Chapter 1.C.1--Insurance and Regulation

The following is a useful timeline and summary of major federal legislation affecting health care. It was produced by Prof. Kenneth Wing at Seattle Univ., in connection with his Aspen casebook, The Law and American Health Care (with Michael Jacobs and Patricia Kuszler). This version is reprinted from the 1999 Supplement to Aspen's Health Care Corporate Law: Formation and Regulation (M.Hall, ed.). Another excellent timeline that provides more of an historical narrative can be found in the Appendix to John G. Day, Managed Care and the Medical Profession, 3 Conn. Ins. L. J. 1, 60 (1997), which is on the LEXIS database at LAWREV/CTINSL.
1946 Hospital Survey & Construction Act (Hill-Burton program) assisted states in constructing hospitals; 1954 amendment added long-term facilities, rehabilitation centers and outpatient departments; Hill-Harris amendments of 1964 set precedent for use of public funds to subsidize planning by voluntary health agencies. Terminated in 1974.
1954 Internal Revenue Code amended to exempt employer-purchased health benefits from taxable income.
1962 Migrant Health Act provided federal funding for health services for migrants; Appalachian Regional Development Act of 1965 supported projects to provide comprehensive health care for the Appalachian poor.
1963 Social Security Amendments of 1963, 1965 and 1967 assisted states and local health departments by paying up to 75% of the costs of maternal & child health programs.
1964 Economic Opportunity Act provided OEO funding for three neighborhood health centers in Boston, New York City & Denver; five others funded in 1965; 1966 amendment provided $50 million to develop Comprehensive Health Service Projects in urban and rural areas of poverty and inadequate health service.
1965 Social Security Amendments authorized Medicare and Medicaid programs.
1965 Heart Disease, Cancer & Stroke Amendments to Public Health Service Act created Regional Medical Programs to provide planning grants and operational grants for projects associated with the disease listed in act; 55 RMPs were approved. Program was replaced by 1974 health planning legislation.
1966 Comprehensive Health Planning & Public Health Service Amendments (also known as "Partnership for Health" Act) provided federal grants for state and areawide health planning and grants-in-aid to support health services.
1967 Early Periodic Screening, Diagnosis and Treatment Program (EPSDT) created to provide screening and health services for needy children under Medicaid.
1967 Federal government assumed licensing and regulatory authority over clinical laboratories.
1970 Family Planning Services & Population Research Act established nationwide program of family planning and research.
1971 Economic Stabilization Program (Cost of Living Council) initiated control on prices (including hospitals) which continued until 1974.
1972 The largest set of Social Security amendments in U.S. history passed by 92nd Congress. They added 1.7 million disabled to Medicare eligibility and expanded eligibility to include anyone with end-stage renal disease. Professional Standards Review Organizations (PSROs) created to review medical necessity, quality of care, and cost of Medicare and Medicaid services.
1972 Both presidential candidates (Nixon and McGovern) included broad national health insurance proposals in their party platforms.
1973 Health Maintenance Organization Act provided $375 million in federal subsidies over five years to prepaid group practices; all employers with 25 or more employees providing health insurance as a benefit were required to make HMO enrollment available where HMOs exist.
1973-1975 90 separate bills dealing in some manner with national health insurance were introduced in 93rd Congress.
1974 Employee Retirement Income Security Act authorized extensive federal control over employee benefits, preempting state regulatory schemes. Health benefits included within scope of legislation.
1974 National Health Planning & Resources Development Act created system of national health planning and development; eventually, there were over 200 HSAs throughout the U.S.
1976 1973 HMO Act amended to relax requirements for "qualified" HMOs; 1978 amendments extended HMO assistance program for 3 years; 1981 legislation eliminated almost all requirements. 
1976 Office of Inspector General created in DHEW to investigate fraud and inefficiency in all DHEW programs.
1977 During 95th Congress, Carter administration introduced hospital cost containment proposal designed to temporarily limit hospital revenues; no legislation adopted, but private hospitals agreed to undertake the "Voluntary Effort," a nationwide voluntary program to contain health care costs; effects of this effort noticed only for about a year.
1978 President Carter issued 10 principles for a "National Health Plan" which should "assure that all Americans have comprehensive health care." No action taken on these principles. 
1981 Omnibus Budget Reconciliation Act (OBRA) mandated significant reductions in funding for virtually all federal health programs; scope of PSRO federal certificate of need program and all other federal regulatory efforts reduced.
1982 Tax Equity and Fiscal Responsibility Act (TEFRA) mandated further reductions in many federal health programs; replaced PSRO program with Professional Review Organizations (PRO) program; mandated Medicare as secondary payer to any employer-sponsored health insurance; required DHHS to develop plan for prospective reimbursement of hospitals.
1983 Social Security Amendments (following recommendations by a bipartisan commission) enacted major revisions of Social Security financing that indirectly affected Medicare financing; included mandate for Medicare prospective payment scheme on a diagnostic-related group basis (PPS/DRG).

Several Reagan Administration proposals for stimulating competition in health care financing (e.g., eliminating the tax exclusion of employer-paid health benefits and vouchers for Medicare) considered but not enacted.

(Congressional deadlock over future of federal health planning program resulted in expiration of the program's authorization. Program was re-funded as part of a continuing resolution -- a practice that was continued until the program was finally eliminated from the FY 1988 budget.)

1984 Deficit Reduction Act included a number of amendments to Medicaid and Medicare designed to limit expenditures. The most notable amendment was a freeze on increases in rates of Medicare physician reimbursement for fifteen months and financial incentives to encourage physicians to accept assignment. The rate freeze/incentives were extended for an additional year in 1985.
1985 Emergency Deficit Control Act ("Gramm-Rudman") required limits on federal spending and a balanced budget by FY 1991. Medicaid and maternal and child health program exempted from required cuts in spending. Medicare reductions limited to no more than 2% per year.
1986 Consolidated Omnibus Budget Reconciliation Act (COBRA) and Sixth Omnibus Budget Reconciliation Act (SOBRA) included a variety of changes in Medicaid and Medicare. Among the changes were the following: 

-- controversial "adjustments" in PPS/DRG reimbursement (e.g., raising reimbursement for "disproportionate share" hospitals and reducing reimbursement for medical education);

-- very limited increases in reimbursement for physicians participating in Medicare; a maximum ceiling on reimbursement for non-participating physicians serving Medicare patients;

-- federal penalties for hospitals that transfer poor patients or deny care in emergencies;

-- significant expansions in Medicaid eligibility for children and pregnant women.

1987 Omnibus Budget Reconciliation Act (OBRA) scheduled major reductions in federal spending including $6 billion (over two years) in Medicare spending reductions to be accomplished largely by limits on increases in physician and hospital reimbursement rates.
1988 Medicare Catastrophic Coverage Act of 1988 (MCCA) eliminated most cost-sharing requirements for Part A and added coverage for prescription drugs and a few other services, representing the largest expansion of Medicare since 1972. The revenues for the expansions were to be drawn from a surtax on the income tax liability of beneficiaries and an increase in Part B premiums. States required to buy Part B for eligible Medicaid recipients and to expand coverage for pregnant women. Although MCCA was enacted with virtually unanimous approval, the upheaval over the new taxes resulted in the repeal of the taxes and the new Medicare benefits in 1989.
1988 1973 HMO Act rewritten to allow experience rating by HMOs and to allow employers to contribute less to HMO plans than to indemnity options.
1989 Omnibus Budget Reconciliation Act of 1989 (OBRA 1989) included $2.7 billion in Medicare reductions. Most of the savings were achieved by delays or restrictions in the increases for PPS/DRG payments. OBRA 1989 also included:

-- authorization for resource-based, relative value scale (RB-RVS) reimbursement of physicians under Part B of Medicare (to be fully implemented by 1996);

-- limits on charges by all physicians to Medicare patients to more than 115% of Medicare payment and a ban on "balance billing" to all indigent Medicare patients;

-- authorization of "volume performance standards" that effectively allowed maximum limits on annual increases in Part B spending.

-- authorization to repeal "Section 89" of the federal tax law which prohibited employers from discriminating between categories of employees in health benefits.

-- a requirement that states provide Medicaid to pregnant women and to children within 133% of the poverty line. 1990 Budget Reconciliation Act of 1990 (for FY 1991) included:

* A series of Medicare reforms intended to save over $40 billion in 5 years including: an increase in the Part B deductible was raised from $75 to $100; annual increases in the Part B premium were scheduled through 1995 (intended to make total premiums equal 25 percent of Part B expenditures); and severe limits on annual increases and other adjustments to Part A and Part B reimbursement;

* A requirement that states provide Medicaid coverage for all children born after September 30, 1983 by the year 2002;

* A requirement that the states expand their Part B "buy-in" for poor elderly;

* Medi-Gap insurance regulation including limits on exclusions for pre-existing conditions, requirements for uniformity in policies, civil penalties for duplicative services, mandatory rebates if policies failed to return specified percentages of each premium dollar, and rules for "simplification" and standardization of policies.

1990 Legislation enacted requiring the overhaul of the FDA program for approving the safety of medical devices (originally authorized in 1976).
1990 National Health Services Corp reauthorized (through 1993).
1990 Program for payment of cost of childhood vaccines and compensation for victims of adverse reactions to vaccinations reauthorized.
1990 First major program of federal support for AIDS-related services authorized (and appropriated $875 million in FY 1991).
1991 Legislation enacted to limit the discretion of the states to obtain their Medicaid matching funds by accepting donations from Medicaid providers or through taxes on providers.
1991 1990 legislation amended to allow drug manufacturers to give discounts to Veteran Affair's hospital without giving same discounts to Medicaid programs.
1992 (No major health care legislation enacted.)
1993 Budget Reconciliation Act of 1993 included (a) various limits on coverage and reimbursement under both Medicaid and Medicare, and (b) a new $1.5 billion child immunization program.
1993 Legislation enacted to allow federal funding of fetal tissue research (effectively lifting prior ban).
1994 (No major health care legislation enacted.)
1995 Self-employed tax deduction for health financing premiums expanded from 25 percent to 30 percent.
1996 Major revision of federal SSI, food stamps, and AFDC programs enacted, but with only minor changes in Medicaid (although provisions converting Medicaid to a block grant were included in earlier versions of the bill.)
1996 Health Insurance Portability and Accountability Act of 1996 enacted requiring private insurers to offer group and in some cases individual policies to people who have had prior coverage, prohibiting the use of pre-existing condition exclusions, and imposing other requirements on private health financing arrangements. Other provisions of the legislation authorized up to 750,000 people (over four years) to establish tax deductible medical savings accounts.
1997 Balanced Budget Act of 1997 added new Part C to Medicare, expanding options for enrollment in managed care plans; scheduled $30-40 billion in reimbursement cost-savings; and set Part B premiums at 25 percent of program costs through FY 2003.
2001 Rules pursuant to Health Insurance Portability and Accountability Act, governing privacy and security of medical information and data, promulgated by DHHS.
2004 Medicare Moderinzation Act adopted, which provides prescription drug coverage and fosters partial privitization of Medicare

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