People Were Skeptical about Veterans’ Hospitals, Too: The Affordable Care Act and Health Policy Precedents

“Don't let them fool you,” President Barack Obama told attendees of the Disabled American Veterans (DAV) National Convention in August 2013. “No one is taking away your benefits. Your veterans’ healthcare is safe.”

A few months before his signature Affordable Care Act (ACA) was scheduled to launch, the president was offering those reassurances to beneficiaries of the Veterans Health Administration (VHA), the largest integrated health care system in the United States, and one of the country’s first medically focused entitlement programs.

His remarks made it clear that the ACA was only the latest iteration of government involvement in the health care realm. In fact, by the time “Obamacare” was passed, roughly 20% of Americans already had access to medical services via federal programs like the VHA, Medicare, Medicaid, or the Children’s Health Insurance Program.

None of those government initiatives came about without controversy.

The story of the establishment of the VHA provides insight into how major changes in U.S. health policy have materialized in the past. It also reveals that the ACA, while in many ways unique, is rooted in previous debates and policies.

During and immediately after the Great War, there was no guarantee that military veterans would have access to publicly funded health services. In the 1920s, a nationwide system of hospitals was established for former service members, in part, as a response to the failure of previous policies and to alleviate an economic and public health burden.

Similar conditions in recent years shaped the passage of the ACA. Sweeping new legislation was put in place, in part, as a response to a perceived social crisis: the increasing number of uninsured, a population widely viewed as a drain on the economic and public-health systems.

Separated by almost a century, the tone and wording of the debates surrounding these two distinctly American health programs are remarkably similar.

After the First World War, legislators said the federal government’s incursion into health care would constitute an “immeasurable expense.” They worried that it went against the American tradition of local responsibility; that it would breed dependency; that it was “socialism.”

Although they never went so far as shutting down the government in protest, politicians of the 1920s—much like those who debated the ACA in 2010—felt that the legislation they were considering was deeply flawed. They argued that, in addition to being vague and impractical, it gave too much power to the federal government and offered privileges to people who did not deserve them.

But, like their counterparts nearly a century later, many voted for passage not only to gain political favor and alleviate a perceived crisis, but also because of a dearth of alternatives.

Meanwhile, advocates of both medical support for veterans and the passage of the ACA argued that the programs were cost-effective and necessary. They would serve as safety nets for citizens who might otherwise be neglected by state and local health systems, or become—in World War I-era parlance—“public charges.”

Alongside those similar patterns, there are telling differences between the veterans’ health system and the ACA.

The former is intended to provide direct, government sponsored care to a specific category of citizens widely deemed worthy, and took form incrementally with multiple pieces of legislation between World War I and World War II.

The latter—a one act attempt to alleviate problems wrought by a century’s worth of haphazard policies and practices—aims to make health insurance accessible, through both public and private channels, to the greatest possible number.

In this respect, the ACA is path-breaking. It marks a shift away from the twentieth-century model of offering individuals federal assistance based on their membership in a clearly definable group of citizens.

Preparing for the Health Fallout of War

In the months surrounding the United States’ declaration of war in April 1917, the social reformers, doctors, and legislators who conceptualized medical and rehabilitation plans for service members were guided by a Progressive-Era faith in the potential of government and professional medicine to buffer citizens from society’s ills.

They dreaded the possibility of young men being released from service shell-shocked, maimed, and helpless. In such a state, they feared, individuals were doomed to live in mendicancy or, perhaps worse, on monthly pensions like their Civil War brethren.

In the second decade of the twentieth century, although less than ten percent of southern men age 65 and older were pensioners, approximately 35 percent of their counterparts in the north received regular payments from the federal government by virtue of their military service. At the outbreak of World War I, Civil War veterans also had access to ten national Soldiers’ Homes and a variety of state-run institutions. Those facilities focused primarily on providing domicile care for aged men with nowhere else to turn, rather than medical or rehabilitative services.

By 1917, policymakers felt the current system was costly, antiquated, and unproductive.

Lawyer and Judge Julian Mack gave voice to their belief that the power of the state should be harnessed to make more self-reliant citizens, but selectively. “The great outcry against the (Civil War) compensation system had not been due to the moneys that were paid to the men who died or were disabled because of injuries received while serving this country,” Mack declared in 1917. “The outcry” came with the establishment of the service pension legislation in the 1890s, which “aims to give a man a pension because he was a soldier, and sometimes a soldier for 30 days, and sometimes not much of a soldier at that for 30 days.”

Mack’s rationale—that government benefits had to be earned by action or circumstance—represents a recurring credo of American social policy.

In an effort to improve the chances of long-term health and financial independence for veterans, policymakers of the Great-War era mandated the ultimate universal health-care program: the military would oversee care of personnel until so-called “maximum curative results” could be achieved.

Jefferson R. Kean, Director of Military Relief for the American Red Cross, addressed the issue at a June 1917 meeting of the Medical Board of the Council of National Defense, an advisory body focused on health-related war efforts.

While treating soldiers in Europe, Kean reported, “it was impossible to accomplish anything … unless they were under military discipline and treated as soldiers until repair work has been completed.” When it came to healing the wounded, he said, “the problem is military and should be under military control.”

But even as an extensive, centralized military-based rehabilitation program took shape, legislators and the civilian experts who guided them acknowledged that the health fallout of war would likely extend beyond Army and Navy hospitals.

The 1917 iteration of the War Risk Insurance Act vaguely guaranteed that former service members could receive necessary medical care after being discharged, but failed to define who would manage and fund those services.

The Burdens and Bureaucracies of “Maximum Curative Results”

As soldiers were treated in military hospitals during and immediately after the war—some for bodily injuries from the front, but many more for diseases such as “mental alienation” and tuberculosis—it became clear that doctors, patients, and bureaucrats had widely varying views of the definition of “maximum curative results.”

The urgency of the situation became increasingly apparent soon after the armistice, as the Bureau of War Risk Insurance (BWRI)—the Treasury Department agency created to administer insurance and disability compensation payments—put forth estimates of massive future need. Approximately 640,000 of the 4.3 million men and women who served during World War I, according to the BWRI, qualified as potential future claimants. Of those, more than 425,000 had been discharged with a disability.

Large numbers of sick and injured soldiers posed “a great public health and economic problem,” declared Charles E. Banks, Chief Medical Advisor of the BWRI. They were, he told members of Congress in September 1918, “a menace to their families and … communities.”

As the number and pace of discharges increased in early 1919, Congress mandated that a variety of pre-existing federal agencies would work together to usher medical care and rehabilitation into the broader society.

The result was a makeshift system rife with problems. Veterans complained about being treated by under-trained doctors in ill-suited institutions. Federal officials accused one another of incompetence and legislators voiced frustration that dysfunction reigned, even as tens of thousands of dollars were allocated to the rehabilitation project.

Soon enough, newspapers regularly reported that veterans were receiving treatment “that cannot be justified by anyone who has any regard for the well being of the men who fought to maintain the country,” as the Atlanta Journal-Constitution put it in 1920.

Around this time, Public Health Service Surgeon General Rupert Blue asserted that offering quality care in hospitals geared specifically at the needs of veterans would lead to “economic saving” by “preventing or deferring the payment of compensation and insurance claims” and “by providing medical supervision for … a large portion of the population at the greatest productive age period.”

Far from fostering dependency, Blue suggested, increased federal aid would encourage self-reliance. If the government made quality health services more accessible, not only individual veteran-patients, but also society at large, could benefit.

The Creation of the Veterans Bureau

As medical care for veterans remained in disarray, increasingly powerful veterans’ organizations helped sway Congressional debates from focusing on temporary measures—such as the need for additional and better facilities—to the merits of more far-reaching legislation mandating that one federal agency be created and charged with “treating all the necessities of the disabled man.”

Representatives of advocacy groups pragmatically argued that the creation of a veterans’ bureau was a necessity and a righteous duty, rather than a new and unwarranted expansion of government. They insisted that it would ensure that the pre-war promises contained in the War Risk Insurance Act—that the government would provide financial and medical assistance for veterans—were fulfilled.

“The government today,” John H. Sherburne of the American Legion told legislators in 1921, “has the chance to salvage more human wreckage than they have ever had in a similar situation before.” That was a powerful argument to make at a moment when medical professionalization, industrialization, and the advent of new technologies such as the X-ray, had brought about an expansion in both the use and expectations of institutionalized medical care.

But advocates in the 1920s knew that demonstrating the prevalence of suffering and a public health necessity was not enough. They pointed out that the proposed bureau would alleviate costly redundancies—veterans receiving payments from two different government agencies, for example—rampant under a system of “divided authority.”

Veterans’ groups also maintained a focus on the universally appealing goal of self-reliance. Robert Marx, National Commander of the Disabled American Veterans, told a gathering of former service members in 1921 that government assistance could inspire in disabled veterans “a determination to come back and to take their place in the nation as self-supporting and independent citizens.”

Despite those arguments, some legislators argued that the extent, power, and permanence of the proposed agency had to be limited. Many were disturbed to find that men who had never seen the front lines—even some who had been admitted to the military only to be deemed unfit for service before completing training—were eligible for future benefits, including hospital care.

Senator Reed Smoot (R–UT) expressed his concern with the proposal that the bureau should fund medical care not only for those whose injuries or illnesses could be conclusively proven to be “upon service origin,” but also former soldiers whose ailments had been “aggravated” while they were in the military.

He noted that if an injury was of service origin, it should be “taken care of,” but contended that “this thing is wide open … every soldier thinks his case is an aggravated one. There will be no end to the examinations; there will be no end to the dissatisfaction; there will be no end to the demands for the next 50 years.”

Like Julian Mack, Smoot implied that federal benefits should be earned by virtue of one’s actions and valor.

Yet even legislators who were skeptical about creating a new government agency conceded it was the only viable solution to the problem of underserved veterans.

“Further continuation of the present system of separate bureaus handling the problems which are so closely interrelated,” said a 1921 Senate report, “would be not only unfavorable from the viewpoint of our incapacitated war veterans, but would be a pitiable reflection on Congressional inability to bring about quick beneficial changes in the present laws.”

Ultimately signed into law on August 9, 1921, “an Act to Establish a Veterans’ Bureau” (VB) laid the groundwork for a vast system of federally sponsored hospital care. The new agency would have a central office in Washington, DC, and more than 150 regional and “suboffices.”

In addition to overseeing the disbursal of insurance benefits and vocational education, the Bureau would be responsible for providing examinations, hospitalization, and dispensary and convalescent care for veterans and military nurses who had incurred injuries or illnesses in the line of duty, and for those whose pre-existing conditions had been aggravated in service.

Hospital Access for all Veterans

A veterans’ hospital system was never deliberately legislated, but its roots were planted with the creation of the VB. In April 1922, the Public Health Service formally transferred facilities treating former service members to the new bureau.

Local representatives of different stripes—legislators, Chambers of Commerce, private citizens—eagerly approached the federal government about building hospitals for former service members in their communities.

In 1924, once a network of more than 40 veterans’ hospitals existed across the country, VB Director Frank Hines told Congress that all former members of the military—regardless of whether their injuries or illnesses were connected to service—should have free access to the facilities.

In the 1920s, like today, the idea of unfettered, universal access—even when practically justified for a select group of citizens—was greeted with hostility.

“You do not recommend that every man who walks up to a hospital with a discharge in his hand … regardless of his financial standing, shall be admitted to that hospital?” asked an incredulous Alfred L. Bulwinkle (D-NC).

Providing federal assistance so all veterans could access medical care would cost “billions of dollars,” said James H. MacLafferty (R-CA).

“If we establish the principle of free hospitalization for all veterans,” noted Robert Luce (R-MA), “it would then be incumbent upon us to furnish the facilities.”

Luce was ideologically opposed to the whole idea, which, he asserted, “involves an immeasurable expense over 50 to 75 years, but also involves a long step toward that centralization of activities which some people call socialism.”

By granting millions of former service members access to government hospitals, Luce suggested, communities would no longer be encouraged to collectively provide for themselves. “You are throwing away ... the idea of local responsibility,” he said.

Again, advocates and bureaucrats countered with arguments about efficiency.

“We believe, rather than go through all the administrative work of investigating and segregating, (that the VB should) take care of the man as he comes knocking at your door,” Edwin Bettelheim, of the Veterans of Foreign Wars, told members of Congress. Bettelheim noted that the reviews of records necessary in order to prove service connection were time-consuming and costly. Treating all veterans who sought care, as opposed to only some, Bettelheim and others asserted, would help alleviate wastefulness.

Wasn’t it worth spending four or five million dollars per year, Bettelheim asked, “to take care of these men that will become a charge on some community?”

By focusing on these and other practical benefits of expanding access, bureaucrats and advocates overpowered legislators’ ideological concerns about socialism. Congress passed the World War Veterans’ Act on June 7, 1924 stipulating that the director of the VB could provide hospitalization to all honorably discharged veterans who had served since 1897.

But the notion that a system of preference should exist was—and is—central to the shape of veterans’ health care.

According to the World War Veterans’ Act, former service members could be treated through the VB “without regard to the nature or origin of their disabilities,” but only if “existing Government facilities (permitted).” Preference for care would be granted to those with service-connected disabilities and individuals who were “financially unable to pay for hospitalization” otherwise.

As a result of the passage of the World War Veterans’ Act and increasingly lenient rules regarding disability ratings and service-connection for various conditions, the number of patients under hospital treatment sponsored by the VB grew from approximately 18,000 in 1924 to more than 30,000 in 1930. By that point, 46 percent of bureau patients were receiving hospital care for non-line-of-duty injuries or illnesses.

According to the 1930 Veterans Bureau annual report, the “hospitalization of veterans of the world and other wars, and the necessity for the expansion of government facilities” constituted a “growing problem.”

An Adaptable, Lasting, Selective System of “Socialized Medicine”

The legacy of postwar policy surrounding medical care for soldiers and veterans is not simply one of unyielding growth and generosity. Throughout the twentieth and twenty-first centuries, the U.S. government has backtracked and vacillated in its willingness to fulfill promises made to those who served, and the veterans’ health system has experienced both challenges and successes.

Still, legislation passed during and after the Great War was crucial. It established the fundamental principle that medical care should be offered as a federally sponsored entitlement to former service members.

As headlines abound regarding the rough rollout of the Affordable Care Act, it is worth noting that, even in the early days of veterans’ hospitals, there was great confusion and controversy about eligibility, standards of care, and how the bureaucracy would work.

Throughout the interwar years, piecemeal legislation was passed in order to address some of the most glaring problems with the new medical program.

Even after the Veterans Bureau was consolidated with the Bureau of Pensions, and the National Home for Disabled Volunteer Soldiers to form the Veterans Administration (VA) in 1930, the hospital system remained a “backwater,” as scholar Paul Starr puts it.

After World War II, when public concern for former service members was reignited, veterans’ hospitals gained more federal attention and funding, and began affiliating with medical schools. By the mid-twentieth century, the system had grown exponentially—it consisted of hospitals, nursing homes, ambulatory care, and education and training for medical professionals—but it failed to shake its negative reputation among veterans and many others.

In the wake of the Vietnam War, the majority of veterans eligible for care through the VA opted not to access it.

But during the last decades of the twentieth century, there were signs of progress. In the late 1970s, VA doctors pioneered an electronic health record system that continues to serve as a model for private sector institutions.

In 1989, the VA became the Department of Veterans Affairs, as it gained cabinet status and the administration of health services was placed under a reorganized branch—the Veterans Health Administration.

Soon after, in the mid-1990s, VHA administrators undertook efforts to make services more accessible to non-indigent veterans and those with non-service-connected disabilities. At that time, 23 regional “integrated service networks” consisting of a variety of types of in- and out-patient facilities replaced hospitals as the focal points of care.

Following those organizational improvements, battles about the righteousness and conditions of federal intervention have raged on. As the U.S. engaged in two lengthy wars in Iraq and Afghanistan, the number of veterans eligible for treatment rose sharply, much to the chagrin of conservative legislators who argued—as some did in the 1920s—that access to publicly sponsored medical care should be strictly limited.

The Cato Institute’s Michael F. Cannon maintained in March 2006 that the Veterans Health Administration was hardly a model system since it was forced to “play politics with people’s health” and cope with decreases in federal funding by “freezing enrollment, increasing waiting times, and rationing access to the latest prescription drugs.”

In November 2011, when presidential candidate Mitt Romney told a gathering of veterans in a South Carolina barbeque shop that he wondered “if there would be some way to introduce private sector competition” to the VHA, New York Times columnist and economist Paul Krugman joined a chorus of skeptical veterans’ advocacy groups.

“What Mr. Romney and everyone else should know is that the VHA is a huge policy success story,” Krugman argued, pointing out that it has achieved “rising quality and successful cost control.” That is true, he added, because it is an “integrated” system, meaning it both provides and pays for health care. “Yes,” Krugman noted, “this is ‘socialized medicine’ … but it works.”

Today, more than eight million former service members receive health care through the VHA.

Echoes of the Past

Justifications offered during the post-World War I years for the necessity of publicly sponsored veterans’ health services were echoed nearly a century later during debates over the ACA: government intervention was not only laudable in a humanitarian sense, advocates maintained, but it would cut costs, increase efficiency, and protect the public’s health.

“This bill creates four million jobs,” House Democratic Leader Nancy Pelosi said in a July 2012 congressional floor speech in opposition to Republican efforts to repeal the ACA. “It reduces the deficit, it enables our society to have the vitality of everyone rising to their aspirations without being job locked … let us move forward together to strengthen the economy and to strengthen the great middle class, which is the backbone of our democracy.”

President Obama, too, reiterated arguments focused on economic efficiency. “Each time an uninsured American steps foot into an emergency room with no way to reimburse the hospital for care,” he told attendees of the American Medical Association convention in Chicago in 2009, “the cost is handed over to every American family as a bill of about $1,000.”

Likewise, opponents of the ACA have cited concerns similar to those who questioned the expansion of the VA system: cost, government largesse, and the squashing of individual rights and initiative.

In August 2012, when Republican Representative and Vice Presidential candidate Paul Ryan addressed the Republican National Convention, he invoked Robert Luce’s ideals regarding “local responsibility” and gave voice to a timeless argument against federal involvement in health care: “We do not each face the world alone,” Ryan said. “And the greatest of all responsibilities, is that of the strong to protect the weak.” But, Ryan argued, “our rights come from nature and God, and not from government.”

An October 2009 report by Matt Peterson of the National Center for Public Policy Research made a related point, referring specifically to the ACA’s requirement that every citizen purchase insurance. The so-called individual mandate, Peterson said, “would constitute a gross abuse of governmental power and a violation of every American's right to decide what is best for themselves and his or her family.”

Perhaps the most stunning similarity between the formation of a veterans’ health program and the ACA is that in both cases conceptions about dependency—the creation of a “dependent class” as Mark Steyn put it in the National Review in 2009—shaped opinions.

Some, including Public Health Service Surgeon General Rupert Blue, Robert Marx of the Disabled American Veterans, and Democratic Leader Nancy Pelosi, viewed federal intervention as a means of promoting self-reliance.

Others—Utah Republican Reed Smoot, his Massachusetts counterpart, Robert Luce, and Paul Ryan—tended to see it in the opposite light: government aid was something to be earned, a potential threat to community, and frighteningly paternalistic.

In a variety of ways, early proponents of veterans’ health care faced less of a challenge than the Obama administration and its supporters. They represented a limited and, they argued, worthy constituency.

The ACA, on the other hand, was designed with the ambition of making health insurance available to virtually every citizen—not least of all to those left behind by state- and employer-sponsored programs established in the twentieth century. Today’s “underserved” are the working poor, the young, and people with previously existing conditions; they do not form a cohesive and powerful constituency.

Time will tell if the legislation intended to cover those populations, like its twentieth-century predecessor aimed at veterans, will prove enduring.