Most people think Ronald Reagan cut the US welfare system. Reagan did cut anti-poverty and education programs, but overall, he greatly expanded the US welfare system by increasing resources for pensions and healthcare. Reagan increased funding for these programs more than any other president in history by raising the payroll tax rate from 12.26% in 1980 to 15.1% in 1988.
In 1986, Reagan’s COBRA act mandated that employers must continue to offer health insurance to former employees (even for most employees that they had fired) for up to three years. In 1986, Reagan also announced plans to expand Medicare to add coverage for catastrophic care, pharmaceuticals and other benefits and in 1988 he passed the Medicare Catastrophic Coverage Act with strong bipartisan support. Most people don’t remember the act because it was repealed by George Bush in 1999, before it could go into effect. Voters objected to the large tax increase that funded it and feared how it would change their benefits.
Most significantly of all, Reagan created the first universal healthcare entitlement in US history: The Emergency Medical Treatment and Active Labor Act or EMTALA. It is the entitlement for all people in the US to get guaranteed hospital treatment through emergency rooms without regard to ability to pay or citizenship status. And once anyone is admitted to a hospital, they cannot be discharged until their condition is stabilized regardless of the costs for treatment.
EMTALA is rarely recognized as a major welfare-state program because it did not cost the government any money. It was an unfunded mandate, but it is one of the most costly healthcare programs. In 2007, 55% of ER care was uncompensated, in large part thanks to EMTALA.
There is a constituency of Americans who would prefer to refuse treatment to the uninsured. Wolf Blitzer asked Ron Paul if he would just “let ‘em die” at a presidential debate in 2011. It is a bit chilling to hear a few people in the audience scream, “YEA”, in support of “let ‘em die”. Oddly, nobody mentioned that that is illegal due to Reagan’s legacy. Although few Americans have heard of EMTALA, the values that it embodies are extremely popular and although some libertarians like the Hoover Institute Fellow Richard A. Epstein want to eliminate it, no national politician has dared to sponsor a repeal. All Americans get some benefit from it. For example, if you were injured in a traffic accident and the highway patrol finds your unconscious body on the side of the road, you won’t want the local ER to refuse to care for you simply because your insurance card fell out of your pocket. EMTALA provides that security for us all.
My aunt and uncle didn’t have any health insurance when they were hit by a car. EMTALA assured that they got hospital care despite lacking insurance. Eventually, the other motorist’s liability insurance covered their enormous medical bills, but it took a lot longer for the liability to be established than it would have taken for them to die from internal bleeding without surgery while the lawyers sorted things out, so EMTALA might have saved their lives.
Ron Paul claimed (in the ‘let em die’ link above) that charity care could cover uninsured people in situations like this because that is what happened before Medicare. But charity didn’t always work which is why Reagan passed EMTALA. There was a long tradition in the segregated south (including the state of Texas where Ron Paul practiced medicine) of denying hospital treatment to people of the wrong color. In 1959, only 9% of Southern hospitals treated blacks and whites equally. That was banned by the 1964 Civil Rights Act. Ever since then, new medical technologies developed every year which increased the costs of hospital treatment. This gradually increased the economic motives to deny treatment. Ability to pay gradually replaced race as a motive for denying treatment and the numbers had been growing until Reagan put a legal end to it.
Ironically, EMTALA was the only health insurance that Ron Paul’s campaign manager had when he died in 2008 with an unpaid $400,000 hospital bill. EMTALA didn’t save his life in 2008, but he went in to the hospital hoping that it would. EMTALA is horribly bad health insurance that doesn’t cover most health needs. It only covers emergency healthcare and active labor. It won’t provide a mammogram to prevent breast cancer nor provide insulin to prevent diabetic gangrene, but it is a lot better than nothing, especially in a crisis. Once breast cancer or gangrene becomes life threatening, EMTALA will spare no expense to treat the complications of cancer or amputate the gangrene.
EMTALA has had far-reaching effects on government policy. It resulted in hospitals being forced to shut down in poor areas due to the rise in uncompensated care. It caused the government to alter the formula for Medicare reimbursements to try to reimburse some of the uncompensated care costs.
EMTALA is revolutionizing homelessness policy because it is cheaper to give free housing to the homeless than to let them live on the street. Life on the street leads to a lot of expensive ER visits that only housing can prevent.
By any measure, Reagan’s EMTALA deserves a prominent pace in the history of the US welfare system.