the logical progression, when everybody is saying, The time has come.

That’s right.

Which goes back to you saying, Labor really killed it.

You really could envision if Labor had said, See what you can get, Ted. And he could have gone into those negotiations with Mills and the administration with me saying, Look, guys, I don’t know, what can we do here? Maybe we could do this, and then I could come back to Kennedy, and then Kennedy could get on the horn and say, Here’s what I’m thinking of doing, and seeing how far he could push them. 

Kennedy may have exercised some leverage over that ultimate Mills negotiation. It may have been a three-way bill, although it wouldn’t have changed the AMA’s opposition, or the AHA’s opposition, or the insurance industry’s opposition. It might have equipped Mills with some things he could say, like, What do you mean we’re putting the insurance industry out of business? to a colleague. Do you realize they’re going to do umpteen billion dollars worth of business handling the claims and all the activities just like they do under Medicare? We might have been able to equip him with some arguments that would have brought a few of his colleagues along. But we didn’t get a chance to do that. I went on vacation—may as well have. Kennedy could have gone on vacation too. It’s embarrassing sitting there with these two sides dickering and me not even being able to say anything except, Well, just let me remind you that so-and-so and so-and-so—

By the time you get to ’76—and I think we can hold this for another time—the initiative has really shifted to the administration. It then becomes, in some ways, a White House—

First of all, the initiative had shrunk. And I have trouble sorting this out. When Joe Califano came on board as Secretary, he started recruiting for someone to produce a national health insurance bill, because the White House had said they were going to have a proposal. And he called me and offered me the job. I went down there. Here he’s talking to the scarred veteran of the process, and he’s, incidentally, a really convincing person. He’s one of these arm-over-your-shoulders, slap-on-the-back—I said, Let me just ask you this to start with: how much money will you put in the budget for this? And he said, $12 billion.

And you’d breached that $100 billion.

I said, $12 billion? You’d be lucky to buy a catastrophic-only proposal for that. He said, Well, I don’t know what it would buy, but we feel like— and out comes the rhetoric of the budget makers, and, If we do it right, and, You do this, and, We can eliminate corruption and— whatever they call it— and cheating and—

Fraud.

Fraud, right. We do this, and I said, Mr. Secretary, you can’t write this bill for that kind of money. He said, What do you mean? I said, You can’t, and he said, Well, maybe we could put together something else. I said, Not a national health insurance bill. There are things that might be done that you may want to do, but it’s not going to— He said, Under the flag of national health insurance, we could do some of these things. I said, You don’t want a flag. You know what? This isn’t going to work. You really believe something can be done, and I shouldn’t deter you from running at this, even though I think there isn’t a snowball’s chance in hell. You need somebody who can be as energetic about it as you are. We shook hands, and he reminisced about how he’d done that once, he’d turned down a great job when somebody had offered it to him because he just didn’t think it could be done. 

I disappeared, and later, Jim Mongan tackled it, the guy who went on to be president of Mass General. He did a good job. Jim is a very low-key, levelheaded, smart, listen-to-all-sides kind of guy, and he gets less frustrated than I do. He put together their combination, what was the CHIP [Children’s Health Insurance Plan] bill—CHIP, CHAP, children’s health insurance plan plus catastrophic, something like that.

Something. I can’t even remember.

And it attempted to improve the coverage for kids and provide a catastrophic plan. 

But the wind was out of the sails. It wasn’t going anywhere. It wasn’t long after that visit that somebody called us, or I had formed that little consulting group with Bill Fullerton from Mills’ staff. Actually Bill formed it. And Bill recruited the smartest guy I’ve ever met about federal law and Social Security and health legislation, Irv Wolkstein, who had been at Social Security and drafted most of the regs—and the three of us had this thing. We thought maybe the time was ripe to write another proposal for Kennedy on this subject that did mandate coverage, and that’s when we put together the healthcare for—actually we proposed this to Kennedy. We were just starting a business. 

[interruption]

It just goes on and on, all the different things in that time period, because it is such a fruitful time period. There is so much to talk about.

I honestly think, when we wrote this next proposal, the Healthcare for All Americans Act—I can’t remember if Ig Falk was still alive, but I think so. Somehow between us and Kennedy’s office, the UAW got contacted, and Kennedy asked them to fund our efforts. It took a year-plus to write a new piece of legislation and pull together all the numbers and background and documentation for it. We did everything. We wrote the introductory speeches. We did what you’d do if you were on the staff: we put together a really thorough package. 

Woodcock said they would pay for it. So Woodcock knew—and this was going to be a compromise proposal. Mel Glasser, who worked for Woodcock, had to have been deeply disappointed. He’s such a wonderful man. And I just know, every time we produced a draft and sent it—we didn’t get much comment from Mel—that he went in and told Woodcock, You’ve got to stop this. This is worse than Kennedy-Mills ever was, which it was, from their perspective. But Woodcock funded it all the way to the end. 

The Committee for National Health Insurance got convened—that’s what Rashi was talking about last time—and they were looking at portions of the bill and talking it through. He obviously remembers it fondly, and as a really professional—it was really a smart bill; it really was. It really had the best minds of the time working on it. It was mandated; it set up multiple choices for every person so they chose among the plans; it was heavily Government subsidized, funded; everybody was covered. And when we finished it and Kennedy introduced it, the Healthcare for All Americans Act, maybe S.1143 or something, he got mail. I got phone calls from Alain Enthoven and Paul Ellwood. I don't know if you recognize their names as the—

Run them by me again.

Paul Ellwood, who thinks of himself as the father of HMOs. Alain Enthoven is the economist at Stanford, who’s the free-market man and the source of many of the ideas on competition. He’s the great guru on market competition and healthcare. They called—and I knew these guys from being on panels with them—saying they just can’t believe we’ve achieved in this bill what we’ve done. My God, they are almost ready to support it, because it had multiple choice and employees could decide among plans. As they saw it, the one that was doing the best job would end up getting more employees, and that’s what we need. It was as decentralized as we knew how to make it. The Committee for National Health Insurance approved it, Kennedy filed it, and nobody paid any attention to it because there was no wind left in the sails. 

After that Congress—I guess maybe halfway through that Congress—we asked Dick Froh, who was our contact then on Kennedy’s staff—I’m sure you’ve come across that name—what he wanted to do and what did the Senator want to do? He called back and, I’m sure, got this just right, that Kennedy had said, Nothing’s happening and nothing’s going anywhere. What we ought to do is go back to our basic flagship, the Health Security Act. And they re-filed the original bill, because there’s no point in laying a compromise on the table when nobody’s compromising. All it does is give away your marbles. And that was really the end. The Clinton thing, when it came along later, was trying to take these semi-dead embers, pile them all in a big pile, and get them to burning again. Everything they piled had been fought over so many times, and the positions were so staked out. Are you with me?

Oh, yes.

They just couldn’t get any enthusiasm.

But what they had against them was Harry and Louise.

Yes, the PR was devastating.

The PR was devastating.

But they wouldn’t have been supported by any of the major constituencies. If they had managed to get the public—and I mean the grassroots, the voting individuals—to go in on it—and we’ve never been able to do that on this issue, incidentally. We used to scratch our heads on this and try to think—and Kennedy did those field hearings with the whole idea of getting a lot of press and coverage and getting a lot of public momentum. I have some theories about that, about why the public doesn’t get it on this one. But we couldn’t, and we just never did, so we ended up dealing with institutional interests. 

To show you how dead it is—gosh, when was this? This was probably five years ago. I can’t remember what I was doing, but Dave Nexon called and he asked me—they were working on something; I can’t remember what the specific issue was—he asked me if Kennedy had ever supported mandating or filed any bills, and I said, Well, yes, there was this national health insurance proposal that mandated, that also had multiple choice. He said, Multiple choice, is that right? I said, Yes, it was the Healthcare for All Americans Act. He said, Somebody told me that he’d done that. I said, You don’t have it in the files, right? He said, I’ve never seen anything like that.

Really.

This is the Hill. So I told him what I thought the number was and that they probably ought to go to the Library of Congress, and if they did a search—I think it was Healthcare for All Americans Act—and they tracked it down—but that’s how dead it was. I mean, it doesn’t even stay in the corner of your desk or in the back of your file. It just went off the radar screen. The public doesn’t get jived up about this. They just don’t vote based on this issue. They say they are going to vote. 

A theory, for your quick benefit, is that if you ask people how much they pay for health insurance premiums in the country, most of them will answer, on surveys, something like, Well, it’s about $35 a month. And if you ask them, To get everybody covered, how much additional taxes would you pay? Circle one: $10 a month, $50 a month, $100, everybody’s in the $10 category, because all the money is going from the—not all of it, a big chunk—from the employer to the insurance company. And if they notice, they’ll see their share, maybe, on their paycheck if they read the check stub right.

But they don’t look at the check stubs.

They don’t look at the check stubs.

It’s just gone money.

And their whole notion about what it costs and who’s doing what—and the Government picks up bad debts from hospitals. They have a special allowance for bad debts for hospitals in the Medicare calculation and so forth. So the average person just is out of the loop, and they only know the financial pressure of people who are left out.

They’re aware that there are uninsured people.

And they’ve got an idea that a lot of them are of another ethnic background than they are, or the majority of them are.

Which actually isn’t the case. It’s the work force.

That’s right. They don’t have a sense of commonality with them. It’s not their problem. That’s the story about that.

Well, this has been fascinating, and we have lots—

Would it help you if I looked at some of the detailed ones before we meet again?

Yes.

Some of them I might just be able to say, No, yes, 25, 112, or, Ask Lee, or, Ask Paul.

Thanks for your help.